Transition Events in the Dynamics of Poverty

Research Report

Transition Events in the Dynamics of Poverty

Abstract

Poverty rates hit record highs in 1993 and have fallen to record lows in 2000. What events triggered entries into poverty in the early 1990s and exits from poverty in the late 1990s? This paper uses a discrete-time multivariate hazard model and two longitudinal data sets, the PSID and SIPP, to examine how events--such as changes in household composition and labor supply--affect poverty entries and exits. We find that there is no single path in or out of poverty. Changes in household composition, disability status, and especially labor supply are important events for entering and exiting poverty.

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