Income Trajectories Research Articles

Family income trajectories and early child development: A latent class growth analysis

Family income strongly influences child development. However, the impact of income trajectories on developmental outcomes is unclear. Using nationally representative data of children in poor and moderate income families and three relevant theoretical frameworks, the present study (a) empirically classified family income from 2001 to 2007 and (b) evaluated associations between derived income trajectories and kindergarten outcomes. Results identified four distinct family income trajectory profiles: stable adequate, low to adequate, stable low, and adequate to low. Most children were classified in the stable low trajectory (67%). Multiple regression results suggested children in the stable low trajectory demonstrated poorer kindergarten outcomes than children in more advantaged trajectories, and children who experience economic disadvantage early with later income growth display poorer reading outcomes than children who were economically advantaged initially and experience later income decline. Findings are discussed in the context of current dialogue about the nature of family poverty over time.

Linking Canadian Administrative Data: Income Trajectories, Residential and School Mobility, and Grade 3 Academic Achievement.

ObjectiveThe objective is to examine the association between trajectories of childhood residential and school mobility and academic achievement (literacy, numeracy) in Grade 3 using linked whole-population administrative data in Manitoba, Canada. Secondarily, we assessed childhood residential/school mobility based on neighbourhood income levels (moving in/out of low- or mid-/high-income neighbourhoods). ApproachThis retrospective cohort study used linkable, de-identified administrative data (health, education, national census, provincial survey) from the provincial Population Research Data Repository housed at the Manitoba Centre for Health Policy (MCHP). Among kindergarteners from 2005 to 2014 (n = 83,894), those not having continuous residency in Manitoba, valid education assessments, and relevant family-level covariates were excluded. We followed this eligible cohort from kindergarten to Grade 3 based on various neighbourhood income trajectories of residential and school mobility. To assess Grade 3 literacy and numeracy scores based on trajectories, log-binomial regression models were conducted using SAS® version 9.4. ResultsThe total cohort included 36,754 children; at the end of kindergarten, 14.2% resided in low-income neighbourhoods, and 84.8% lived in mid-/high-income neighbourhoods. Moving between two low-income neighborhoods between kindergarten to Grade 3 was associated with an increased risk of poor Grade 3 numeracy and literacy scores (numeracy aRR=1.39 [1.16,1.67]; literacy aRR=1.31 [1.08,1.59]). When moving between neighborhood income levels, the association was stronger for children moving into low-income neighbourhoods (e.g., mid-/high-income to low-income: numeracy aRR=1.41 [1.19,1.67]) than children moving into mid/high-income neighbourhoods (e.g., low-income to mid-/high-income: numeracy aRR=1.31 [1.08,1.59]). Changing schools between kindergarten and Grade 3 was also associated with poorer numeracy and literacy scores in Grade 3 (numeracy aRR=1.31 [1.22,1.40]; literacy aRR=1.34 [1.24,1.44]); however, the strength varied based on residential mobility patterns. ConclusionMoving homes/schools can differentially impact children’s educational attainment depending upon the income level of residing neighborhood(s). Stakeholders should recognize different levels of risks related to mobility and provide support accordingly to reduce the adverse impact. Support systems should be tailored to not only children but also families and neighbourhoods.

Early-Life Socioeconomic Disadvantage and Health in Late Middle-Age: Importance of Heterogeneous Income Trajectories.

This paper aims to investigate heterogeneous income changes and whether the income trajectories moderate effects of early socioeconomic disadvantage on health in late middle age. The sample was restricted to 9,056 middle-aged adults from the Health and Retirement Study (1998-2010). Through a latent class growth analysis, six patterns of income changes were identified: constantly low, constantly moderate, constantly high & increasing, high to low, moderate to high, and high to moderate. The Constantly low group more frequently displayed depressive symptoms if exposed to early socioeconomic disadvantage and Constantly low income mobility. Individuals who experienced early socioeconomic disadvantage and a downward income mobility in middle age tended to have multiple chronic conditions while there was no moderating effect of income changes for mobility functional limitations. These findings suggest that not all health outcomes are programmed in early life: Disadvantage can be somewhat alleviated through stable and better later-life economic status.

