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From the short view to the long view: Volatility and continuity John Hills, Centre for Analysis of Social Exclusion, LSE Longview Conference, Oxford, 21.

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Presentation on theme: "From the short view to the long view: Volatility and continuity John Hills, Centre for Analysis of Social Exclusion, LSE Longview Conference, Oxford, 21."— Presentation transcript:

1 From the short view to the long view: Volatility and continuity John Hills, Centre for Analysis of Social Exclusion, LSE Longview Conference, Oxford, 21 July 2006

2 Initial income group (tenths of individuals) in 1991 Percentage of each initial income group Ending up in each income group in 1992 Poorest Richest Poorest Richest BHPS data: Income mobility between 1991 and 1992

3 Initial income group (fifths of individuals) in 1991 Percentage of each initial income group ending up in each income group in 2001 Poorest234Richest Poorest Richest A longer view: Income mobility between 1991 and 2001

4 An even longer view: Parents incomes and daughters earnings, 1958 and 1970 cohorts Daughters earnings group (early 30s) Parents net income groupBottom quarterTop quarter (a) Daughters born 1958 Bottom quarter 2618 Top quarter 1835 (b) Daughters born 1970 Bottom quarter 3315 Top quarter 1340 Source: Blanden et al.

5 But what underlies these snapshots? CASE/ NatCen income tracking project: survey of weekly incomes of low- to medium income working families with children for whole of (sample drawn from WFTC recipients in winter 2002/3) Selected to give mix: lone parents/couples; 1-3 children; 1-2 earners; tenants/owners; higher/lower WFTC 192 agreed to take part; 180 started income reporting;129 still in survey after six months; 110 still in at end of year; 93 records complete enough to use in this analysis No evidence of significant bias in attrition by initial characteristics, nor by variability in first part of year (for those completing six-month interview). However, where partnerships split or formed respondents tended to drop out.

6 Example case with regular weekly income

7 Example case with changing circumstances

8 Stable with blips

9 Highly erratic cases

10 Trajectory types Cases Highly stable (± 10% x 13)7 Stable (± 10% x 11 + ; ± 20% x 1-2)8 Broadly stable (± 15% x 11 + ; ± 25% x 1-2)13 Stable with blips (± 15% x 10)32 Rising4 Falling3 Erratic (± 25% x 10)18 Highly erratic (all other cases)8

11 Distribution of period income as percentage of cases annual average income

12 Income changes depending on length of income periods compared

13 Income changes using different pairs of periods

14 Implications for measuring income mobility: There may be a lot of noise! For this group of low to middle earners with children, income was (surprisingly?) variable over the year. Checks with administrative data suggests most of this was genuine, not a result of reporting lapses. Short-term volatility was greatest for those with lower incomes For measuring changes in income receipts, choice of periods compared can make a very large difference However, what people report as normal or usual income may be less variable – under examination And although this involved a large number of weekly income reports, it was a small number drawn from a particular population: other population groups may have less (or more?) volatility


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