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

84 Pages Posted: 14 Jul 2008

See all articles by Carol Propper

Carol Propper

Imperial College London Business School; Centre for Economic Policy Research (CEPR); University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO)

Date Written: July 1998

Abstract

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.

Suggested Citation

Propper, Carol, An Economic Model of Household Income Dynamics, with an Application to Poverty Dynamics Among American Women (July 1998). LSE STICERD Research Paper No. CASE009. Available at SSRN: https://ssrn.com/abstract=1158900

Carol Propper

Imperial College London Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

University of Bristol - Leverhulme Centre for Market and Public Organisation (CMPO) ( email )

12 Priory Road
Bristol BS8 1TN
United Kingdom

HOME PAGE: http://www.bris.ac.uk/Depts/Economics/department/profiles/propper.htm

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