The poverty balancing equation: Expressing poverty of place as a population process

Abstract

The measurement of poverty is essential for the development of effective poverty policy. Unfortunately, approaches using poverty rates to assess the causes and consequences of poverty do not fully capture the components of change in the poverty population. This is because changes in the conventional poverty rate can occur due to processes of natural increase, migration, or transitions in and out of poverty. This paper presents an accounting framework for changes in poverty within and between places. The framework, termed the poverty balancing equation, generates a series of summary statistics which can be used in place of the conventional poverty rate in future research. The approach is then demonstrated using the 2014 panel of the Survey of Income and Program Participation to generate state-level estimates of the poverty components of change for states in the American South between January and December of 2013. Results show that even when poverty rates remain constant, there is significant dynamism within poor and non-poor populations. By applying this approach, researchers can provide more specific and actionable evidence for poverty alleviation policy.