Slipping into and out of Poverty: The Dynamics of Spells

Mary Jo Bane, David T. Ellwood

NBER Working Paper No. 1199
Issued in September 1983
NBER Program(s):Labor Studies Program

This paper examines the dynamics of poverty. Previous analyses of the dynamics of poverty have either examined only fluctuations in the male heads earnings or looked at the frequency of poverty periods over a fixed time frame. We argue that a more appropriate way to understand the dynamics of poverty is to define spells of poverty. Using this methodology we find that the majority of poor persons at any point in time are in fact in the midst of a rather long spell of poverty. The methodology also allows us to estimate the extent to which poverty spell beginnings and endings are associated with changes in income or changes in family structure. Less than 40 percent of poverty spell beginnings seem to be caused by a drop in the heads earnings,while 60 percent of endings occur when the head's earnings increase. As a result we argue that to understand the causes and potential remedies for poverty, researchers must focus on household formation decisions and on the behavior of so called secondary family members.

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Document Object Identifier (DOI): 10.3386/w1199

Published: Bane, Mary Jo and David T. Ellwood. "Slipping into and out of Poverty: The Dynamics of Spells." Available through ERIC Clearinghouse on Urban Education, ERIC Document Reproduction Service, Arlington, Virginia alsoin Journal of Human Resources, Vol. 21, No.1, Winter 1986.

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