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An Economic Model of Household Income Dynamics, with an Application to Poverty Dynamics among American Women

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  • Simon Burgess
  • Carol Propper

Abstract

The rise in inequality and poverty is one of the most important economic and social issues in recent times. But in contrast to the literature on individual earnings inequality, there has been little work modelling (as opposed to documenting) household income dynamics. This is largely because of the difficulties created by the fact that on top of the human capital issues that arise in personal earnings, individuals are continually forming, dissolving and reforming household units. This paper proposes a framework for modelling household income dynamics. It emphasises the role of household formation and dissolution, and labour market participation. It allows standard economic theory to address the issues of household, as distinct from individual, income and poverty dynamics. We illustrate this framework with an application to poverty rates among young women in the US. We use this model to analyse differences in poverty experiences, particularly between black and white women.

Suggested Citation

  • Simon Burgess & Carol Propper, 1998. "An Economic Model of Household Income Dynamics, with an Application to Poverty Dynamics among American Women," CASE Papers case09, Centre for Analysis of Social Exclusion, LSE.
  • Handle: RePEc:cep:sticas:case09
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    Cited by:

    1. Pérez-Mayo, Jesús, 2004. "Consistent poverty dynamics in Spain," IRISS Working Paper Series 2004-09, IRISS at CEPS/INSTEAD.
    2. FUSCO Alessio & ISLAM Nizamul, 2012. "Understanding the drivers of low income transitions in Luxembourg," LISER Working Paper Series 2012-31, LISER.
    3. Arnstein Aassve & Simon Burgess & Matt Dickson & Carol Propper, 2005. "Modelling Poverty by not Modelling Poverty: An Application of a Simultaneous Hazards Approach to the UK," The Centre for Market and Public Organisation 05/134, Department of Economics, University of Bristol, UK.
    4. Francesco Devicienti, 2011. "Estimating poverty persistence in Britain," Empirical Economics, Springer, vol. 40(3), pages 657-686, May.
    5. Pérez-Mayo, Jesús, 2009. "Un análisis dinámico de la privación en España /A Dynamic Analysis of Deprivation for Spain," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 27, pages 501-522, Agosto.
    6. Biewen, Martin, 2004. "Measuring State Dependence in Individual Poverty Status: Are There Feedback Effects to Employment Decisions and Household Composition?," IZA Discussion Papers 1138, Institute for the Study of Labor (IZA).
    7. Martin Biewen, 2009. "Measuring state dependence in individual poverty histories when there is feedback to employment status and household composition," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(7), pages 1095-1116.
    8. Eirini Andriopoulou & Panagiotis Tsakloglou, "undated". "The determinants of poverty transitions in Europe and the role of duration dependence," DEOS Working Papers 1119, Athens University of Economics and Business.
    9. Francesco Devicienti, 2002. "Poverty persistence in Britain: A multivariate analysis using the BHPS, 1991–1997," Journal of Economics, Springer, vol. 77(1), pages 307-340, December.
    10. Bigsten, Arne & Shimeles, Abebe, 2004. "Dynamics of Poverty in Ethiopia," WIDER Working Paper Series 039, World Institute for Development Economic Research (UNU-WIDER).
    11. Ambra Poggi, 2007. "Does persistence of social exclusion exist in Spain?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 5(1), pages 53-72, April.
    12. Simon Burgess & Carol Propper & Matt Dickson, 2006. "The analysis of poverty data with endogenous transitions," Fiscal Studies, Institute for Fiscal Studies, vol. 27(1), pages 75-98, March.
    13. Coral del Río & Carlos Gradín & Olga Cantó, 2006. "What helps households with children in leaving poverty? Evidence from Spain," Working Papers 24, ECINEQ, Society for the Study of Economic Inequality.
    14. Stephanie Riegg Cellini & Signe-Mary McKernan & Caroline Ratcliffe, 2008. "The dynamics of poverty in the United States: A review of data, methods, and findings," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 27(3), pages 577-605.
    15. Sheldon Danziger & Markus Jäntti, 1999. "Income Poverty in Advanced Countries," LIS Working papers 193, LIS Cross-National Data Center in Luxembourg.

    More about this item

    Keywords

    Poverty analysis; household income dynamics;

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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