Missing Poor and Income Mobility

Mathieu Lefebvre (1) , Pierre Pestieau (2) , Grégory Ponthière (3)

1 CREPP - Center of Research in Public Economics and Population Economics
2 CORE - Center of Operation Research and Econometrics [Louvain]
3 PSE - Paris School of Economics

Higher mortality among the poor leads to selection biases in poverty measures. Whereas existing attempts to deal with the "missing poor" problem assume the absence of income mobility and assign to the prematurely dead a …ctitious income equal to the last income enjoyed, this paper relaxes that assumption in order to study the impact of income mobility on the size of the missing poor bias. We use data on poverty above age 60 in 12 countries from the EU-SILC database, and we compare standard poverty rates with the hypothetical poverty rates that would have pre- vailed if (i) all individuals, whatever their income, had enjoyed the same survival conditions (the ones of the highest income class), and if (ii) all individuals within the same income class had been subject to the same income mobility process. It is shown that taking income mobility into ac- count has adverse effects on corrected poverty measures across countries, and that it affects international comparisons in terms of old-age poverty.

Mots clés: poverty; measurement; mortality; missing poor; income mobility

Domaines: Economies et finances

Mathieu Lefebvre, Pierre Pestieau, Grégory Ponthière. Missing Poor and Income Mobility. 2017. ⟨halshs-01662808⟩