Measurement Error and Poverty Rates of Widows
AbstractEstimates of the poverty rate and of the probability of entering or exiting poverty are biased when income is observed with error. I estimate a variance components model of income which contains a white noise error term and then treat this component as an approximation of the error in observed income. By comparing poverty rates calculated with and without this estimated measurement error, I conclude that observation error causes the poverty rate to be overestimated around two percentage points on average. However, eliminating observation error substantially reduces the probability of transiting either into or out of poverty. These reductions imply that the amount of permanent poverty is underestimated when measurement error is ignored.
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Bibliographic InfoArticle provided by University of Wisconsin Press in its journal Journal of Human Resources.
Volume (Year): 30 (1995)
Issue (Month): 1 ()
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Web page: http://jhr.uwpress.org/
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- Cooper, D. & McCausland, W.D. & Theodossiou, I., 2006. "The health hazards of unemployment and poor education: The socioeconomic determinants of health duration in the European Union," Economics & Human Biology, Elsevier, vol. 4(3), pages 273-297, December.
- Nayoung Lee & Geert Ridder & John Strauss, 2010.
"Estimation of Poverty Transition Matrices with Noisy Data,"
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576, Department of Economics PUC-Rio (Brazil).
- John Strauss & Nayoung Lee & Geert Ridder, 2010. "Estimation of Poverty Transition Matrices with Noisy Data," Working Papers id:2796, eSocialSciences.
- David R. Weir & Robert J. Willis & Purvi A. Sevak, 2002. "The Economic Consequences of Widowhood," Working Papers wp023, University of Michigan, Michigan Retirement Research Center.
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