Chronic and Transitory Poverty over the Life Cycle

This study estimates chronic and transitory rates of poverty in Australia using the concept of permanent income and longitudinal data covering the period July 2001 through June 2007. We sketch a picture of chronic and transitory poverty over the life cycle by decomposing the poverty rate for the entire population into poverty rates for age categories that range from childhood, through adulthood, to old age. The measure of household income that underlies our poverty rates includes imputed rent on owner-occupied, public and rent-free housing, which has a large influence on measured poverty, particularly among older members of the population. We also document changes in chronic and transitory poverty from the period July 2001-June 2004 to the period July 2004-June 2007 and use a jack-knife procedure to test their statistical significance. JEL Classification: I320; I380; I390 1