Association for Public Policy Analysis & Management

Qualitative studies highlight the extent to which instability in housing, work and health impact the lives of families in poverty. Indeed, families at the lower end of the income distribution experience more income volatility than their higher-income counterparts. Although research has addressed the role of earnings instability and government transfers in contributing to or smoothing fluctuations in income, less is known about how other kinds of shocks shape income volatility and poverty experiences among low-income families.

This paper uses of the 2014 Survey of Income and Program Participation to estimate income volatility among families with incomes below 200% of poverty and to explore how different sources of instability – including changes in work hours or job loss, changes in program receipt, changes in household structure, housing and medical shocks – individually and cumulatively contribute to income volatility among families with annual income below 200% of poverty over a 24-month period. Further, it examines whether different triggers are associated with income volatility for families in deep poverty, in poverty and in near poverty. A clearer understanding the factors triggering income volatility may inform policies to address sources of instability in the lives of low-income families.