Five Decades of Consumption and Income Poverty

No 14827, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper examines poverty in the United States from 1960 through 2005. We investigate how poverty rates and poverty gaps have changed over time, explore how these trends differ across family types, contrast these trends for several different income and consumption measures of poverty, and consider explanations for the differences in trends. We document sharp differences, particularly in recent years, between different income poverty measures, and between income and consumption poverty rates and gaps. Moving from the official pre-tax money income measure to a disposable income measure that incorporates taxes and transfers has a substantial effect on poverty rate changes over the past two decades. Furthermore, consumption poverty rates often indicate large declines, even in recent years when income poverty rates have risen. We show that bias in the CPI-U has a sizable effect on changes in poverty. Between the early 1960s and 2005, an income poverty measure that corrects for bias in this price index declines by 14 percentage points more than a comparable measure based on the CPI-U. The patterns are very different across family types, with consumption poverty falling much faster than income poverty for single parents and the elderly, but more slowly for married couples with children. Income and consumption measures of deep poverty and poverty gaps have generally moved sharply in opposite directions in the last two decades with income deep poverty and poverty gaps rising, but consumption deep poverty and poverty gaps falling. While relative poverty rose in the early 1980s, changes in relative poverty have been fairly small since 1990. We examine the role that demographics, taxes, and transfers play in explaining changes in poverty over the past three decades. We also consider whether measurement error, saving and dissaving, and other explanations can account for income and consumption differences.

JEL-codes: D12 I32 (search for similar items in EconPapers)
Date: 2009-03
New Economics Papers: this item is included in nep-cba
Note: CH LS PE
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (42)

Published as “Consumption and Income Poverty in the U.S.” (with James X. Sullivan) in The Oxford Handbook of the Economics of Poverty, edited by Philip N. Jefferson, 2012, 49-74.

Downloads: (external link)
http://www.nber.org/papers/w14827.pdf (application/pdf)

Related works:
Working Paper: Five Decades of Consumption and Income Poverty (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:14827

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w14827

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().