Changing Fortunes: Income Mobility and Poverty Dynamics in Britain. By Stephen P. Jenkins. Oxford University Press, Oxford. 2011. xx + 409 pp. £32.00.
Article first published online: 2 DEC 2013
© 2013 The London School of Economics and Political Science
Volume 81, Issue 321, pages 190–191, January 2014
How to Cite
Gustafsson, B. A. (2014), Changing Fortunes: Income Mobility and Poverty Dynamics in Britain. By Stephen P. Jenkins. Oxford University Press, Oxford. 2011. xx + 409 pp. £32.00. Economica, 81: 190–191. doi: 10.1111/ecca.12045
- Issue published online: 2 DEC 2013
- Article first published online: 2 DEC 2013
At the end of the 1960s, the Panel Study of Income Dynamics (PSID) was launched in the USA. This is a survey—still in use today—where information from individuals and the household in which they live is collected. The database has made it possible to address many new research questions and has also stimulated the development of new methods for statistical analysis. The PSID came to be influential for the construction of, for example, the German Socioeconomic Panel, which started in 1984, as well as the British Household Panel Survey (BHPS), a multipurpose survey at the University of Essex that began in 1991.
As the title indicates, Changing Fortunes focuses on income mobility and poverty dynamics in Britain, and summarizes research conducted by Stephen P. Jenkins based on the BHPS for more than a decade. While labour economists typically focus on how wages develop for workers in their mobility studies, the main concern in Jenkins’ book is broader; it is about mobility as the sum of all sources of income received by households, and individuals are followed over time. The book is also about poverty dynamics. It is built partly on material previously published in journals and book chapters, and succeeds very well in covering the existing literature as well as contributing to it.
Besides the introduction and summary chapters, the book comprises ten chapters dealing with varied subjects. The first part of the book discusses different measurement issues concerning studies of income distributions, particularly those using household income panels. Chapter 4 introduces the British Household Income Survey, which is the basis for the analysis presented in the subsequent seven chapters. In total, 18 waves of annual interviews were made. The last was completed in 2008, after which the panel became incorporated into the UK Household Longitudinal Study. For researchers used to registering data for Nordic countries, the BHPS has several advantages. A useful definition of the household unit and the information from respondents covers a wide spectrum of circumstances. Turning to disadvantages, however, not all persons sampled for the BHPS can be found, some are not willing to be interviewed, and others answer the first survey but not subsequent surveys. In addition, respondents might not accurately remember all sources of income that they have received. Making surveys is costly, and for this reason household income panels are not particularly large in terms of number of individuals and households, limiting the possibility to study smaller subgroups of the population.
The first empirical centrepiece of the book deals with income mobility, which can be viewed from different perspectives, and the reader learns that there are many concepts of income mobility. Chapter 5 shows that to a large extent, people change their positions in the income distribution. Inequality in long-term income is smaller, but not necessarily much smaller than in income computed over a shorter period. However, most income changes are actually relatively small. Chapter 6 adds another perspective on mobility by showing how longitudinal variability in income can be summarized using measures of transitory variation and volatility of income. In Chapter 7, ‘mobility’ refers to the fact that people have differently shaped income–age trajectories, and it analyses how income has developed over a 17-year period. Looking at data arranged in this way is similar to looking at cooked spaghetti, but patterns can be unravelled nonetheless.
The second empirical and analytical focus is poverty dynamics. Chapter 8 analyses poverty dynamics by describing entry rates, exit rates and re-entry rates, and length of poverty spells and length of re-entry spells—in other words, much that is dynamic about poverty when looked at from a longitudinal perspective. Chapter 9 studies the importance of events triggering movements into and out of poverty. Changes in household labour earnings are the events that account for the largest shares of poverty entries and exits for most groups in the population, with pensioners being an obvious exception. Chapter 10 analyses the length of time spent being poor by estimating hazard regression models. Most people starting a poverty spell are poor for only a short period and do not fall back into poverty for a long time. However, there is also a significant minority who live with long spells of poverty. Chapter 11 complements the analysis by estimating first-order Markov models.
The empirical results on income mobility and poverty dynamics in Britain are of large policy relevance. This book is highly recommended not only to new students, but also to experienced scholars in the field of income distribution and poverty. Any person who is thinking of or is already doing serious work on household income dynamics and poverty dynamics should read it.