On The Empirical Finding Of A Higher Risk Of Poverty In Rural Areas: Is Rural Residence Endogenous To Poverty?
AbstractResearch shows households are more likely to be poor in rural versus urban America. Does this phenomenon partly reflect that people who choose rural residence have unmeasured attributes related to human impoverishment? To address this, two models are estimated using Panel Study of Income Dynamics data. A single equation Probit model of household poverty replicates the well-documented finding of higher poverty risk in rural places. However, a two-stage instrumental variables approach accounting for residential choice finds no measured effect of rural location on poverty. Results suggest failure to correct for endogenous rural residence leads to over-estimation of the "rural effect".
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Bibliographic InfoPaper provided by Oregon State University, Rural Poverty Research Center (RPRC) in its series Working Papers with number 18917.
Date of creation: 2004
Date of revision:
endogeneity; households; instrumental variables; poverty; rural; Food Security and Poverty;
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