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On the Definition and Measurement of Chronic Poverty

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Author Info
Rolf Aaberge and Magne Mogstad () (Statistics Norway)

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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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Paper provided by Research Department of Statistics Norway in its series Discussion Papers with number 497.

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Date of creation: Mar 2007
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Handle: RePEc:ssb:dispap:497

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Related research
Keywords: Intertemporal choice; liquidity constraints; permanent income; chronic poverty.;

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Find related papers by JEL classification:
D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
D91 - Microeconomics - - Intertemporal Choice and Growth - - - Intertemporal Consumer Choice; Life Cycle Models and Saving
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty

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  2. Erik Fjærli and 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. [Downloadable!]
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  4. Stevens, Ann Huff, 1994. "The Dynamics of Poverty Spells: Updating Bane and Ellwood," American Economic Review, American Economic Association, vol. 84(2), pages 34-37, May. [Downloadable!] (restricted)
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  6. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September. [Downloadable!] (restricted)
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  8. Flavin, Marjorie A, 1981. "The Adjustment of Consumption to Changing Expectations about Future Income," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 974-1009, October. [Downloadable!] (restricted)
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    GOVERNMENT POLICY AND POVERTY DYNAMICS IN CANADA, GERMANY, GREAT BRITAIN, AND THE UNITED STATES    ," Review of Income and Wealth, Blackwell Publishing, vol. 52(2), pages 261-284, 06. [Downloadable!] (restricted)
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  15. Tjalling C. Koopmans, 1959. "Stationary Ordinal Utility and Impatience," Cowles Foundation Discussion Papers 81, Cowles Foundation, Yale University. [Downloadable!]
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  17. Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June. [Downloadable!] (restricted)
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  19. Slesnick, Daniel T, 1993. "Gaining Ground: Poverty in the Postwar United States," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 1-38, February. [Downloadable!] (restricted)
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