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Heterogeneity Or True State Dependence In Poverty: The Tale Told By Twins

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  • WILLIAM NILSSON

Abstract

This study focuses on the persistence of poverty in Sweden. The purpose is to distinguish between two different reasons why poverty could persist on an individual level. By using a sample of identical twins, this study takes advantage of the similarity within pairs of twins to separate family specific heterogeneity from true state dependence, where the experience of poverty leads to a higher risk of future poverty. The results, based on a four variate probit model, show the importance of true state dependence in poverty. When using the information on whether an individual received social assistance as a measure of poverty, family specific heterogeneity explains between 24 and 31 percent of the poverty persistence in the sample.

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File URL: http://hdl.handle.net/10.1111/j.1475-4991.2011.00477.x
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Bibliographic Info

Article provided by International Association for Research in Income and Wealth in its journal Review of Income and Wealth.

Volume (Year): 58 (2012)
Issue (Month): 1 (03)
Pages: 1-23

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Handle: RePEc:bla:revinw:v:58:y:2012:i:1:p:1-23

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  1. Cappellari, Lorenzo & Jenkins, Stephen P., 2002. "Modelling Low Income Transitions," IZA Discussion Papers 504, Institute for the Study of Labor (IZA).
  2. repec:ese:iserwp:2002-08 is not listed on IDEAS
  3. Gunnar Isacsson, 2004. "Estimating the economic return to educational levels using data on twins," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(1), pages 99-119.
  4. Lorenzo Cappellari & Stephen P. Jenkins, 2003. "Multivariate probit regression using simulated maximum likelihood," United Kingdom Stata Users' Group Meetings 2003 10, Stata Users Group.
  5. Stephen P. Jenkins, 2000. "Modelling household income dynamics," Journal of Population Economics, Springer, vol. 13(4), pages 529-567.
  6. Jorgen Hansen & Magnus Lofstrom, 2003. "Immigrant Assimilation and Welfare Participation Do Immigrants Assimilate Into or Out of Welfare?," Journal of Human Resources, University of Wisconsin Press, vol. 38(1).
  7. Stewart, M.B. & Swaffield, J.K., 1997. "Low Pay Dynamics and Transition Probabilities," The Warwick Economics Research Paper Series (TWERPS) 495, University of Warwick, Department of Economics.
  8. Martin Biewen, 2004. "Measuring State Dependence in Individual Poverty Status: Are there Feedback Effects to Employment Decisions and Household Composition?," Discussion Papers of DIW Berlin 429, DIW Berlin, German Institute for Economic Research.
  9. repec:ese:iserwp:99-01 is not listed on IDEAS
  10. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Equivalence Scale Relativities and the Extent of Inequality and Poverty," Economic Journal, Royal Economic Society, vol. 102(414), pages 1067-82, September.
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Cited by:
  1. Sara Ayllón, 2013. "Understanding poverty persistence in Spain," SERIEs, Spanish Economic Association, vol. 4(2), pages 201-233, June.

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