[Excerpt] This study presents the main results of a larger, more technical report (Fields and others 2001) and subsequent work (Fields and others 2002) that analyzes income mobility in Indonesia, South Africa, Spain, and Venezuela. These economies were selected on the basis of the availability of panel data with which to analyze household income dynamics in the 1990s. By following households over time, we are able to investigate how households that were poor initially fared economically, relative to their richer counterparts. We can learn more about how and why households exit—and enter—poverty.
To gauge income mobility, this study centers on the change in household per capita income over time, using two measures. Our first measure—a conventional one—gauges income changes in currency units. Our second measure, the change in log currency units, approximates the percentage changes in income. In this way, it arguably better reflects the reality of a poor household, in which a given change in income—whether an increase or a decrease—counts more than it does in a richer one.
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