Intergenerational income mobility table revisited: A trajectory group perspective

There is a long history of studying intergenerational mobility using mobility tables or transition matrices. This approach has two potential limitations: each generation is typically divided into several equally sized income groups based on percentile ranking to create ad-hoc social classes or into predetermined broad occupational groups, and inter- and intragenerational changes in social class are not jointly analyzed. To address these limitations, we construct intergenerational income mobility tables using an alternative, group-based trajectory approach to determine the number of socioeconomic groups and characterize the development of social status over the course of individuals’ working lives. Using data from the Panel Study of Income Dynamics (1968–2017), we show intergenerational differences in income dynamics as each generation’s life-cycle profile unfolds. Specifically, parents and offspring who, based on their average household incomes, belong to different income strata may have similar working life-course income trajectory patterns. As a result, by focusing exclusively on the average income levels, studies using income quintiles for mobility tables may underestimate intergenerational income associations.

Regional differences in initial labour market conditions and dynamics in lifetime income trajectories.

We use longitudinal register data from Sweden to study patterns and dynamics in lifetime income trajectories. We examine divergences in these income trajectories by local economic conditions at labour market entry, in combination with other factors such as gender, education level and socio-economic background. We cannot assume that these relationships are constant over the course of individuals' working lives. Therefore, we use methods from functional data analysis, allowing for a time-varying relationship between income and the explanatory variables. Our results show a large degree of heterogeneity in how lifetime income trajectories develop for different subgroups. We find that, for men, entering the labour market in an urban area is associated with higher cumulative lifetime income, especially later in life. The exception is men with only primary education, for whom those starting their working lives in a large city have lower incomes on average. This divergence increases in size over time. Women who enter into a large urban labour market receive higher lifetime income at all education levels. This relationship is strongest for women with primary education but decreases in strength over time for these women.

The influence of low family income from birth to adolescence and adulthood on intelligence: Findings from two Brazilian birth cohorts

Research to date on the impact of income throughout the life course on intelligence is inconclusive due to limited evidence. We set out to examine whether two models of life course family income (family income trajectories and low family income at birth) predicted a lower subsequent intelligence quotient (IQ). Data from two Brazilian birth cohorts were used (1993 and 1982 Pelotas Birth Cohorts). In both cohorts, a clear gradient was observed in distribution of IQ scores by family income trajectories across the life course. Participants in the Stable low-income group had the lowest IQ scores. Low family income at birth had a direct negative effect on subsequent IQ in the 1993 and 1982 cohorts. Our findings provide new insights about the relationship between low family income and IQ in adolescence and adulthood.

Life-course income trajectories of men and women in Norway: implications for self-rated health in later life.

BackgroundSocioeconomic inequalities in health are well-established, but studies addressing lagged effects of income or of fluctuations in income over the life course are relatively rare. The current study aims to (i) identify and describe life-course income trajectories for men and women who are currently in later life; and (ii) assess the association of income trajectories with self-rated health in older adults.MethodsThe study sample consisted of 1625 men and 1634 women born between 1937 and 1955 who participated in the third wave of the Norwegian Life course, Ageing and Generation Study. Latent class growth analyses were used to estimate dominant income trajectories from ages 30 through 62 in men and women. Stepwise logistic regression analyses were specified to analyze the association of income trajectories with self-rated health in later life.ResultsFour trajectories in women and three trajectories in men were estimated as dominant patterns of income over the life course. Differences in the level of income were considerable at age 30 and accumulated over time. Continued exposure to low income showed statistically significant higher odds for poor self-rated health in older men and women. This association remained significant after taking differences in educational attainment, working life, family formation and accumulated wealth into account.ConclusionThe findings suggested remarkable rigidity in income groups that had formed by age 30. A significant share of men and women remain mired in relatively low-income status across the life course with negative implications for health in later life.

