National Academies Press: OpenBook

Measuring Poverty: A New Approach (1995)

Chapter: Other Work-Related Expenses

« Previous: Out-of-Pocket Medical Care Expenditures
Suggested Citation:"Other Work-Related Expenses." National Research Council. 1995. Measuring Poverty: A New Approach. Washington, DC: The National Academies Press. doi: 10.17226/4759.
Page 255

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EFFECTS OF THE PROPOSED POVERTY MEASURE 255 of-pocket medical expenditures on the basis of their characteristics and the computed probabilities from the NMES tabulations. If the family was assigned to have out-of-pocket medical expenditures, we devised an imputation procedure so that these families were assigned a level of expenditures consistent with the distribution of expenditures tabulated with their characteristics from the NMES. The object of this two-step procedure was to impute a set of medical expenditures that would reflect the entire distribution of expenditures and not to impute to all families the average level of expenditures consistent with their characteristics (see Betson, 1995). Child Care Expenses The March CPS does not contain any information on child care expenses, although it does have information on the number and age of children and employment status and weeks worked for the parents, which is needed for imputation purposes. We imputed child care expenses by using four regression equations from the 1990 SIPP panel. Two logit regressions estimated, respectively, the probability that a single parent who worked and a two-parent family in which both parents worked would pay for child care. Then, two ordinary-least-squares regressions estimated, for those single-parent and two- parent working families who paid for care, the total weekly amount. The single- parent working family equations included as independent variables the race of the head, the number of children of various ages, the region of residence, and the log of total family income. The two-parent working family equations included the same variables plus the proportion of family earnings accounted for by the earnings of the mother. (A number of model specifications were tested before deciding on these regression models.) For weekly child care amounts, the probability that a family would have paid for child care was computed using the estimated logit equations. On the basis of this probability, the family was randomly assigned either to have or to have not paid for child care. If the family was imputed to have paid for child care, the second estimated equation and the family's characteristics were used to predict an average amount of child care for the family. A random ''shock," whose standard deviation was derived from the standard error of the estimated equation, was then added to this average amount. This weekly amount was then multiplied by the number of weeks worked by the head of single-parent families or by the secondary worker of two-earner families. A cap was imposed so that the annual amount imputed could not exceed the earnings of the parent with the lower earnings or the value of the ceiling on eligible expenses for the dependent care tax credit of $2,400 per year for one child and $4,800 for two or more children. Other Work-Related Expenses The March CPS does not contain any information on work-related expenses,

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Each year's poverty figures are anxiously awaited by policymakers, analysts, and the media. Yet questions are increasing about the 30-year-old measure as social and economic conditions change.

In Measuring Poverty a distinguished panel provides policymakers with an up-to-date evaluation of:

  • Concepts and procedures for deriving the poverty threshold, including adjustments for different family circumstances.
  • Definitions of family resources.
  • Procedures for annual updates of poverty measures.

The volume explores specific issues underlying the poverty measure, analyzes the likely effects of any changes on poverty rates, and discusses the impact on eligibility for public benefits. In supporting its recommendations the panel provides insightful recognition of the political and social dimensions of this key economic indicator.

Measuring Poverty will be important to government officials, policy analysts, statisticians, economists, researchers, and others involved in virtually all poverty and social welfare issues.

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