Income Mobility, Temporary and Permanent Poverty

Vani Borooah and John Creedy

Australian Economic Papers, 1998, vol. 37, issue 1, 36-44

Abstract: This paper incorporates poverty persistence in a measure of aggreg ate poverty over two‐periods by decomposing the Foster et al. (1984) class of poverty measures into those temporarily in poverty and those in poverty in both periods. An additional weight is added to the permanent component in forming an aggregate poverty measure over both periods; this weight reflects the degree of poverty‐persistence aversion. The effect on aggregate poverty of mobility between permanent and temporary poverty is found to be unambiguous only in the case of the headcount poverty measure. Simulations are used to investigate the relationship between poverty and mobility. The effects of two different types of mobility (random proportio nal income changes and a systematic regression towards or away from the median) are isolated

Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:bla:ausecp:v:37:y:1998:i:1:p:36-44

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