Life-Cycle Economic Returns to Educational Mobility in Denmark

Although most studies of the transition from school to work take a snapshot perspective in examining economic returns to education, such returns evolve over an individual’s lifetime. We empirically test a theoretical formulation derived from the cumulative advantage mechanism about enduring life-cycle effects of educational mobility on income. We analyse income trajectories for all Danes born in 1960–1961, and we consider how the welfare state may counteract certain mechanisms of intergenerational transmission that give children with college-educated parents better opportunities in the labour market. We find only small direct effects of parental college attainment on earnings trajectories after we control for offspring college attainment. Thus, schooling acts as a powerful and enduring economic leveller of family background effects in Denmark. Our analyses also show direct effects on trajectories in property income derived from wealth, suggesting that the welfare state has a harder time equalising income from wealth than from earnings.

Income Trajectories in Later Life: Longitudinal Evidence from the Health and Retirement Study.

We track low-income respondents in the longitudinal Health and Retirement Study for 23 years, to observe how their financial situations unfolded as they aged. We document that (a) real incomes remained relatively stable as individuals entered retirement and progressed through their later years; and (b) labor force participation declined and thus earnings became less important with age, while Social Security and retirement savings rose as a proportion of annual income. Low-income people near retirement also tended to fare poorly during retirement.

Managing Retirement Incomes

In this article we discuss the state of the literature relating to the decumulation of retirement wealth and the management of retirement incomes. On the one hand, life-cycle models that allow for strong bequest motives and for the effects of medical expense risks have been shown to be able to rationalize retirees’ wealth, income, and consumption trajectories. On the other, studies of individual asset choices and portfolio decisions seem to suggest low levels of financial literacy and engagement as well as non-negligible consequences of age-related cognitive decline on financial decision making. We argue that future work should try to reconcile these two sets of conflicting findings into a coherent and holistic evidence base to inform policy, because issues concerning the management of retirement incomes, and insurance against different risks in retirement more generally, will become increasingly important for future cohorts of retirees.

Scarred by Your Employer? The Effect of Employers’ Strategies on the Career Outcomes of Non-Standard Employment

In this article, we investigate how the strategies employers have for using non-standard employment – screening, workforce adaptability or cost reduction – affect the career outcomes of workers. To investigate this, we use multichannel sequence analysis to produce a typology of employment and income trajectories of workers with non-standard contracts in the Netherlands. The results show that workers starting employment in firms that use non-standard employment as a screening device are most likely to have careers with high levels of employment security. Strong scarring effects on the career are only found for workers who start employment in firms with cost reduction strategies.

Disability pension dynamics in early adulthood: A two-decade longitudinal study of educational, work and welfare-state trajectories in Norway

BackgroundSince the 1990's, structural transformations in the Norwegian economy have decreased employment opportunities for low-skilled young people lacking formal education credentials. In parallel with these economic changes, there has been a strong increase in the proportion of young disability pensioners. Preventing labour market exit requires a thorough understanding of the disability process. We aim to 1) identify the most typical trajectories into disability pension for young Norwegian inhabitants between 1993 and 2014 and 2) investigate if the trajectories and composition of young disability pensioners changed over time. MethodsUsing high-quality Norwegian registry data, we established two population-based cohorts of Norwegian inhabitants aged 29–39 years in either 2003 (cohort 1) or 2014 (cohort 2) who were not disability pensioners during the first month of their cohort period but had been granted a disability pension by the cohort end-date. Cohort 1 was followed from the beginning of 1993 through 2003, cohort 2 from 2004 through 2014. We used sequence and cluster analyses to identify typical disability pension trajectories and investigate how they changed overtime. ResultsThe majority follow trajectories characterised by little or no previous work participation. Both the trajectories and composition of young disability pensioners changed overtime. Between the two cohorts there was 1) a doubling in the probability of following 'precarious income trajectories', 2) a decrease in the probability of following ‘work and/or education trajectories’ and 3) an increase in the proportion of early school leavers. ConclusionCurrent initiatives such as the Norwegian Inclusive Workplace Agreement (IA) focus on preventing transitions from employment to disability benefits. However, such initiatives have little relevance for young disability pensioners as the majority have weak labour market attachment. Policymakers should therefore consider placing more emphasis on non-workplace interventions.

