New working paper by Dr. Bandyophadyay demonstrates differences between income vulnerability and poverty
A new research paper by Dr. Sanghamitra Bandyopadhyay (QMUL CGR) discusses the concept of “vulnerability” within the context of income mobility of the poor. The full paper, titled ‘The Vulnerable Are Not (Necessarily) the Poor’, can be found here. The abstract is shown below.
Abstract: in this paper I examine the concept of “vulnerability” within the context of income mobility of the poor. While the concept of poverty is well developed, the concept of vulnerability is less established in the economic literature. I test for the dynamics of vulnerable households in the UK using Waves 1 – 12 of the British Household Panel Survey and find that, of three different types of risks for which I test, household-specic shocks and economy-wide aggregate shocks have the greatest impact on consumption, in comparison to shocks to the income stream. I find vulnerable households up to at least 10 percentile points above the poverty line. Savings and earnings from a second job are not significantly associated with smoothing consumption of all vulnerable households. The results strongly indicate that income transfers and benefits assist the vulnerable in smoothing consumption. Thus, traditional poverty alleviating policies are not likely to assist the vulnerable.