Household economic instability: Constructs, measurement, and implications

A growing body of research demonstrates the multiple dimensions and dynamism of family income and employment. The metrics of household economic instability and their associations with household characteristics and hardship require further examination in order to compare across studies, subgroups, and historical periods. This paper empirically examines and compares commonly used measures of income and employment instability, how these measures inter-relate, vary by household characteristics, and how they predict household hardship. Using longitudinal data from the 2008 panel of the Survey of Income and Program Participation (SIPP), and focusing on households with children, this study examined a range of descriptive measures of economic instability, including in income, earnings, public assistance benefits, and employment status, and how these measures related to each other. Results indicate that overall rates of income and employment instability were high, particularly among less-educated families, those with young children, and those who did not own a home. Economic instability, particularly decreases in employment, was associated with increased household hardship three months later. Findings also show that the source of income included in the instability measure affects the patterns identified and conclusions drawn, whereas the specific type of measure used matters less. Results highlight the instability of public assistance benefits and suggest that safety net programs must take economic instability into account when designing programs and benefits.