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Slipping into and out of Poverty: The Dynamics of Spells

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  • Mary Jo Bane
  • David T. Ellwood

Abstract

This paper examines the dynamics of poverty. Previous analyses of the dynamics of poverty have either examined only fluctuations in the male heads earnings or looked at the frequency of poverty periods over a fixed time frame. We argue that a more appropriate way to understand the dynamics of poverty is to define spells of poverty. Using this methodology we find that the majority of poor persons at any point in time are in fact in the midst of a rather long spell of poverty. The methodology also allows us to estimate the extent to which poverty spell beginnings and endings are associated with changes in income or changes in family structure. Less than 40 percent of poverty spell beginnings seem to be caused by a drop in the heads earnings,while 60 percent of endings occur when the head's earnings increase. As a result we argue that to understand the causes and potential remedies for poverty, researchers must focus on household formation decisions and on the behavior of so called secondary family members.

Suggested Citation

  • Mary Jo Bane & David T. Ellwood, 1983. "Slipping into and out of Poverty: The Dynamics of Spells," NBER Working Papers 1199, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:1199
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    References listed on IDEAS

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    1. Kim B. Clark & Lawrence H. Summers, 1978. "Labor Force Transitions and Unemployment," NBER Working Papers 0277, National Bureau of Economic Research, Inc.
    2. Gottschald, Peter T, 1982. "Earnings Mobility: Permanent Change or Transitory Fluctuations," The Review of Economics and Statistics, MIT Press, vol. 64(3), pages 450-456, August.
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    Cited by:

    1. Eric Akobeng, 2017. "Gross Capital Formation, Institutions and Poverty in Sub-Saharan Africa," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 20(2), pages 136-164, April.
    2. Aysenur Acar & Cem Baslevent, 2014. "Examination of the Transitions of Households into and out of Poverty in Turkey," Working Papers 015, Bahcesehir University, Betam.
    3. Carlos Brambila-Paz, 2017. "Households, Families and Prospective Economic Mobility in Mexico," Journal of Family and Economic Issues, Springer, vol. 38(4), pages 582-595, December.
    4. Asep Suryahadi & Sudarno Sumarto, "undated". "The Chronic Poor, the Transient Poor, and the Vulnerable in Indonesia Before and After the Crisis," Working Papers 418, Publications Department.
    5. Olabimtan Adebowale & David Lawson, 2018. "How does access to formal finance affect household welfare dynamics? Micro evidence from Nigeria," Global Development Institute Working Paper Series 242018, GDI, The University of Manchester.
    6. Slon, Pablo & Zúñiga, Edwin, 2006. "Poverty dynamics in Costa Rica with panel data from cross-sections," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), August.
    7. Magali Duque & Abigail McKnight, 2019. "Understanding the relationship between inequalities and poverty: a review of dynamic mechanisms," CASE Papers /217, Centre for Analysis of Social Exclusion, LSE.
    8. Danielle Venn & Boyd Hunter, 2018. "Poverty transitions in non-remote Indigenous households: The role of labour market and household dynamics," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 21(1), pages 21-44.
    9. Amy Farmer & Jill Tiefenthaler, 2003. "Strategic Bargaining Over Child Support and Visitation," Review of Economics of the Household, Springer, vol. 1(3), pages 205-218, September.
    10. Yekaterina Chzhen & Emilia Toczydlowska & Sudhanshu Handa & UNICEF Innocenti Research Centre, 2016. "Child Poverty Dynamics and Income Mobility in Europe," Papers inwopa840, Innocenti Working Papers.
    11. Asep Suryahadi & Wenefrida Widyanti & Sudarno Sumarto, 2003. "Short-term poverty dynamics in rural Indonesia during the economic crisis," Journal of International Development, John Wiley & Sons, Ltd., vol. 15(2), pages 133-144.
    12. Daniel S. Hamermesh & James M. Johannes, 1983. "Food Stamps as Money and Income," NBER Working Papers 1231, National Bureau of Economic Research, Inc.
    13. Gambetta Podesta, Renzo, 2007. "Poverty Dynamics in Peru 2001-2003: A Probit Model Analysis," MPRA Paper 3723, University Library of Munich, Germany.
    14. Tracy Roberts & Steven Martin, 2010. "Welfare Exit, Marriage, and Welfare Recidivism: A Reevaluation of Patterns of the 1980s and 1990s," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 29(2), pages 105-125, April.
    15. Duque, Magali & Mcknight, Abigail, 2019. "Understanding the relationship between inequalities and poverty: a review of dynamic mechanisms," LSE Research Online Documents on Economics 103457, London School of Economics and Political Science, LSE Library.

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