Poverty Transitions in Non-remote Indigenous Households The Role of Labour Market and Household Dynamics

Abstract

Using data from the HILDA Survey, this paper estimates year-to-year poverty entry and exit rates for Indigenous and non-Indigenous individuals living in non-remote areas of Australia. Indigenous Australians of working age have a higher probability of entering poverty and a lower probability of exiting than non-Indigenous people, suggesting that Indigenous poverty is likely to be more persistent and have a greater negative impact on well-being. Changes in household size trigger almost half of Indigenous poverty entries and 40% of exits. Indigenous people tend to live in more dynamic households than non-Indigenous people, and also have a greater likelihood of entering poverty and a smaller likelihood of exiting after experiencing changes in household size. The labour market also plays a prominent role in triggering poverty transitions for Indigenous people, while changes in private income, such as business and investment income, play a much smaller role, largely because Indigenous people get far less of their income from such sources.

JEL Codes: D19, J15, I32