Modelling Household Income Dynamics

This paper is about income and poverty dynamics and their socioeconomic correlates. The first half of the paper aims to establish some of the salient facts for Britain, applying the pioneering methods of Bane and Ellwood (1986). Important for poverty dynamics are changes in labor earnings from persons other than the household head, changes in non-labor income (including benefits), and changes in household composition, in addition to changes in the heads' labor earnings. The second half of the paper is a review and critique of the multivariate modelling frameworks which might be used to explain and forecast these salient facts for Britain or elsewhere