Dynamics of Poverty

Poverty Spells

Mary Jo Bane and David Ellwood,“Slipping into and Out of Poverty: The

Dynamics of Spells,” The Journal of Human Resources, Vol. 21, No.

1 (Winter, 1986), 1-23. (Source for the following 6 slides.)

1. What are poverty spells?

2. Why study poverty spells?

3. What is the distribution of poverty spells by length?

4. How do poverty spells begin?

5. How do poverty spells end?

6. What does the analysis of poverty spells tell us about welfare

dependency?

Bane and Ellwood “Slipping Into and Out of Poverty”

• What are poverty spells? – Continuous periods during which income falls below the poverty

line.

• Why study poverty spells?

– Because we need to distinguish between the larger population of

people who are ever poor, and those who are poor at a point in

time if we are the understand the effects of culture, dependency,

and the allocation of assistance.

Poverty Spells: Bane and EllwoodDistribution of Completed Spells of Poverty

0

10

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60

1 2 3 4 5 6 7 8 9 9+

(1) Prospectivedistribution forspell beginners(2) Snap shot ofCompleted Spells

Poverty Spells: Bane and EllwoodDistribution of Completed and Uncompleted Spells of Poverty

0

10

20

30

40

50

60

1 2 3 4 5 6 7 8 9 9+

(1) Prospectivedistribution forspell beginners(2) Snap shot ofCompleted Spells

(3) Snap shot ofUncompletedSpells

Bane and EllwoodConclusions of “Slipping Into and Out of Poverty”

1. Most of those who ever become poor will have a short stay in poverty.2. The majority of those who are poor at a given time have very long spells of

poverty.3. Most people use aid programs briefly.4. The bulk of aid goes to a small group that has very long stays in poverty.5. Changes in family structure and life cycle events explain nearly one-half of

spell beginnings.6. A fall in the head’s earnings explain a small minority of beginnings.7. Increase earnings of all household members is the primary route out of

poverty.8. The poverty population is extremely heterogeneous.

Poverty Spells

• Consequences of Bane and Ellwood’s Work– Survey of Income and Program Participation (SIPP)--a

longitudinal survey that allow the analyst to observe how the status of the same group of people changes over time; ie., to study the dynamics of poverty. http://www.census.gov/hhes/www/poverty/newguidance.html#sipphighlight

– Dynamics of Economic Well-Being: Poverty, 1996 to 1999 http://www.census.gov/hhes/www/poverty/sipp96/sipp96.html

• Methodology applied to spells of welfare receipt