Economic Patterns of Single Mothers Following Their Poverty Exits: Acknowledgments and Introduction. Findings from the Poverty Dynamics Literature

06/25/2007

A large literature on poverty dynamics offers valuable context to our study. The literature finds that most people who experience poverty have short spells, but the relatively few long spells represent the majority of the poor at any given time. The seminal work of Bane and Elwood (1986), based on evidence from the 1970 through 1982 panels of the Panel Study of Income Dynamics (PSID), shows that 45 percent of poverty spells end within a year, but more than half of the poor in a given survey year are in the midst of a poverty spell lasting 10 years or more. Similar patterns have been found in studies using monthly poverty measures using the SIPP data (Ruggles and Williams 1987; Eller 1996; Naifeh 1998) and in descriptive evidence presented in studies that use other methodological approaches (Rank and Hirschl 2001; Stevens 1994; Stevens 1999; McKernan and Ratcliffe 2002). Studies that look at poverty patterns by gender of household head find that female-headed households have much higher incidence of poverty, higher rates of recidivism, and longer poverty spells (Bane and Ellwood 1986; Stevens 1999; McKernan and Ratcliffe 2002).

Although the literature on the dynamics of poverty exits is well developed, few studies have investigated the dynamics of poverty recidivism. One exception is Stevens (1999), whose study of poverty persistence also includes duration analysis of non-poverty spells. Using data from the 1968 through 1989 waves of the PSID, the author finds that poverty recidivism is common — more than half of those who leave poverty return within five years. Stevens (1999) finds that individuals in female-headed households are significantly less likely to exit poverty and significantly more likely to reenter after having exited. These differences translate into much greater poverty exposure among those who live in female-headed households, leading Stevens to conclude that "even a short period spent in a female-headed household significantly increases poverty persistence."

The literature examining trigger events associated with poverty entry and exit has emphasized the importance of changes in income and employment status. Bane and Ellwood (1986) find that a change in the household head's earnings is by far the most common event associated with poverty entry and exit among all households. These findings are supported in multivariate analysis based on data from the PSID and SIPP presented in McKernan and Ratcliffe (2002), which shows that employment events, rather than changes in household composition or disability status, are the most important factors in poverty entry and exit.

Studies, however, have also found large differences in events associated with poverty dynamics for female-headed households/families compared to the general population. Bane and Ellwood (1986) report that, while nearly 60 percent of poverty spells in two-parent households begin with a decline in the head's income, only 14 percent of poverty spells in female-headed households begin this way. The most common event associated with poverty entry for female-headed households is a transition from married to single, rather than a change in income by a household member. Multivariate analysis presented in McKernan and Ratcliffe (2002) also supports the finding that transitions to and from female-headed households are important in explaining poverty transitions.

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