Reconciling income mobility and welfare persistence

• Elliott Fan, Chris Ryan
• Centre for Economics Policy Research

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01 August 2011In this paper, the authors provide evidence that reconciles the co-existence of high income mobility among people on low income and patterns of high persistence on income support among people whose income from government payments is low – both phenomena have been founded in different Australian studies. They find that these phenomena are evident in data from the Household, Income and Labour Dynamics in Australia (HILDA) survey, but that they reflect the experiences of different groups of individuals. These groups of individuals are around the same size. While there is considerable mobility in income from the lowest two deciles of household equivalised income, this mobility is greater for those not reliant on welfare for the majority of their income than for those who are. The non-welfare reliant individuals appear to have substantially different characteristics compared with those in the (more disadvantaged) welfare reliant group, being much younger, less likely to suffer from a long-term health condition, more likely to be full-time students and less likely to have been divorced than the welfare reliant group.