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Poverty dynamics corrected for measurement error

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  • Richard Breen
  • Pasi Moisio

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

Suggested Citation

  • Richard Breen & Pasi Moisio, 2004. "Poverty dynamics corrected for measurement error," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 2(3), pages 171-191, July.
    • Handle: RePEc:kap:jecinq:v:2:y:2004:i:3:p:171-191
    DOI: 10.1007/s10888-004-3227-9
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    References listed on IDEAS

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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, 2014. "The Persistence Of Income Poverty And Lifestyle Deprivation: Evidence From Italy," Bulletin of Economic Research, Wiley Blackwell, vol. 66(3), pages 246-278, July.
    2. Pérez-Mayo, Jesús, 2009. "Un análisis dinámico de la privación en España /A Dynamic Analysis of Deprivation for Spain," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 27, pages 501-522, Agosto.
    3. Guglielmo D’Amico & Philippe Regnault, 2018. "Dynamic Measurement of Poverty: Modeling and Estimation," Sankhya B: The Indian Journal of Statistics, Springer;Indian Statistical Institute, vol. 80(2), pages 305-340, November.
    4. Johannes Gräb & Michael Grimm, 2007. "Robust Multiperiod Poverty Comparisons," Ibero America Institute for Econ. Research (IAI) Discussion Papers 160, Ibero-America Institute for Economic Research.
    5. Markus Jäntti & Stephen P. Jenkins, 2013. "Income Mobility," SOEPpapers on Multidisciplinary Panel Data Research 607, DIW Berlin, The German Socio-Economic Panel (SOEP).
    6. Christopher T. Whelan & Bertrand Maître, 2007. "The Dynamics of Economic Vulnerability: A Comparative European Analysis," Papers WP202, Economic and Social Research Institute (ESRI).
    7. Donal O'Neill & Olive Sweetman, 2013. "Estimating Obesity Rates in Europe in the Presence of Self-Reporting Errors," Economics Department Working Paper Series n236-13.pdf, Department of Economics, National University of Ireland - Maynooth.
    8. Arne Bigsten & Abebe Shimeles, 2011. "The persistence of urban poverty in Ethiopia: a tale of two measurements," Applied Economics Letters, Taylor & Francis Journals, vol. 18(9), pages 835-839.
    9. Stefan Angel & Richard Heuberger & Nadja Lamei, 2018. "Differences Between Household Income from Surveys and Registers and How These Affect the Poverty Headcount: Evidence from the Austrian SILC," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 138(2), pages 575-603, July.
    10. Celso Nunes, 2008. "Poverty Measurement: The Development of Different Approaches and Its Techniques," Working Papers 93, ECINEQ, Society for the Study of Economic Inequality.
    11. repec:dau:papers:123456789/4330 is not listed on IDEAS
    12. Francesco Devicienti & Valentina Gualtieri, 2007. "The Dynamics and Persistence of Poverty: Evidence from Italy," LABORatorio R. Revelli Working Papers Series 63, LABORatorio R. Revelli, Centre for Employment Studies.
    13. Alessio Fusco & Philippe Van Kerm, 2023. "Measuring poverty persistence," Chapters, in: Jacques Silber (ed.), Research Handbook on Measuring Poverty and Deprivation, chapter 18, pages 192-200, Edward Elgar Publishing.
    14. Sara AYLLÓN & Xavier RAMOS, 2019. "Youth earnings and labour market volatility in Europe," International Labour Review, International Labour Organization, vol. 158(1), pages 83-113, March.
    15. 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.
    16. 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," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 5(2), pages 159-178, August.
    17. Christopher Whelan & Bertrand Maître, 2006. "Comparing poverty and deprivation dynamics: Issues of reliability and validity," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(3), pages 303-323, December.
    18. 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: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 97(3), pages 419-438, July.
    19. Guglielmo D'Amico & Riccardo De Blasis & Philippe Regnault, 2020. "Confidence sets for dynamic poverty indexes," Papers 2006.06595, arXiv.org.

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