Chronic and Transitory Poverty in Australia 2001-2004
AbstractMany people experience poverty at some time in their lives. Tertiary students are an example, but most of them will escape poverty at the conclusion of their studies. People in transition between jobs may be in poverty temporarily and have to consume out of past savings. This type of poverty – transitory poverty – should be of less concern than prolonged, chronic poverty yet little is known about the extent of chronic poverty in Australia. This paper uses data from the Household, Income and Labour Dynamics in Australia Survey to measure chronic and transitory poverty from 2000-01 to 2003-04. An individual is considered to be in chronic poverty if he or she has insufficient permanent income to meet basic needs. Transitory poverty occurs when the individual’s permanent income exceeds a given minimum standard but annual income falls below that standard in some years. Chronic and transitory poverty are measured using two axiomatically sound indices of aggregate poverty. For comparison purposes we also employ the crude, but easily interpretable, head-count ratio and we compare the results with those obtained using a tabulation approach. Our results are presented as poverty profiles, which show the sensitivity of the various poverty measures to the poverty threshold. We find that, for equivalised poverty lines from $10,000 through $18,000 per annum (in 2003-04 dollars), the proportion of people with permanent income less than the poverty threshold is at least double the proportion of people who are poor in all four years. Our preferred index – that of Foster, Greer and Thorbecke – indicates that when the real equivalised poverty line is increased from $10,000 through $18,000 per annum, the proportion of total poverty that is chronic in nature increases from approximately 16 per cent to 51 per cent.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by School of Economics, University of Wollongong, NSW, Australia in its series Economics Working Papers with number wp06-28.
Length: 38 pages
Date of creation: 2006
Date of revision:
Contact details of provider:
Postal: School of Economics, University of Wollongong, Northfields Avenue, Wollongong NSW 2522 Australia
Phone: +612 4221-3659
Fax: +612 4221-3725
Web page: http://business.uow.edu.au/econ/index.html
More information through EDIRC
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-07-20 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Peter Saunders, 1999. "Budget Standards and the Poverty Line," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 32(1), pages 43-61.
- Oswald, A.J., 1997.
"Happiness and Economic Performance,"
18, Centre for Economic Performance & Institute of Economics.
- Oswald, Andrew, 1997. "Happiness and Economic Performance," The Warwick Economics Research Paper Series (TWERPS) 478, University of Warwick, Department of Economics.
- Takayama, Noriyuki, 1979. "Poverty, Income Inequality, and Their Measures: Professor Sen's Axiomatic Approach Reconsidered," Econometrica, Econometric Society, vol. 47(3), pages 747-59, May.
- 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.
- David Johnson, 1987. "The Calculation and Use of Poverty Lines in Australia," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 20(4), pages 45-55.
- Sen, Amartya K, 1977. "Social Choice Theory: A Re-examination," Econometrica, Econometric Society, vol. 45(1), pages 53-89, January.
- Flatau, Paul & Wood, Gavin A, 2000. "Comprehensive Income Measures, Housing Equity, and Tax-Transfer Effects," Australian Economic Papers, Wiley Blackwell, vol. 39(3), pages 327-46, September.
- 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.
- Susan E. Mayer & Christopher Jencks, 1989. "Poverty and the Distribution of Material Hardship," Journal of Human Resources, University of Wisconsin Press, vol. 24(1), pages 88-114.
- Rafael Di Tella & Robert MacCulloch, 2006. "Some Uses of Happiness Data in Economics," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 25-46, Winter.
- Joan R. Rodgers & John L. Rodgers, 1993. "Chronic Poverty in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 28(1), pages 25-54.
- Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-31, March.
- John L. Rodgers & Joan R. Rodgers, 1991. "Measuring the Intensity of Poverty among Subpopulations: Applications to the United States," Journal of Human Resources, University of Wisconsin Press, vol. 26(2), pages 338-361.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Siminski).
If references are entirely missing, you can add them using this form.