Transition Events in the Dynamics of Poverty

by:
Signe-Mary McKernan and Caroline Ratcliffe
The Urban Institute

Prepared for:
U.S. Department of Health and Human Services
Office of the Assistant Secretary for Planning and Evaluation
Contract # HHS-100-99-0003

Project Officers:
Laura Chadwick and Susan Hauan

September 2002

This report is available on the Internet at:
http://aspe.hhs.gov/hsp/poverty-transitions02/

How to Obtain a Printed Copy

Contents

• Executive Summary
• Acknowledgements

Sections

1. Introduction
2. Literature Review
   1. Theories Used to Explain Poverty
      • Human Capital Theory
      • Permanent Income and Life-Cycle Hypotheses
      • Other Theories
   2. Findings from the Literature
   3. Contributions to the Literature
      • What are the dynamics behind changes in the poverty rate over time?
      • What are the events that increase individuals' likelihood of entering and exiting poverty?
      • What is the likelihood of exiting and reentering poverty given these different events?
3. Conceptual Framework
   1. A Simple Model of Poverty
      • Determinants of Poverty
      • Events Hypothesized to Affect Poverty
   2. Poverty Rate
4. Empirical Methods
   1. Count Method
   2. Multivariate Hazard Model
      • Calculating the Likelihood an Event Occurs
      • Left and Right Censoring
5. Data
   1. Panel Study of Income Dynamics (PSID)
   2. Survey of Income and Program Participation (SIPP)
6. Results
   1. Dynamics Behind Changes in the Poverty Rate Over Time
      • Decomposing the Annual Poverty Rate
      • Likelihood of Entering and Exiting Poverty Over Time
   2. Events Associated with Poverty Entries and Exits
      • Descriptive Analysis
      • Multivariate Analysis
7. Conclusion
   • What are the dynamics behind changes in the poverty rate over time?
   • What events increase individuals' likelihood of entering and exiting poverty?
   • What is the likelihood of entering and exiting poverty given these different events?

References

Appendices:

1. Hazard Rate Model
2. Tables

Achnowledgements

The Transition Events in the Dynamics of Poverty project was funded by the Assistant Secretary for Planning and Evaluation (ASPE), U.S. Department of Health and Human Services (DHHS) under a contract to the Urban Institute. The project benefited greatly from the oversight and input of Laura Chadwick and Susan Hauan, the ASPE Project Officers. We also thank Kelleen Kaye, Julia Isaacs, and Don Oellerich from ASPE for excellent comments and advice.

At the Urban Institute, we thank Robert I. Lerman and Katherin Ross for helpful comments and advice. We also thank Neal Parikh, Stephanie Riegg, Yasmeen A. Salahuddin, Kristen Erwin, and especially Emily Rosenberg for their excellent research assistance. This report draws in part on related papers by McKernan and Ratcliffe (2001) and McKernan, Ratcliffe, and Riegg (2001). This report also benefited from comments received from Steven Haidar at the 2002 Econometric Society Meetings in Atlanta, GA.

How to Obtain a Printed Copy

To obtain a printed copy of this report, print the “printer friendly“ version [in PDF format] or send or fax the title and your mailing information to:

Where to?

Top of Page | Contents

Home Pages:
Human Services Policy (HSP)
Assistant Secretary for Planning and Evaluation (ASPE)
U.S. Department of Health and Human Services (HHS)

Last update:  01/10/03