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The relationship between income and material hardship

  • James X. Sullivan

    (University of Notre Dame)

  • Lesley Turner

    (Columbia University)

  • Sheldon Danziger

    (National Poverty Center, University of Michigan)

This paper examines the relationship between income and the extent of material hardship and explores other factors that might affect hardship. Using panel data from the Women's Employment Study, we examine the incidence of material hardship from 1997 to 2003 among current and former welfare recipients. We then consider the extent to which income is associated with hardship. We show that hardship decreases monotonically across quintiles of the income distribution for several income measures. When we measure income as the average across the 6-year study period, a 10 percent increase in average income is associated with a 1.1 percentage point decrease in the likelihood of experiencing a hardship, a drop of about 3.4 percent. We also find that the relationship between transitory changes in income and hardship is weak. These results are consistent with findings based on a nationally representative sample of disadvantaged households from the Survey of Income and Program Participation. Our results indicate that observable factors, such as measures of mental health, are more strongly related to hardship than current income. © 2008 by the Association for Public Policy Analysis and Management.

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File URL: http://hdl.handle.net/10.1002/pam.20307
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Article provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.

Volume (Year): 27 (2008)
Issue (Month): 1 ()
Pages: 63-81

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Handle: RePEc:wly:jpamgt:v:27:y:2008:i:1:p:63-81
Contact details of provider: Web page: http://www3.interscience.wiley.com/journal/34787/home

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  1. Daniel Feenberg & Elisabeth Coutts, 1993. "An introduction to the TAXSIM model," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 12(1), pages 189-194.
  2. 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.
  3. James X. Sullivan, 2006. "Welfare Reform, Saving, and Vehicle Ownership: Do Asset Limits and Vehicle Exemptions Matter?," Journal of Human Resources, University of Wisconsin Press, vol. 41(1).
  4. Lesley J. Turner & Sheldon Danziger & Kristin S. Seefeldt, 2006. "Failing the Transition from Welfare to Work: Women Chronically Disconnected from Employment and Cash Welfare," Social Science Quarterly, Southwestern Social Science Association, vol. 87(2), pages 227-249.
  5. Robert Rector & Kirk Johnson & Sarah Youssef, 1999. "The Extent of Material Hardship and Poverty in the United States," Review of Social Economy, Taylor & Francis Journals, vol. 57(3), pages 351-387.
  6. Bound, John & Brown, Charles & Mathiowetz, Nancy, 2001. "Measurement error in survey data," Handbook of Econometrics, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 59, pages 3705-3843 Elsevier.
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