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On the Definition and Measurement of Chronic Poverty

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  • Aaberge, Rolf

    ()
    (Statistics Norway)

  • Mogstad, Magne

    ()
    (University of Chicago)

Abstract

As an alternative to the conventional methods for measuring chronic poverty, this paper proposes an interpersonal comparable measure of permanent income as a basis for defining and measuring chronic poverty. This approach accounts for the fact that individuals regularly undertake inter-period income transfers. Moreover, the approach allows for individual-specific interest rates on borrowing and saving as well as for the presence of liquidity constraints. Due to the general nature the proposed method proves useful for evaluating the theoretical basis of the standard methods for measuring chronic poverty.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2659.

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Length: 23 pages
Date of creation: Mar 2007
Date of revision:
Handle: RePEc:iza:izadps:dp2659

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Keywords: intertemporal choice; liquidity constraints; permanent income; chronic poverty;

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References

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  1. Erik Fjærli & Rolf Aaberge, 2000. "Tax Reforms, Dividend Policy and Trends in Income Inequality Empirical Evidence based on Norwegian Data," Discussion Papers 284, Research Department of Statistics Norway.
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  23. Mary Jo Bane & David T. Ellwood, 1986. "Slipping into and out of Poverty: The Dynamics of Spells," Journal of Human Resources, University of Wisconsin Press, vol. 21(1), pages 1-23.
  24. Rolf Aaberge & Anthony B. Atkinson, 2008. "Top Incomes in Norway," Discussion Papers 552, Research Department of Statistics Norway.
  25. Kahneman, Daniel & Wakker, Peter P & Sarin, Rakesh, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 375-405, May.
  26. Susan Dynarski & Jonathan Gruber, 1997. "Can Families Smooth Variable Earnings?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 229-303.
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Cited by:
  1. Duclos, Jean-Yves & Araar, Abdelkrim & Giles, John, 2010. "Chronic and transient poverty: Measurement and estimation, with evidence from China," Journal of Development Economics, Elsevier, vol. 91(2), pages 266-277, March.
  2. Luigi Fabbris, Irene Sguotti, 2013. "Measuring Chronic Poverty In Italy," RIEDS - Rivista Italiana di Economia, Demografia e Statistica - Italian Review of Economics, Demography and Statistics, SIEDS Societa' Italiana di Economia Demografia e Statistica, vol. 0(2), pages 99-122, April-Jun.

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