The Dynamics of Low Income and Persistent Poverty Among U.S. Families

Abstract

Are those in poverty likely to remain there or can they move out of this situation without help from other sources? Our understanding of those in or near poverty is primarily based upon the analysis of either annual income or the income distribution from cross-sectional survey data. It has been argued in the literature that this type of data can be misleading when faced with questions pertaining to transitions in and out of poverty. Studies of the persistence of poverty should focus on individuals and their families, in conjunction with labor market situations, in order to provide an insight into why the situation continues. Using the Survey of Income and Program Participation (SIPP) 1996 panel, it was possible to investigate low-income dynamics and to model family incomes for the years 1996-1999. This article provides a descriptive analysis that evaluates the lowincome dynamics of families and their exit and re-entry rates into low income. It also investigates family income and poverty experiences based upon a componentsof- variance model that identifies permanent and transitory factors and provides insight into low-income dynamics.