This paper investigates measurement error biases in estimated poverty transition matrices. We compare transition matrices based on survey expenditure data to transition matrices based on measurement-error-free simulated expenditure. The simulation model uses estimates that correct for measurement error in expenditure. We find that time-varying measurement error in expenditure data magnifies economic mobility. Roughly 45% of households initially in poverty at time t ? 1 are found to be out of poverty at time t using data from the Korean Labor and Income Panel Study. When measurement error is removed, this drops to between 26 and 31% of households initially in poverty.