The Declining Pension Wealth of Employment for the Birth Cohorts 1935–1974 in Germany

Abstract Social inequality in the labor market leads to similarly unequal pension entitlements. From a life-course perspective, however, there are two components of inequality in the labor market: the degree of stability of employment until retirement, as well as the amount of gross income earned in periods of employment. The following analysis focuses on working-life and income trajectories of the birth cohorts 1935–1974 in East and West Germany until age 40. The results demonstrate a structural shift in the German labor market towards less stable employment in the first half of the working career. The labor market therefore offered increasingly less stable employment, with an especially stark negative trend for East Germans. Only West German women born after 1945 experienced a positive trend in employment stability. For employees of all birth cohorts, the analysis demonstrates that instability in the employment career has a strong negative effect on income and, subsequently, on pension wealth. The impact of income discrimination against those with less employment stability thus remained similar for the later-born despite the more widespread experience of employment interruptions.

Long‐term income trajectories and the evolution of political attitudes

AbstractIncome and political attitudes are powerfully correlated in cross‐sectional data, yet research based on panel data finds at most a weak correlation. In this paper, we examine this puzzling pattern by exploring the long‐term evolution of attitudes over the life cycle. We evaluate the predictions of five different explanations on the relationship between attitudes and income experiences. These explanations focus on, respectively: socialization, anticipation, myopic self‐interest, learning and status maximization. We employ accelerated longitudinal design models using data on core political values that span up to sixteen years from the British Household Panel Survey. Our findings reconcile the mixed evidence in the literature: the correlation between income and political attitudes, strong in cross‐sectional studies but weak in short panel studies, emerges because attitudes crystallize – slowly but systematically – as income evolves over the life cycle. This pattern is most consistent with the learning explanation.

Income trajectories and self-rated health status in the UK

In line with the wide recognition of the connection between socioeconomic status and health outcomes, attention in the recent literature is extending the static perspective to the dynamic implications of income on health. This study contributes to the growing literature on the income-health nexus by evaluating income dynamics on various self-rated health measures in the UK. We explore the impact of different indicators of income experiences on self-rated health and wellbeing outcomes using data from the 11 Waves of Understanding Society UK Household Longitudinal Study between 2009 and 2019. First, we estimate a fixed-effects ordered logit model for various health and wellbeing measures, allowing us to control for unobserved time-invariant heterogeneity. Second, we evaluate the effects of income trajectories by linking longitudinal household income to cross-sectional health outcomes. Our results confirm the general evidence of positive impacts of increasing family income on health. Besides, we find that stability in income position is strongly associated with improved health and wellbeing. On the other hand, income volatility increases the odds of reporting poor health outcomes, particularly for those in low-income households. Also, more years spent in a lower-income quartile reduces the odds of reporting improved self-rated health. Finally, the significant difference in the estimated effects of income before and after 2016 highlights the significant shifts in the effects of income trajectories on self-reported health and wellbeing following the National Living Wage policy implementation.

The Gender Pay Gap: Income Inequality Over Life Course - A Multilevel Analysis.

