income dynamics
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2021 ◽  
pp. 1-29
Author(s):  
Justin Barnette

Abstract Income drops permanently after an involuntary job displacement, but it has never been clear what happens to long run wealth in the USA. Upon displacement, wealth falls 14% relative to workers of the same age and similar education from the Panel Study of Income Dynamics (PSID). Their wealth is still 18% lower 12 years after the event. A standard life cycle model calibrated to US data with permanent decreases in income after displacement behaves differently than these findings. The agents in the model also experience a large drop in wealth but they recover. The biggest culprit for these differences is small and statistically insignificant changes to consumption in the PSID whereas agents in the model decrease their consumption considerably. Extending the model to include habit formation reconciles some of these differences by generating similar long run effects on wealth. This allows for the examination of wealth at death through the lens of the model.


2021 ◽  
Vol 18 (6) ◽  
Author(s):  
Mduduzi Biyase ◽  
Bianca Fisher ◽  
Marinda Pretorius

Using all five waves of the National Income Dynamics Study (NIDS) panel dataset, we examine the effect of domestic remittances on the static and dynamic subjective well-being (SWB) of recipient individuals in South Africa, by using a random effects ordered probit model that accounts for individual heterogeneity. Moreover, we check the robustness of our static model results by making use of an instrumental variable for migrants’ remittances. Two major empirical findings emerge from this paper: firstly, domestic remittances are consistently found to have a positive and statistically significant impact on the happiness of recipient individuals. Moreover, this finding persists in both the static and dynamic panel models. Secondly, the coefficient on lagged SWB (derived from the dynamic model) is found to be positive and statistically significant, confirming that SWB today is significantly influenced by SWB in the past.


2021 ◽  
pp. 776-799
Author(s):  
Mark A. Collinson ◽  
Mduduzi Biyase

The chapter draws from two data sources to describe patterns and trends of internal migration and remittances in South Africa and explore what these mean for rural households. These are the National Income Dynamics Study (NIDS 2008–17) and the South African Population Research Infrastructure Network (2000–17). NIDS data show that at a national level there are high levels of non-resident household membership. As much as 24 per cent of African rural households have a non-resident member. This reflects temporary migration, especially of young adults. SAPRIN shows that temporary migration rates remain persistent over time, while definitive migration shows a gradual decline in incidence after 2003. Some temporary migrants send remittances, mostly of money, but also clothes and food. The study shows amounts averaging R1,100 per month from female migrants and R1,500 per month from male migrants in 2017. These can play a crucial role in food security for the poorest rural households and in improving human capital in better-off rural households. What has not been explored here are costs to the household of temporary migration, which help to explain why more households do not send temporary migrants. These include financial costs, but the main two areas of concern are health and social connection.


Demography ◽  
2021 ◽  
Author(s):  
Katherine Michelmore ◽  
Leonard M. Lopoo

Abstract Using data from the Panel Study of Income Dynamics, this study analyzes the effect of exposure to the Earned Income Tax Credit (EITC) in childhood on marriage and childbearing in early adulthood. Results suggest that EITC exposure in childhood leads women to delay marriage and first births in early adulthood (ages 16–25), but has no effect on men. A $1,000 increase in EITC exposure in childhood leads to a 2%–3% decline in a woman's likelihood of having a first birth and a comparable decline in her likelihood of marrying by her early 20s. We find similar reductions in fertility among Black and White women, though marriage declines are concentrated among White women. Results are focused on children growing up in the bottom half of the income distribution and those who spent the majority of childhood residing with a single parent—two groups that are the primary beneficiaries of the EITC. These findings have important implications for the well-being of individuals exposed to the EITC in childhood, as well as their future children.


