Poverty Amongst British Children: chronic or transitory?

We investigate the nature of child poverty in Britain, adding a longitudinal perspective to cross-sectional pictures such as provided by previous research. Using panel data from the British Household Panel Survey, we analyse poverty over a six year interval (1991-6). We provide information about how many times over this period each child or adult in our sample was poor. In addition, and the principal focus of our research, we provide information about the extent of chronic and transitory poverty. For this analysis, we use information about current incomes and smoothed income (the six-year average of each individual's current income) relative to the poverty line. Whichever longitudinal poverty concept we use, we find that children, especially very young children, have high poverty risks compared to other groups in the population. Since people's incomes typically vary from one year to the next, the observed (current income) poverty status for many people may not match with their chronic poverty status. Consequently policies aiming to reduce chronic poverty using means-tested benefits will be compromised if benefits are targeted using information about current incomes, as we demonstrate with a numerical illustration.