Poverty and social exclusion: two sides of the same coin or dynamically interrelated processes?
AbstractThere is growing interest in the analysis and measurement of social exclusion, to complement the static and dynamic literature on income poverty. On theoretical grounds, social exclusion and income poverty are seen as different processes, but with closely interrelated dynamics. However, our empirical understanding of the way these two processes dynamically interact at the individual level is still very limited. To shed some light on the issue, we use a dynamic bivariate probit model, controlling for unobserved heterogeneity and Wooldridge (2005)-type initial conditions. Both the first- and second-order Markov dynamics are examined. We estimate the model using the Italian sample of the European Community Household Panel (ECHP), waves 1-8, and find a sizable extent of state dependence in both poverty and social exclusion. Moreover, there are dynamic cross-effects implying that poverty and social exclusion are mutually reinforcing. Social policies aimed at eradicating poverty and avoiding individuals' social and economic marginalization should take these interaction effects explicitly into account.
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Bibliographic InfoArticle provided by Taylor and Francis Journals in its journal Applied Economics.
Volume (Year): 43 (2011)
Issue (Month): 25 ()
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Web page: http://www.tandf.co.uk/journals/routledge/00036846.html
Other versions of this item:
- Francesco Devicienti & Ambra Poggi, 2007. "Poverty and social exclusion: two sides of the same coin or dynamically interrelated processes?," LABORatorio R. Revelli Working Papers Series 62, LABORatorio R. Revelli, Centre for Employment Studies.
- I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty
- C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
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