2021 ◽  
Author(s):  
Steven N. Durlauf ◽  
Andros Kourtellos ◽  
Chih Ming Tan

This paper provides a synthesis of theoretical and empirical work on the Great Gatsby Curve, the positive empirical relationship between cross-section income inequality and persistence of income across generations. We present statistical models of income dynamics that mechanically give rise to the relationship between inequality and mobility. Five distinct classes of theories, including models on family investments, skills, social influences, political economy, and aspirations are developed, each providing a behavioral mechanism to explain the relationship. Finally, we review empirical studies that provide evidence of the curve for a range of contexts and socioeconomic outcomes as well as explore evidence on mechanisms. (Stone Center on Socio-Economic Inequality Working Paper)


Demography ◽  
2021 ◽  
Author(s):  
Linda Zhao ◽  
Philipp Hessel ◽  
Juli Simon Thomas ◽  
Jason Beckfield

Abstract This study contributes to the debate on whether income inequality is harmful for health by addressing several analytical weaknesses of previous studies. Using the Panel Study of Income Dynamics in combination with tract-level measures of income inequality in the United States, we estimate the effects of differential exposure to income inequality during three decades of the life course on mortality. Our study is among the first to consider the implications of income inequality within U.S. tracts for mortality using longitudinal and individual-level data. In addition, we improve upon prior work by accounting for the dynamic relationship between local areas and individuals' health, using marginal structural models to account for changes in exposure to local income inequality. In contrast to other studies that found no significant relation between income inequality and mortality, we find that recent exposure to higher local inequality predicts higher relative risk of mortality among individuals at ages 45 or older.


2021 ◽  
Vol 38 (02) ◽  
pp. 213-235
Author(s):  
ANAND SAHASRANAMAN

I use a stochastic model to explore the dynamics of poverty in India from 1952 to 2006 and find that temporal transitions into and out of poverty are common. Model outcomes suggest that transitions out of poverty outnumber transitions into poverty in recent times, but that there is still a nontrivial proportion of individuals transitioning annually into poverty, highlighting the economic fragility of those near the poverty line. There is also a marked persistence of poverty over time, and although this has been slowly declining, past poverty remains a good predictor of current poverty. Particularly concerning in this context are the income trajectories of those in the bottom decile of the income distribution for whom escape from poverty appears infeasible given extant income dynamics. Finally, the dynamics suggest that transitional and persistent poverty are distinct phenomena that require distinct policy responses involving both missing markets and state action.


2021 ◽  
pp. 102055
Author(s):  
Christian Zimpelmann ◽  
Hans-Martin von Gaudecker ◽  
Radost Holler ◽  
Lena Janys ◽  
Bettina Siflinger

Children ◽  
2021 ◽  
Vol 8 (9) ◽  
pp. 747
Author(s):  
Adam Schickedanz ◽  
José J. Escarce ◽  
Neal Halfon ◽  
Narayan Sastry ◽  
Paul J. Chung

Background: Adverse childhood experiences (ACEs) are stressful childhood events associated with behavioral, mental, and physical illness. Parent experiences of adversity may indicate a child’s adversity risk, but little evidence exists on intergenerational links between parents’ and children’s ACEs. This study examines these intergenerational ACE associations, as well as parent factors that mediate them. Methods: The Panel Study of Income Dynamics (PSID) 2013 Main Interview and the linked PSID Childhood Retrospective Circumstances Study collected parent and child ACE information. Parent scores on the Aggravation in Parenting Scale, Parent Disagreement Scale, and the Kessler-6 Scale of Emotional Distress were linked through the PSID 1997, 2002, and 2014 PSID Childhood Development Supplements. Multivariate linear and multinomial logistic regression models estimated adjusted associations between parent and child ACE scores. Results: Among 2205 parent-child dyads, children of parents with four or more ACEs had 3.25-fold (23.1% [95% CI 15.9–30.4] versus 7.1% [4.4–9.8], p-value 0.001) higher risk of experiencing four or more ACEs themselves, compared to children of parents without ACEs. Parent aggravation, disagreement, and emotional distress were partial mediators. Conclusions: Parents with higher ACE scores are far more likely to have children with higher ACEs. Addressing parenting stress, aggravation, and discord may interrupt intergenerational adversity cycles.


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