Each panel of the SIPP is a nationally representative (non-institutional) sample of households whose members are interviewed at four-month intervals over approximately a two- to four-year period. The sample sizes for each panel range from 14,000 to 36,700 households. At each interview, data are collected on income for each of the preceding four months.
We analyze the 1988, 1990, and 1996 SIPP panels. The 1988 panel interviews households from February 1988 through January 1990, enabling us to analyze poverty dynamics prior to welfare reform and during a strong economy.(29) The 1990 SIPP panel interviews households from February 1990 through September 1992, and brings the benefits of capturing poverty dynamics prior to welfare reform, during a weak economy—including the July 1990 to March 1991 recession (NBER 2001), and during a period of dramatic increases in the annual family poverty rate (from 10.7 percent in 1990 to 11.5 percent in 1991 and 11.9 percent in 1992).(30) The 1996 SIPP panel is the most recently available and interviews households from April 1996 through March 2000, allowing us to capture poverty dynamics post-welfare reform and during a strong economy.(31)
The unit of analysis for defining poverty status is the SIPP household, not the SIPP family. A SIPP household consists of all persons who occupy a housing unit (including all unrelated persons), whereas a SIPP family is a group of two or more persons related by birth, marriage, or adoption who reside together. There are three main reasons for choosing the SIPP household over the SIPP family: (1) the SIPP household is similar to the “family” definition used in the PSID, in that the SIPP household includes cohabitors, whereas the SIPP family does not; (2) the SIPP household will provide us with a better understanding of the economic status of single parents, because it includes the income of a cohabiting partner; and (3) the SIPP household includes single-person households, whereas the SIPP family excludes them. The downsides of choosing the SIPP household, rather than the SIPP family, to define poverty include: (1) the SIPP household differs from the PSID family in that the SIPP household includes unrelated persons who share the housing unit; and (2) the SIPP household deviates from the “official poverty” definition, which is based on families.(32) While there are drawbacks to using the household rather than the family in the SIPP, we think the benefits of using the household outweigh the drawbacks.
A primary strength of the SIPP lies in its monthly data on income and household composition. These monthly data allow for detailed analyses of short poverty spells and the events that cause them. The SIPP also does a better job of capturing the current Hispanic and immigrant populations than the PSID. These populations may be particularly important in measuring poverty. Another advantage of the SIPP is that it has more recent data than the PSID, allowing us to look at changes through 1999—in the post-welfare reform period. Still, in contrast to the long panel length of the PSID, the SIPP can only track households for two to four years, making it impossible to examine long poverty spells.
As with the PSID, the longitudinal nature of the SIPP creates a concern of attrition bias. Research suggests that poorer persons are more likely to leave the SIPP sample prior to the end of the panel (Citro and Michael 1995, pp. 414-15). However, even with this limitation, the NAS Panel recommends that the SIPP replace the March CPS to become the official source of U.S. poverty statistics (Citro and Michael 1995, p. 391).
The monthly SIPP data make it possible to measure monthly poverty rates, but researchers must make some adjustments to the annual poverty thresholds to create a monthly poverty measure. Eller (1996) and Naifeh (1998) adjust poverty thresholds each month according to changes in the consumer price index.(33) Ruggles (1990), using the 1984 SIPP panel, divides the government’s annual poverty thresholds by twelve and compares it to income each month. We adopt the approach used by Ruggles.
Studies of welfare program dynamics (i.e., AFDC/TANF and food stamps) using SIPP data have been concerned with the “seam phenomenon”—transitions are more likely to occur between interview waves than months within the same wave—and have used wavely data rather than monthly data. Researchers using the SIPP to study poverty, however, have used monthly data (Ruggles 1990, Eller 1996, and Naifeh 1998). The seam phenomenon is of less concern when studying poverty status then program dynamics, as indicated by the NAS panel’s recommendation that the SIPP be used to study poverty in part because of its monthly income data. To avoid capturing arbitrary one month changes in poverty, we smooth poverty in the SIPP so that a household must remain in or out of poverty for two months before we consider it a change in poverty status. Similarly, Eller (1996) avoids arbitrary changes in poverty by focusing on poverty spells of two months or more. Overall, using both SIPP and PSID data allows us to examine poverty on both a monthly and annual basis, over the past two and a half decades, and since welfare reform.