Slipping into and out of poverty: the dynamics of spells

This paper examines the dynamics of poverty. Previous analyses have examined either fluctuations in the male heads ' earnings or the frequency of poverty periods over a fixed time frame. Our approach depends on a definition of spells of poverty. Using this methodology we find that the majority of poor persons at any time are in the midst of a rather long spell of poverty. The methodology also allows us to estimate that less than 40 percent of poverty spells begin because of a drop in the heads ' earnings, while 60 percent of the spells end when the heads ' earnings increase. Thus, researchers must focus on household formation decisions and on the behavior of secondary family members. There has been a dramatic resurgence recently of discussion of the "underclass." The discussion is reminiscent of debates about poverty during the 1960s, when the notions of a "culture of poverty, " particularly as popularized by Michael Harrington's Other America (1962), dominated both intellectual and policy thinking. The idea of an underclass seems inconsistent, however, with much of the research on the dynamics of poverty during the 1970s. That research, using new longitudinal data, seemed to show that the bulk of the poor were poor for only a few years. The research also showed that the poor were a very heterogeneous group, including a small minority of persistently poor. The persistence of poverty is of interest both for understanding the phenomenon and for developing policy. Claims about dependency and separate life styles among the poor rest on assumptions about the long-term nature of poverty. Questions The authors are both associate professors at the John F. Kennedy School of Government, Harvar