|This centre is a member of The LSE Research Laboratory [RLAB]: CASE | CVER | CEP | SERC | STICERD||Cookies?|
Paper No' CASE 081: | Full paper
Save Reference as: BibTeX File | EndNote Import File
Keywords: income dynamics; life cycle, poverty
JEL Classification: D31; I32; J18
Is hard copy/paper copy available? YES - Paper Copy Still In Print.
This Paper is published under the following series: CASE Papers
Share this page: Google Bookmarks | Facebook | Twitter
Abstract:This paper argues that our understanding of income and poverty dynamics benefits from taking a life cycle perspective. A person¿s age and family circumstances ¿ the factors that shape their life cycle ¿ affect the likelihood of experiencing key life events, such as partnership formation, having children, or retirement; this in turn affects their probability of experiencing rising, falling, or other income trajectories. Using ten waves of the British Household Panel Survey, we analyse the income trajectories of people at different stages in their lives in order to build a picture of income dynamics over the whole life cycle. We find that particular life events are closely associated with either rising or falling trajectories, but that there is considerable heterogeneity in income trajectories following these different events. Typically, individuals experiencing one of these life events are around twice as likely to experience a particular income trajectory, but most individuals will not follow the trajectory most commonly associated with that life event. This work improves our understanding of the financial impact of different life events and provides an indication of how effectively the welfare state cushions people against the potentially adverse impact of certain events.
Copyright © RLAB & LSE 2003 - 2017 | LSE, Houghton Street, London WC2A 2AE | Contact: RLAB | Site updated 29 March 2017