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Poverty and the business cycle: A regional panel data analysis for Spain using alternative measures of unemployment

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  • Luis Ayala

    (Universidad Rey Juan Carlos and Equalitas)

  • Olga Cantó

    (Universidad de Alcalá and Equalitas)

  • Juan G. Rodríguez

    (Universidad Complutense de Madrid and Equalitas)

Abstract

Conventional wisdom predicts that changes in the aggregate unemployment rate may significantly affect a country’s income distribution and, consequently, have a relevant impact on the evolution of its poverty rate. However, the relationship between labour macroeconomic indicators and poverty seems to have become weaker recently. Using panel data on unemployment and poverty for Spanish regions, we estimate a system GMM model to model this relationship using alternative measures of the unemployment rate. We also test the hypothesis of asymmetric effects of the business cycle on the share of poor individuals in the population. Our results show that unemployment has a positive impact on severe poverty, while inflation has a negative effect. We also highlight the extent to which results differ when alternative intra-household unemployment distribution-sensitive measures are considered. Regarding the existence of asymmetric business cycle effects on severe poverty, our results show that despite the fact that the Great Recession has had a strong and positive effect on severe poverty, the effects of expansions and recessions on poverty are not significantly different.

Suggested Citation

  • Luis Ayala & Olga Cantó & Juan G. Rodríguez, 2017. "Poverty and the business cycle: A regional panel data analysis for Spain using alternative measures of unemployment," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(1), pages 47-73, March.
    • Handle: RePEc:kap:jecinq:v:15:y:2017:i:1:d:10.1007_s10888-016-9343-5
    DOI: 10.1007/s10888-016-9343-5
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    3. Răzvan Vintilescu Belciug, 2022. "Designing Anti-Cyclical Social Policies in Times of Economic Crisis," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(2), pages 471-477, Decembrie.
    4. Raquel Sebastian, 2022. "The labour market, income per capita and welfare in Europe: An overview of the last two decades," EKONOMIAZ. Revista vasca de Economía, Gobierno Vasco / Eusko Jaurlaritza / Basque Government, vol. 101(01), pages 158-183.
    5. Chiara Mussida & Dario Sciulli, 2023. "Being poor and being NEET in Europe: Are these two sides of the same coin?," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 21(2), pages 463-482, June.

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