Jenkins and Schluter 453
There is therefore a potential mismatch in timing between demographic events over the year t⫺1 to t and changes in annual income.
11
In particular the reference period for annual income for households surveyed in year t partially overlaps the
survey date at year t⫺1. As a result, authors such as Burkhauser et al. 1986, Burk- hauser et al. 1990, 1991, and DiPrete and McManus 2000, have taken events
measured between interviews at t⫺1 and t and compared them with annual household incomes at years t⫺1 and t⫹1. The problem with this convention is that calculations
of incomes at t⫹1 may be based on a different set of individuals than those present at t: there is substantial flux in household membership over time. Hence the income
change calculation may reflect this subsequent change rather than the trigger event of interest.
12
Observe too that trigger events relating to arrivals and departures of household members already have some impact on year t income, because household
incomes are calculated only for the individuals forming the household at the year t interview.
In our view, therefore, the appropriate choice of observation window width for income changes is not clear-cut and may depend on the particular event under con-
sideration. We considered income changes both between years t⫺1 and t and be- tween years t⫺1 and t⫹1. The largest differences between corresponding statistics
are likely to arise in the changes in poverty risks estimated to be associated with significant changes in household composition, as with a household split forming a
lone parent household. In this case, the immediate income change—typically a sharp fall—is likely to differ from the net change in circumstances over a longer period
during which eligibility for government transfers or child support is established. By contrast changes in income between t and t⫺1 are better matched with the
changes between t and t⫺1 in household labor earnings or the number of workers in the household—these variables have the same reference period, by construction.
V. Anglo-German Differences in Child Poverty Transition Rates
Before proceeding to the decomposition analysis, we summarize the cross-national differences in annual poverty exit and entry rates for children that are
to be examined. The poverty line is 60 percent of contemporary national median income. Table 1 displays the transition rates broken down by child’s household type
in the year prior to the potential transition. Also shown are the pooled cross-sectional poverty rates for each group.
The estimates in the first row of Table 1, for all children, are the basis of our earlier claim that child poverty exit rates are lower, and child poverty entry rates
11. This potential mismatch problem is endemic in panel comparisons based on annual income measures. An alternative would be to use current income measures income round about the time of the interview,
as there would then be a close correspondence between the income reference period and household compo- sition. Current income measures are not available for the full 1991–98 period for the GSOEP.
12. Of course these adjustments and subsequent ones and their associated income outcomes are also of interest, but that is a separate issue from the one addressed here—which concerns the income change
associated with a given trigger event. Whatever the case, income changes between t ⫺ 1 and t or between t ⫺ 1 and t ⫹ 1 are short-term changes rather than longer-term ones.
454 The Journal of Human Resources
Table 1 Annual Poverty Rates and Poverty Exit and Entry Rates for Children
pooled data, 1991–98
Percentage Percentage
Percentage Poor Exiting Poverty
Entering Poverty Western
Western Western
Child’s Household Type Britain
Germany Britain
Germany Britain
Germany All children
30.1 19.4
25.0 36.1
11.3 7.1
0.5 0.6
1.0 2.1
0.5 0.5
Lone-parent household 68.1
49.1 20.4
33.4 24.9
17.1 1.3
0.3 1.5
5.1 2.4
3.5 Married couple household
22.4 16.3
27.3 36.2
9.9 6.4
0.5 0.6
1.3 2.3
0.5 0.5
‘‘Other’’ household 46.4
33.3 27.1
51.2 23.1
16.7 2.6
3.6 4.1
7.9 3.2
5.0
Note: All cross-national differences in corresponding rates are statistically significant with p ⬍ 0.01, except for the differences in the entry rates for children in lone-parent households p ⫽ 0.07 and ‘‘other’’ house-
holds p ⫽ 0.28. Standard errors adjusted for the nonindependence of the incomes of multiple children per household are shown in parentheses. Transition rates calculated as the number of poverty transitions
between years t⫺1 and t, divided by the number of children at risk of a transition in year t⫺1 sample restricted to individuals who are children at years t⫺1 and t; child’s household type measured at t⫺1.
Poverty line ⫽ 60 percent of contemporary national median income.
are higher, in Britain than in Western Germany. Differences are statistically signifi- cant: see the table note.
13
The difference in exit rates 25 percent compared to 36 percent is much larger in absolute terms than the difference in entry rates 11 percent
compared to 7 percent, but in proportionate terms the differential is larger for the entry rate and larger than four-tenths in both cases.
The all-children differentials in transition rates are echoed when one considers children in each of the three household type subgroups separately. At the same time
there are some cross-national similarities. For example, in both Britain and Western Germany, children from lone parent households have below national average pov-
erty exit rates and above average poverty entry rates. Children from married couple households in both countries below average poverty entry rates poverty exit rates
are about average.
13. All estimates of standard errors of probabilities and rates account for the nonindependence of incomes that arises from having multiple children per household in each wave. We took no account of the complex
survey design in the BHPS and GSOEP but information is not available to do this in the same way for both surveys, nor did we account for repeated observations on the same child across waves in the pooled
analyses. For this reason, our estimates may be underestimates. Also we did not account for the sampling error associated with the poverty line itself. However Preston 1995 shows that this may lead to under-
or overestimates of the true standard error for the poverty rate. His simulations suggest that ignoring the endogeneity of the relative poverty line will be of little practical consequence in our case.
Jenkins and Schluter 455
VI. Trigger Events and Movements Out of Child Poverty
