Estimating Monthly Poverty Rates in the United States

Zachary Parolin, Megan Curran, Jordan Matsudaira, Jane Waldfogel and Christopher Wimer

Journal of Policy Analysis and Management, 2022, vol. 41, issue 4, 1177-1203

Abstract: Official poverty estimates for the United States are presented annually, based on a family unit's annual resources, and reported with a considerable lag. This study introduces a framework to produce monthly estimates of the Supplemental Poverty Measure and official poverty measure, based on a family unit's monthly income, and with a two‐week lag. We argue that a shorter accounting period and more timely estimates of poverty better account for intra‐year income volatility and better inform the public of current economic conditions. Our framework uses two versions of the Current Population Survey to estimate monthly poverty while accounting for changes in policy, demographic composition, and labor market characteristics. Validation tests demonstrate that our monthly poverty estimates closely align with observed trends in the Survey of Income & Program Participation from 2004 to 2016 and trends in hardship during the COVID‐19 pandemic. We apply the framework to measure trends in monthly poverty from January 1994 through September 2021. Monthly poverty rates generally declined in the 1990s, increased throughout the 2000s, and declined after the Great Recession through the onset of the COVID‐19 pandemic. Within‐year variation in monthly poverty rates, however, has generally increased. Among families with children, within‐year variation in monthly poverty rates is comparable to between‐year variation, largely due to the average family with children receiving 37 percent of its annual income transfers in a single month through one‐time tax credit payments. Moving forward, researchers can apply our framework to produce monthly poverty rates whenever more timely estimates are desired.

Date: 2022
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https://doi.org/10.1002/pam.22403

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Persistent link: https://EconPapers.repec.org/RePEc:wly:jpamgt:v:41:y:2022:i:4:p:1177-1203

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