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In this paper, I examine the concept of ‘vulnerability’ within the context of income mobility of the poor. While the concept of poverty is well developed, the concept of vulnerability is less established in the economic literature. I test for the dynamics of vulnerable households in the United Kingdom using Waves 1–12 of the British Household Panel Survey and find that, of three different types of risks for which I test, household-specific shocks and economy-wide aggregate shocks have the greatest impact on consumption, in comparison to shocks to the income stream. I find vulnerable households up to at least 10 percentile points above the poverty line. Savings and earnings from a second job are not significantly associated with smoothing consumption of all vulnerable households. The results strongly indicate that income transfers and benefits assist the vulnerable in smoothing consumption. Thus, traditional poverty alleviating policies are not likely to assist the vulnerable.

In the case of ordered categorical data, the concepts of minimum and maximum inequality are not straightforward. In this chapter, the authors consider the Cowell and Flachaire (2017) indices of inequality. The authors show that the minimum and maximum inequality depend on preliminary choices made before using these indices, on status and the sensitivity parameter. Specifically, maximum inequality can be given by the distribution which is the most concentrated in the top or bottom category, or by the uniform distribution.

The relative bipolarisation literature features examples of indices which depend on the median of the distribution, including the renowned Foster–Wolfson index. This study shows that the use of the median in the design and computation of relative bipolarisation indices is both unnecessary and problematic. It is unnecessary because we can rely on existing well-behaved, median-independent indices. It is problematic because, as the study shows, median-dependent indices violate the basic transfer axioms of bipolarisation (defining spread and clustering properties), except when the median is unaffected by the transfers. The convenience of discarding the median from index computations is further illustrated with a numerical example in which median-independent indices rank distributions according to the basic transfer axioms while median-dependent indices do not.

Conditional cash transfers (CCT) have been adopted in many countries over the last two decades. Although the impacts of these programs have been studied extensively, understanding of the economic mechanisms through which cash and conditions affect household decisions remains incomplete. In particular, relatively little is known about the effects of these programs on intra-household allocation decisions. This chapter uses evidence from a program in Cambodia, where eligibility varied substantially among siblings in the same household, to illustrate these effects. A simple model of schooling decisions highlights three different effects of a child-specific CCT: an income effect, a substitution effect, and a displacement effect. The model predicts that such a CCT should unambiguously increase enrollment for eligible children, but have an ambiguous effect on ineligible siblings. The ambiguity arises from the interaction of a positive income effect with a negative displacement effect. These predictions are shown to be consistent with evidence from Cambodia, where the CESSP Scholarship Program (CSP) makes modest transfers, conditional on school enrollment for children of middle-school age. Scholarship recipients were more than 20 percentage points more likely to be enrolled in school, and 10 percentage points less likely to work for pay. However, the school enrollment and work of ineligible siblings was largely unaffected by the program. A possible fourth effect, operating through non-pecuniary spillovers of the intervention among siblings, remains largely outside the scope of the analysis, although there is some tentative evidence to suggest that it might also be at work.

Regional minimum income (RMI) schemes have been a fundamental tool for fighting poverty in Spain at a regional level. However, the redistributive power of these schemes has not been as effective as was expected in reducing inequality during the last decades. On the other hand, the introduction of the new ‘Minimum Vital Income’ (MVI) by the Spanish Central Government represents a novel measure for fighting poverty, by guaranteeing minimum incomes from a national perspective as a policy response to the asymmetric impact of the COVID-19 crisis upon income distribution. Using EUROMOD,¹ this paper simulates both the distributional effects of the introduction of the MVI and what the effects on inequality and poverty in each Spanish region would be if the national scheme were to substitute the current regional schemes. The results referring to MVI introduction indicate that inequality and poverty would decrease in all dimensions: incidence, intensity, and inequality among the poor (Foster–Greer–Thorbecke poverty measures). Additionally, the negative effects of RMI elimination would be offset by the positive effects of MVI introduction for most regions, leading us to consider that the simulated scenario entails better redistributive results, as well as additional savings for Spanish Public Accounts, in a context of growing debt. Our findings can provide public policy-makers with useful information about the convenience of fighting poverty at a national level as regards distribution and revenue.