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Poverty dynamics corrected for measurement error

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  • Richard Breen
  • Pasi Moisio
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    Abstract

    We use latent class models to correct measurement error in estimates of the dynamics of relative income poverty in ten EU countries measured over four waves of the European Community Household Panel. A latent mover-stayer Markov model gives an acceptable fit to all ten transition tables. We focus in more detail on four countries – Denmark, the Netherlands, Italy and the UK – and show that mobility in poverty transition tables is over-estimated by between 25 and 50 percent if measurement error is ignored. In addition, once error is corrected, poverty rates show less cross-national variation. Copyright Kluwer Academic Publishers 2004

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    File URL: http://hdl.handle.net/10.1007/s10888-004-3227-9
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    Bibliographic Info

    Article provided by Springer in its journal The Journal of Economic Inequality.

    Volume (Year): 2 (2004)
    Issue (Month): 3 (July)
    Pages: 171-191

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    Handle: RePEc:kap:jecinq:v:2:y:2004:i:3:p:171-191

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    Web page: http://springerlink.metapress.com/link.asp?id=111137

    Related research

    Keywords: income poverty; poverty dynamics; measurement error; latent class models;

    References

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    1. Mary Jo Bane & David T. Ellwood, 1986. "Slipping into and out of Poverty: The Dynamics of Spells," Journal of Human Resources, University of Wisconsin Press, vol. 21(1), pages 1-23.
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    Cited by:
    1. Francesco Devicienti & Valentina Gualtieri & Mariacristina Rossi, 2010. "The Dynamics and Persistence of Poverty: Evidence from Italy," Carlo Alberto Notebooks 173, Collegio Carlo Alberto.
    2. Donal O’Neill & Olive Sweetman & Dirk Van de gaer, 2007. "The effects of measurement error and omitted variables when using transition matrices to measure intergenerational mobility," Journal of Economic Inequality, Springer, vol. 5(2), pages 159-178, August.
    3. Johannes Gräb & Michael Grimm, 2007. "Robust Multiperiod Poverty Comparisons," Discussion Papers of DIW Berlin 725, DIW Berlin, German Institute for Economic Research.
    4. Riccardo Massari, 2005. "A Measure of Welfare Based on Permanent Income Hypothesis: An Application on Italian Households Budgets," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(1), pages 55-92, September.
    5. Markus Jantti & Stephen P. Jenkins, 2014. "Income Mobility," Working Papers 319, ECINEQ, Society for the Study of Economic Inequality.
    6. Celso Nunes, 2008. "Poverty Measurement: The Development of Different Approaches and Its Techniques," Working Papers 93, ECINEQ, Society for the Study of Economic Inequality.
    7. Donal O'Neill & Olive Sweetman, 2013. "Estimating Obesity Rates in Europe in the Presence of Self-Reporting Errors," Economics, Finance and Accounting Department Working Paper Series n236-13.pdf, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.
    8. Diana Worts & Amanda Sacker & Peggy McDonough, 2010. "Re-Assessing Poverty Dynamics and State Protections in Britain and the US: The Role of Measurement Error," Social Indicators Research, Springer, vol. 97(3), pages 419-438, July.
    9. Pérez-Mayo, Jesús, 2009. "Un análisis dinámico de la privación en España /A Dynamic Analysis of Deprivation for Spain," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 27, pages 501-522, Agosto.
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