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Dynamics of Economic Well-Being: Moving Up and Down the Income Ladder, 1998 to 1999

Report Number P70-100
Wilfred T. Masumura and John J. Hisnanick
Component ID: #ti2145694272

From year to year, the financial well-being of most Americans changes. Summary measures, such as median income, reflect the overall net gain or loss in income, but do not indicate the amount of movement up and down the income ladder. This report focuses on the issue of movements within the income ladder using data that represent the civilian noninstitutionalized population of the United States as measured by the 1996 panel of the Survey of Income and Program Participation (SIPP).1 (See text box “SIPP—A Longitudinal Survey” for more information concerning SIPP.)

The measure of economic well-being used in this report is the income-to-poverty ratio—called the income ratio here—that is, the ratio of a person’s annual family income to the family’s poverty threshold.2 An income ratio of less than 1.0 indicates a person is in poverty, whereas an income ratio greater than 1.0 indicates that a person’s income is above the poverty threshold. Changes in this measure of well-being are due not only to increases or declines in income but also to changes in personal circumstances, such as changes in the number of workers in a household, marital and family status, and other elements of household composition. This report focuses on people for whom poverty status is defined. In the following discussion, people aged 15 and older is the unit of analysis, using their individual characteristics, or the characteristics of their family or household, as appropriate.

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1The data in this report were collected from April 1996 through March 2000 in the 1996 panel of the Survey of Income and Program Participation (SIPP). The population represented (population universe) is the civilian noninstitutionalized population living in the United States. This report is an update of previous reports—P70-65: “Dynamics of Economic Well-Being: Income, 1993 to1994, Moving Up and Down the Income Ladder,” July 1998; P70-56: “Dynamicsof Economic Well-Being: Income, 1992 to 1993, Moving Up and Down the Income Ladder,” June 1996; and P70-49: “Dynamics of Economic Well-Being: Income, 1991 to 1992,” August 1995. Due to the redesign of the 1996 SIPP panel, the reader should use caution in making comparisons between the 1996 SIPP panel and earlier SIPP panels.

2 Following the Office of Management and Budget’s (OMB) Statistical Policy Directive 14, the Census Bureau uses a set of money income thresholds that vary by family size and composition to determine who is in poverty. Guidelines are available at the following Census Bureau Web site: <www.census.gov/hhes/www/poverty.html>.

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