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An economic model of household income dynamics, with an application to poverty dynamics among American women

By Simon Burgess and Carol Propper

Abstract

The rise in inequality and poverty is one of the most important economic and social issues in recent times. But in contrast to the literature on individual earnings inequality, there has been little work modelling (as opposed to documenting) household income dynamics. This is largely because of the difficulties created by the fact that on top of the human capital issues that arise in personal earnings, individuals are continually forming, dissolving and reforming household units. This paper proposes a framework for modelling household income dynamics. It emphasises the role of household formation and dissolution, and labour market participation. It allows standard economic theory to address the issues of household, as distinct from individual, income and poverty dynamics. We illustrate this framework with an application to poverty rates among young women in the US. We use this model to analyse differences in poverty experiences, particularly between black and white women

Topics: HN Social history and conditions. Social problems. Social reform, HD Industries. Land use. Labor
Publisher: Centre for Analysis of Social Exclusion, London School of Economics and Political Science
Year: 1998
OAI identifier: oai:eprints.lse.ac.uk:6525
Provided by: LSE Research Online

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