kind benefits raises the family's income above the adjusted poverty threshold (which is lower than the official threshold because of the housing cost adjustment).

The family with a working parent in a big New England city, Case 3, is not poor under the current measure but is poor under the proposed measure: subtracting such expenses as child care reduces the family's income below both the official threshold and the adjusted threshold. In contrast, the family in the rural upper Midwest, with a parent who works at a lower pay rate, Case 4, is poor under both the current measure and the proposed measure.

We also conducted an extensive analysis with the March 1993 Current Population Survey data files of poverty rates under the current measure and the proposed measure (see Chapter 5). To implement the proposed family resource definition with the March 1993 CPS, we performed imputations for such components as child care and out-of-pocket medical care expenses by using data from SIPP and the National Medical Expenditure Survey. We were able to take advantage of the Census Bureau's research and development program for other components, such as income and payroll taxes and nonmedical in-kind benefits.20 Although our data adjustments and imputations are not without problems, we believe the comparisons we obtained between gross money income and disposable money and near-money income for 1992 are reasonably accurate.21

Distributional Effects

We carried out one set of comparisons to illustrate the effects of the current and proposed measures on the characteristics of people who are poor, holding constant the poverty rate for the total population. For this exercise, we determined the two-adult/two-child family threshold that, together with the proposed threshold adjustments (including the use of a 0.75 scale economy factor) and the proposed family resource definition, gave the same 1992 poverty rate as the official rate, 14.5 percent. The total number of poor people was about the same as the official number of 36.9 million. (The official reference family threshold for 1992 was $14,228; the threshold that gave the same result with the proposed measure turned out to be $13,175, a number that is purely an artifact of the analysis.)

In this exercise, the proposed measure produces about the same number

20  

The only income component that we did not implement was an adjustment for child support payments. The March CPS lacks any information with which to determine who would most likely make such payments; this lack could be easily remedied by adding a question to the survey.

21  

We are grateful for the help we received from many agencies in obtaining the data with which to implement our proposed family resource definition with the March CPS (see Acknowledgments).



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