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

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

Early Health Related Behaviours and their Impact on Later Life Chances: Evidence from the US (OUT (publ. in Health Economics, 7(5), 1998)

This paper uses evidence from the US to examine the impact of adolescent illegal consumption and violent behaviour on later life chances. Specifically, we look at the effect of such behaviour by young men in late adolscence on productivity and household formation ten years on. We find that alcohol and soft drug consumption have no harmful effects on economic prospects in later life. In contrast, hard drug consumption and violent behaviour in adolescence are both associated with lower productivity even by the time the individuals are in their late twenties. These effects are substantial and affect earnings levels and earnings growth. These results are robust to the inclusion of a rich set of additional controls measuring aspects of the individuals' backgrounds. However, we find no evidence of any of these behaviours significantly affecting household formation.alcohol and drug consumption, anti-social behaviour, earnings, marriage

An Economic Model of Household Income Dynamics, with an Application to Poverty Dynamics among American Women

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.Poverty analysis, household income dynamics

Growing up: school, family and area influences on adolescents' later life chances

This paper explores the links between school, family and area background influences during adolescence and later adult economic outcomes. The empirical analysis is based on data covering the period 1979 to 1996, drawn from the 1979 US National Longitudinal Survey of Youth. For a sample of individuals aged 14 to 19 in 1979, estimates are produced of the impact of family, school and local area when growing up, on earnings capacity and poverty risk once they reach adulthood

Competition and Quality: Evidence from the NHS Internal Market 1991-1999

Payer-driven competition has been widely advocated as a means of increasing efficiency in health care markets. The 1990s reforms to the UK health service followed this path. We examine whether competition led to better outcomes for patients, as measured by death rates after treatment following heart attacks. Using data on mortality as a measure of hospital quality and exploiting the policy change during the 1990s, we find that the relationship between competition and quality of care appears to be negative.competition, health care, mortality, quality of care

Growing Up: School, family and area influences on adolescents later life chances

This paper explores the links between school, family and area background influences during adolescence and later adult economic outcomes. The empirical analysis is based on data covering the period 1979 to 1996, drawn from the 1979 US National Longitudinal Survey of Youth. For a sample of individuals aged 14 to 19 in 1979, estimates are produced of the impact of family, school and local area when growing up, on earnings capacity and poverty risk once they reach adulthood.family background, poverty, wages, impact of schooling, area effects

Explaining differences in hospital performance: Does the answer lie in the labour market?

This paper examines the relationship between performance of English public sector hospitals (NHS trusts) and the quality of their nursing staff. Performance ratings of NHS trusts published in 2001 and 2002 indicate a clear regional divide. This divide is not explained by lower medical need. The gap between wages in the private and public sector (the private sector premium) has a regional divide similar to that of the performance ratings. Utilising cross sectional variation in the private sector premium, we find that performance against several of the individual targets that are aggregated into the NHS performance ratings is negatively associated with the private sector premium.performance ratings, private sector wage, premia, public sector performance

The Impact of Low-Income on Child Health: Evidence from a Birth Cohort Study

There is a growing literature that shows that higher family income is associated with better health for children. Wealthier parents may have more advantaged children because they have more income to buy health care or because parental wealth is associated with beneficial behaviours or because parental health is associated with both income and children's health. The policy implications of these transmission mechanisms are quite different. We attempt to unpick the correlation between income and health by examining routes by which parental disadvantage is transmitted into child disadvantage. Using a UK cohort study that has rich information on mother's early life events, her health, her behaviours that may affect child health, and her child's health, we examine the impact of being in low income compared to that of mother child health related behaviours and mother's own health on child health. We find children from poorer households have poorer health. But we find the direct impact of income is small. A larger role is played by mother's own health and events in her early life. No clear role is played by mother child health production behaviours.child health, income, maternal health, transmission mechanisms

Keeping Up With the Schmidts: An Empirical Test of Relative Deprivation Theory in the Neighbourhood Context

We test empirically whether people’s life satisfaction depends on their relative income position in the neighbourhood, drawing on a unique dataset, the German Socio-economic Panel Study (SOEP) matched with micro-marketing indicators of population characteristics. Relative deprivation theory suggests that individuals are happier the better their relative income position in the neighbourhood is. To test this theory we estimate micro-economic happiness models for the years 1994 and 1999 with controls for own income and for neighbourhood income at the zip-code level (roughly 9,000 people). There exist no negative and no statistically significant associations between neighbourhood income and life satisfaction, which refutes relative deprivation theory. If anything, we find positive associations between neighbourhood income and happiness in all cross-sectional models and this is robust to a number of robustness tests, including adding in more controls for neighbourhood quality, changing the outcome variable, and interacting neighbourhood income with indicators that proxy the extent to which individuals may be assumed to interact with their neighbours. We argue that the scale at which we measure neighbourhood characteristics may be too large still to identify the comparison effect sought after.Life satisfaction, Neighbourhood effects, Comparison income, Reference group

Why rising tides dont lift all boats? An explanation of the relationship between poverty and unemployment in Britain

Abstract: This paper is motivated by the lack of any obvious relationship between aggregate poverty and unemployment in Great Britain. We derive a framework based on individuals' risks of unemployment and poverty, and how these vary over the economic cycle. Analysing the British Household Panel Survey for 1991-96, we are able to square the micro evidence - that unemployment matters for poverty - with the macro picture - that there's no strong link. We then go on to identify which household and individual characteristics are associated with whether an individual's poverty risk is vulnerable to the economic cycle.Poverty, unemployment, economic cycle