Income Fluctuations and Firm Choice

How households shift spending across firms in response to income fluctuations is an important source of firm risk. Using transaction-level data, we study how households interact with the universe of retailers following income changes. We find that income increases within and across households result in substitution toward retailers in a category that are higher quality; smaller; more profitable; and have higher labor intensity, research and development (R&D) intensity, and equity betas. Although not all shifts are economically large, they do not average out across retailers. Thus, retailer choice has implications for key financial and macroeconomic outcomes, such as aggregate profitability and labor demand.

The overlap between income poverty and material deprivation: sensitivity evidence for Australia

Many studies have noted the low overlap between income poverty and material deprivation when the latter is derived using the consensual approach that builds on the work of Townsend. However, few have examined the contributing factors and even fewer have assessed the sensitivity of the overlap to different approaches and adjustments. This paper uses Australian data to examine the impact on the overlap of data adjustments and three substantive factors: short-run income fluctuations, housing costs and net wealth. The analysis shows that accounting for two of these factors leads to a marked increase in the overlap between poverty and deprivation.