Patterns of Income Instability Among Low‐ and Middle‐Income Households with Children

• Author: Sharon Wolf,Heather D. Hill,Lisa A. Gennetian,Pamela A. Morris
• DOI: http://doi.org/10.1111/fare.12067
• Published date: 01 July 2014
• Date: 01 July 2014

SHARON WOLF New York University

LISA A. GENNETIAN New York University∗

PAMELA A. MORRIS New York University∗∗

HEATHER D. HILL University of Chicago∗∗∗

Patterns of Income Instability Among Low-

and Middle-Income Households with Children

Concern about the effects of income and child

poverty in the United States has spurred decades

of research documenting the relationships

between income level, family functioning, and

children’s development. Using data from the

Survey of Income and Program Participation,

this study expands on this knowledge base

by considering patterns of income change

among low- and middle-income households

with children, a population often targeted by

social policies and one of growing vulnerability.

A household-centered growth curve analysis

first identified statistically significant variation

in intrayear household income level over the

period of the study. Cluster analysis was

then used to distinguish between groups of

households according to their distinct patterns of

Steinhardt School of Culture, Education and Human

Development, New York University, 246 Greene Street,

Fl 4E, New York, NY, USA 10003 (sharon.wolf@nyu.edu).

∗Institute for Human Development and Social Change, New

York University, 246 Greene Street, Fl 6E, New York, NY

10003.

∗∗Steinhardt School of Culture, Education and Human

Development, New York University, 246 Greene Street,

New York, NY, USA 10003.

∗∗∗School of Social Service Administration, University of

Chicago, 969 E. 60th St., Chicago, IL 60637.

Key Words: cluster analysis, household economics, income

instability.

income instability using measures of frequency,

magnitude, direction of income change, and

income level. This work begins to establish

a descriptive empirical evidence base of the

realities of household income dynamics that has

implications for future research, policy, and

practice.

The recent U.S. economic crisis has exposed

millions of households to volatile economic

circumstances triggered by job loss, reduced

work hours, falling home and investment values,

and cuts to social assistance programs. Several

studies have found that income instability has

grown in the United States over the last

few decades, particularly among low-income

households (Dynan, 2010; Dynan, Elmendorf, &

Sichel, 2008; Gottschalk & Moffitt, 2009; Keys,

2008; Leete & Bania, 2010; Newman, 2008).

For some households, these economic changes

are temporary income shocks from which they

will recover. For others, the insecurity of the

broader economy only exacerbates long-term or

persistent patterns of financial instability.

Early research on income and poverty pointed

to the importance of empirically assessing the

dynamic nature of individual and household

economic circumstances (Bane & Ellwood,

1986, 1996; Duncan, 1988; Stevens, 1994).

Yet outside of research that documents general

Family Relations 63 (July 2014): 397–410 397

DOI:10.1111/fare.12067