Chronic Poverty in the United States

Abstract

This paper proposes a method of measuring chronic and transitory poverty using an axiomatically sound, additively decomposable index of aggregate poverty. Our approach is contrasted with alternative methods of measuring poverty persistence. We use our method to measure chronic and transitory poverty in the United States during the 1980s and late 1970s and find that chronic poverty is a more serious problem than previously thought. Between the late 1970s and mid 1980s poverty not only increased, it became more chronic and less transitory in nature. This is true for the population as a whole and for some, but not all, of the subpopulations we considered. The latter were defined according to race, type of social unit, and educational qualifications of the head of the social unit. All empirical analyses are based on data from the Panel Study of Income Dynamics.