Missing poor and income mobility

Abstract : Higher mortality among the poor prevents standard poverty measures from quantifying the actual extent of old-age poverty. Whereas existing attempts to deal with the ”missing poor” problem assume the absence of income mobility and assign to the prematurely dead a fictitious 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 prevailed if (i) all individuals, whatever their income, had enjoyed the same survival conditions, and if (ii) all individuals within the same income class had been subject to the same income mobility process. Taking income mobility into account has unequal effects on corrected poverty measures across countries, and, hence, affects international comparisons in terms of old-age poverty.
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Submitted on : Wednesday, April 10, 2019 - 1:21:20 PM
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Mathieu Lefebvre, Pierre Pestieau, Grégory Ponthière. Missing poor and income mobility. Journal of Comparative Economics, Elsevier, In press, ⟨10.1016/j.jce.2018.12.002⟩. ⟨halshs-02095333⟩

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