In and Out of Poverty: Episodic Poverty and Income Volatility in the US Financial Diaries

Abstract

We use data from the U.S. Financial Diaries study to relate episodic poverty to intra-year income volatility and to the availability of government transfers. The U.S. Financial Diaries data track a continuous year's worth of month-to-month income for 235 low-and moderate-income households, each with at least one employed member, in four regions in the United States. The data provide an unusually granular view of household financial transactions, allowing the documentation of episodic poverty, and the attribution of a large share of it to fluctuations in earnings within jobs. For households with annual income greater than 150 percent of the poverty line, smoothing within-job income variability reduces the incidence of episodic poverty by roughly half. We decompose how month-to-month income volatility responds to receipt of eight types of public or private transfers. The transfers assist households mainly by raising the mean of income rather than by dampening intra-year income variability.

Family Policy and Complex Contemporary Families: A Decade in Review and Implications for the Next Decade of Research and Policy Practice

“…In addition to overall inconsistencies in the ways various family forms—and individuals therein—are treated for purposes of eligibility and benefit determination across programs, public policies are also ill equipped to provide responsive services to dynamic changes in family situations. It is well known that low‐income families regularly experience considerable instability and uncertainty in employment and income (Morduch & Siwicki, ), as well as living arrangements and family relationships (Kalil & Ryan, ), within relatively short time periods. Yet, applying for benefits or changing one's information is often a cumbersome process that may involve appearing in‐person and filling out paper forms—and, in the case of noncustodial parents with a child support order, sometimes reappearing in court (there is considerable variation across states in the extent to which child support modifications can be made via administrative versus court processes).…”

Debt, Incarceration, and Re-entry: a Scoping Review

“…Since the 1980s, low-income households in America have become disproportionately burdened by debt they cannot afford (Alpert & Hockett, 2018 ; Boshara, 2016 ; Zinman, 2015 ). This has been caused by an increasingly precarious and low wage labor market and a weakening social safety net (Atkinson, 2019 ; Freedman & Sherle, 2015 ; Kim, Wilmarth, & Henager, 2017 ; Morduch & Siwicki, 2017 ), resulting in demand for loans to cover basic needs and emergencies (Romich & Hill, 2017 ), a demand met by financial services deregulation enabling banks and other lenders to offer a wider range of costly loan products (Baradaran, 2013 ). Low-income households often have high-cost debt, for relatively small loan amounts from alternative financial services (AFS) providers, such as pawn shops, payday lenders, auto title lenders, tax refund anticipation lenders, or rent-to-own stores (Federal Deposit Insurance Corporation (FDIC), 2015 ), related to the historical and ongoing exclusion of the poor and minorities from mainstream financial institutions and services (Caskey, 1997 ).…”

Native American children and school readiness: A nationally representative study of individual and cumulative risks

“…This approach to measuring poverty was informed by literature that suggests family income levels fluctuate across early childhood (see Duncan, Yeung, Brooks-Gunn, & Smith, 1998;Wagmiller, Lennon, Kuang, Alberti, & Aber, 2006, for example). In fact, longitudinal data have shown household income volatility is common among Americans with incomes near the poverty line (Morduch, & Siwicki, 2017). These individuals may experience episodic poverty spells lasting anywhere from a month to multiple years (Bane & Ellwood, 1986;Morduch, & Siwicki, 2017;Stevens, 1999).…”

“…In fact, longitudinal data have shown household income volatility is common among Americans with incomes near the poverty line (Morduch, & Siwicki, 2017). These individuals may experience episodic poverty spells lasting anywhere from a month to multiple years (Bane & Ellwood, 1986;Morduch, & Siwicki, 2017;Stevens, 1999).…”