The Dynamics of Poverty in the United States: A Review of Data, Methods, and Findings

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Abstract

This paper reviews the literature on poverty dynamics in the United States. It surveys the most prevalent data, theories, and methods used to answer three key questions: How likely are people to enter, exit, and reenter poverty? How long do people remain in poverty? And what events are associated with entering and exiting poverty? The paper then analyzes the combined findings of the literature, discussing overarching patterns of poverty dynamics, differences among demographic groups, and how poverty probabilities, duration, and events have changed over time. We conclude with a discussion of the policy implications of these findings and avenues for future research.

Introduction

From President Johnson's War on Poverty to President Bush's response to Hurricane Katrina, poverty, and the fight against it, has played a central role in American politics and policy. The poverty threshold, formally defined in 1965 to compare a family's basic needs against its income, and the corresponding U.S. poverty rate, have for decades provided seemingly universal justification for American social welfare policies. As such, a vast body of literature on poverty rates and the causes of poverty has accumulated since the 1960s. One strand of this literature examines static poverty measures, while another examines the dynamics of poverty.

Studies of static poverty rates provide information on well-being, such as the changing proportion of Americans whose basic needs are not being met.¹ However, studies of static poverty rates do not provide a complete picture of poverty. They do not reveal, for example, whether those in poverty last year remain in need or whether new individuals have fallen below the poverty threshold. Nor do they reveal how long individuals remain in poverty. Examining poverty dynamics or transitions provides information on how, why, and when families' incomes fall below or rise above the poverty threshold, filling in gaps left behind when one looks at static poverty rates alone. This research provides insight into a number of questions such as: Who are the poor in the United States and is this population changing? Are those below the poverty threshold at any one point in time chronically poor or just experiencing a short poverty spell? What events lead people into poverty and what events lead them out?

In this paper we review and synthesize the literature on poverty dynamics in the United States. As the first review of this substantial body of research, we provide essential informationfor those seeking to understand, evaluate, or conduct poverty dynamics research. The paper is organized around three key research questions found in the literature:

(1) What are the probabilities associated with entries into, exits from, and reentries into poverty?

(2) What is the duration of poverty?

(3) What are the events associated with entries into and exits from poverty?

We survey, describe, and assess the merits of the most prevalent poverty measures, data, theories, and methods used to answer these questions over the past two decades. We also analyze the combined results of these studies, discussing overarching patterns of poverty dynamics for the U.S. population, differences among demographic groups, and how poverty probabilities, duration, and events have changed over time. We conclude with a brief discussion of the policy implications of these findings and avenues for future research.

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