TY  - JOUR
AU  - Meyer,Bruce D.
AU  - Sullivan,James X.
TI  - Five Decades of Consumption and Income Poverty
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14827
PY  - 2009
Y2  - March 2009
UR  - http://www.nber.org/papers/w14827
L1  - http://www.nber.org/papers/w14827.pdf
N1  - Author contact info:
Bruce D. Meyer
Harris School of Public Policy
University of Chicago
1155 E. 60th Street
Chicago, IL 60637
Tel: 773/702-2712
Fax: 773/702-0926
E-Mail: bdmeyer@uchicago.edu

James X. Sullivan
Department of Economics
447 Flanner Hall
University of Notre Dame
Notre Dame, IN 46556
Tel: 574/631-7587
E-Mail: James.X.Sullivan.197@nd.edu
M2  - featured in NBER digest on 2009-08-01
AB  - This paper examines poverty in the United States from 1960 through 2005.  We investigate how poverty rates and poverty gaps have changed over time, explore how these trends differ across family types, contrast these trends for several different income and consumption measures of poverty, and consider explanations for the differences in trends.  We document sharp differences, particularly in recent years, between different income poverty measures, and between income and consumption poverty rates and gaps.  Moving from the official pre-tax money income measure to a disposable income measure that incorporates taxes and transfers has a substantial effect on poverty rate changes over the past two decades.  Furthermore, consumption poverty rates often indicate large declines, even in recent years when income poverty rates have risen.  We show that bias in the CPI-U has a sizable effect on changes in poverty.  Between the early 1960s and 2005, an income poverty measure that corrects for bias in this price index declines by 14 percentage points more than a comparable measure based on the CPI-U.  The patterns are very different across family types, with consumption poverty falling much faster than income poverty for single parents and the elderly, but more slowly for married couples with children.  Income and consumption measures of deep poverty and poverty gaps have generally moved sharply in opposite directions in the last two decades with income deep poverty and poverty gaps rising, but consumption deep poverty and poverty gaps falling.  While relative poverty rose in the early 1980s, changes in relative poverty have been fairly small since 1990.  We examine the role that demographics, taxes, and transfers play in explaining changes in poverty over the past three decades.  We also consider whether measurement error, saving and dissaving, and other explanations can account for income and consumption differences.
ER  -