Income Dynamics, Pro-Poor Mobility And Poverty Persistence Curves*

Abstract

This paper explores poverty income dynamics in the form of income mobility by the poor and poverty persistence, making use of simple diagrams. It seeks to illustrate (a) the extent to which income mobility is pro-poor; and (b) when mobility is associated with persistence below, or movement across, a povery line over a specified time period. While statistical measures can be used to examine detailed characteristics of income dynamics, two simple diagrams are shown to capture the extent of pro-poor mobility and poverty persistence respectively in ways that allow convenient comparisons. These are referred to as a ‘three I’s of mobility’ (or TIM) curve, and a ‘poverty persistence curve’, The curves are illustrated using anonymised Inland Revenue longitudinal individual income data for New Zealand over 2006-10.