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Missing poor in the U.S

Author

Listed:
  • LEFEBVRE Mathieu,

    (BETA, Université de Strasbourg)

  • PESTIEAU Pierre,

    (Université de Liège, CORE, UCLouvain and Paris School of Economics)

  • PONTHIERE Gregory,

    (Université Paris 12, Paris School of Economics and Institut Universitaire de France)

Abstract

Given that poor individuals face worse survival conditions than non-poor individuals, one can expect that a steeper income/mortality gradient leads, through stronger income-based selection, to a lower poverty rate at the old age (i.e. the “missing poor” hypothesis). This paper uses U.S. state-level data on poverty at age 65+ and life expectancy by income levels to provide an empirical test of the missing poor hypothesis. Using air pollution as an instrument for mortality differentials, we show that instrument changes in mortality differentials have a negative and statistically significant effect on old-age proverty: A 1 % increase in the mortality differential implies a 9 % decrease in the 65+ headcount poverty rate. Using those regression results, we compute hypothetical old-age poverty rates while neutralizing the impact of the income/mortality gradient, and show that correcting for heterogeneity in income-based selection effects modifies the comparison of old-age poverty prevalence across states.

Suggested Citation

  • LEFEBVRE Mathieu, & PESTIEAU Pierre, & PONTHIERE Gregory,, 2019. "Missing poor in the U.S," LIDAM Discussion Papers CORE 2019005, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:2019005
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    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp2019.html
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    Keywords

    poverty; measurement; income/mortality gradient; selection biases; comparability;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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