Poverty dynamics: measuring and preventing recurrence

The most visible and easily understood measure of poverty is its incidence: what percentage of Canadians, or any smaller group among Canadians, had incomes below a pre-established measure of poverty? For decades, policy makers and policy analysts have sought to go behind these numbers to ask other important questions.

For example, if the percentage of people living in low income is the same in one year as it was five years earlier, were the same people poor all that time? Some of the time? Briefly?  These questions have led analysts to use survey data to determine how many people entered and exited poverty, and how many years in a given period particular individuals or families were living in poverty. This measure is the persistence of poverty, one element of poverty dynamics.

At the same time, researchers and policy makers have had other questions: when people exit poverty do they return one year or three years or even five years later?  Do poor families escape poverty “for good”, or do they return again and again into poverty? In other words, do they cycle in and out of poverty over years and decades? If so, what causes their return to poverty, and what allows them to escape?

Instinct and qualitative data have told us that many do cycle in and out of poverty, and only some escape it and stay out of it.  In fact, some reports describe programs in terms of their likelihood of causing this cyclical effect, or recurrent poverty.  A recent Canadian example is a 2009 report from the Bissell Centre in Edmonton, called Scanning the Terrain: A discussion document for poverty elimination. Still, a quantitative measure of such recurrence has not yet emerged from Canadian data, making proposed selections educated guesses.

For this reason, publications released just last month by the Joseph Rowntree Foundation in the United Kingdom that address recurrent poverty are a welcome break-through.  One of these publication serves as a roundup of four more detailed research papers on cycling among poverty, low wages, and unemployment. A second publication provides detailed data analysis of family poverty and its recurrence, while a third relies more on survey and key informant data to analyze how parents can escape recurrent poverty.

Their findings are worth reading more closely, but they will not be surprising: changes in family structure, low-wage jobs and loss of employment led families into poverty repeatedly, and only the availability of both employment opportunities and child care, combined with the appropriate individual characteristics, made it possible to escape poverty in the longer term. The design of income security programs, it was determined could contribute either to cyclical poverty or to escape from the poverty trap.

In particular, the research showed the detrimental effects of requiring the depletion of assets before becoming eligible for social assistance and the benefits of permitting and even encouraging the building of assets among low-income households. For a recent plea in this direction in Canada, read John Stapleton’s recent CD Howe Institute e-brief, entitled “Down but Not Out: Reforming Social Assistance Rules that Punish the Poor for Saving,”

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