The gender pay gap has been observed for decades, and still exists. Due to a life course perspective, gender differences in income are analyzed over a period of 24 years. Therefore, this study aims to investigate income trajectories and the differences regarding men and women. Moreover, the study examines how human capital determinants, occupational positions and factors that accumulate disadvantages over time contribute to the explanation of the GPG in Germany. Therefore, this study aims to contribute to a better understanding of the GPG over the life course. The data are based on the German cohort study lidA (living at work), which links survey data individually with employment register data. Based on social security data, the income of men and women over time are analyzed using a multilevel analysis. The results show that the GPG exists in Germany over the life course: men have a higher daily average income per year than women. In addition, the income developments of men rise more sharply than those of women over time. Moreover, even after controlling for factors potentially explaining the GPG like education, work experience, occupational status or unemployment episodes the GPG persists. Concluding, further research is required that covers additional factors like individual behavior or information about the labor market structure for a better understanding of the GPG.

Long-Term Dynamics of Poverty Transitions in India

I use a stochastic model to explore the dynamics of poverty in India from 1952 to 2006 and find that temporal transitions into and out of poverty are common. Model outcomes suggest that transitions out of poverty outnumber transitions into poverty in recent times, but that there is still a nontrivial proportion of individuals transitioning annually into poverty, highlighting the economic fragility of those near the poverty line. There is also a marked persistence of poverty over time, and although this has been slowly declining, past poverty remains a good predictor of current poverty. Particularly concerning in this context are the income trajectories of those in the bottom decile of the income distribution for whom escape from poverty appears infeasible given extant income dynamics. Finally, the dynamics suggest that transitional and persistent poverty are distinct phenomena that require distinct policy responses involving both missing markets and state action.

Longitudinal patterns in cohort income inequality, income instability, and income trajectories of a US cohort on the cusp of retirement

Abstract Previous research has shown that the course of income inequality of a US cohort in retirement depends on the inequality measure used. For example, the variance of logarithmic income, a bottom sensitive measure, displays a decidedly declining trend. This study examines the mechanisms that underlie these income inequality changes as a cohort enters their retirement years using longitudinal data over a 20-year period and a variety of methods. In particular, individual income trajectories and income instability just before and in retirement are investigated. The results show (i) the variance of logarithmic income falls as the cohort ages primarily due to a reduction in income instability; (ii) on average, the rich and poor get poorer as they age into retirement; and (iii) consistent with previous research, a person’s place in the retirement income distribution is largely determined before retirement.

Growth in Syria: losses from the war and potential recovery in the aftermath

ABSTRACT This paper addresses three questions: (1) what would have been the growth and income trajectory of Syria in the absence of war; (2) given the war, what explains the reduction in economic growth; and (3) what potential growth scenarios for Syria there could be in the aftermath of war. Conflict impact estimates point to negative GDP growth of −12% on average over 2011–2018, with output contracting to about one-third of the 2010 level. In post-conflict simulation scenarios, the growth drivers are affected by the assumed levels of reconstruction assistance, repatriation of refugees, and productivity improvements associated with three political settlement outcomes: a baseline (Sochi-plus) moderate scenario, an optimistic (robust political settlement) scenario, and a pessimistic (de facto balance of power) scenario. Respectively for these scenarios, GDP per capita average growth in the next two decades is projected to be 6.1%, 8.2%, or 3.1%, assuming a final and stable resolution of the conflict.

Extending the Kitagawa–Oaxaca–Blinder decomposition approach to panel data

The Kitagawa–Oaxaca–Blinder decomposition approach has been widely used to attribute group-level differences in an outcome to differences in endowment, coefficients, and their interactions. The method has been implemented for Stata in the popular oaxaca command for cross-sectional analyses. In recent decades, however, research questions have been more often focused on the decomposition of group-based differences in change over time, for example, diverging income trajectories, as well as decomposition of change in differences between groups, for example, change in the gender pay gap over time. We review five existing methods for the decomposition of changes in group means and contribute an extension that takes an interventionist perspective suitable for applications with a clear before–after comparison. These decompositions of levels and changes over time can be implemented using the xtoaxaca command, which works as a postestimation command for different regression commands in Stata. It is built to maximize flexibility in modeling and implements all decomposition techniques presented in this article.