Has income growth in Britain become more pro-poor?

Abstract

Assessments of who is getting better off over time typically summarize changes in the incomes of particular groups, e.g. the poor or the rich, or for subgroups such as lone parent families and other families with children. These calculations ignore the fact that these groups change composition over time: the same individuals are not being compared. To assess whether this year’s poor (or rich) are gainers or losers, one has to track the fortunes of individuals using longitudinal data. Using data from the British Household Panel Survey, we compare the patterns of individual income growth over the period 1992–1996 with those of the period 1999–2003. We develop methods providing a longitudinal perspective, and show that the pattern of income growth became more pro-poor between periods, and in a different manner than is revealed by conventional analysis. The results are consistent with the aims of the New Labour government to reduce pensioner and child poverty