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Modelling Poverty by not Modelling Poverty: An Application of a Simultaneous Hazards Approach to the UK

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Author Info

  • Arnstein Aassve
  • Simon Burgess
  • Matt Dickson
  • Carol Propper

    ()

Abstract

We pursue an economic approach to analysing poverty. This requires a focus on the variables that individuals can influence, such as forming or dissolving a union or having children. We argue that this indirect approach to modelling poverty is the right way to bring economic tools to bear on the issue. In our implementation of this approach, we focus on endogenous demographic and employment transitions as the driving forces behind changes in poverty. We construct a dataset covering event histories over a long window and estimate five simultaneous hazards with unrestricted correlated heterogeneity. The model fits the demographic and poverty data reasonably well. We investigate the important parameters and processes for differences in individuals’ poverty likelihood. Employment, and particularly employment of disadvantaged women with children, is important.

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Bibliographic Info

Paper provided by Department of Economics, University of Bristol, UK in its series The Centre for Market and Public Organisation with number 05/134.

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Length: 64 pages
Date of creation: Oct 2005
Date of revision:
Handle: RePEc:bri:cmpowp:05/134

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Keywords: poverty dynamics; poverty transitions; simultaneous hazards;

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References

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  1. Arnstein Aassve & Simon Burgess & Carol Propper & Matt Dickson, 2003. "Employment, family union, and childbearing decisions in Great Britain," MPIDR Working Papers WP-2003-027, Max Planck Institute for Demographic Research, Rostock, Germany.
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  3. Burtless, Gary, 1999. "Effects of growing wage disparities and changing family composition on the U.S. income distribution," European Economic Review, Elsevier, vol. 43(4-6), pages 853-865, April.
  4. Simon Burgess & Carol Propper & Matt Dickson, 2003. "The Analysis of Poverty Data with Endogenous Transitions," Bristol Economics Discussion Papers 03/543, Department of Economics, University of Bristol, UK.
  5. Peter Gottschalk & Sheldon Danziger, 2003. "Wage Inequality, Earnings Inequality and Poverty in the U.S. Over the Last Quarter of the Twentieth Century," Boston College Working Papers in Economics 560, Boston College Department of Economics.
  6. Burgess, Simon & Propper, Carol, 1998. "An Economic Model of Household Income Dynamics, with an Application to Poverty Dynamics among American Women," CEPR Discussion Papers 1830, C.E.P.R. Discussion Papers.
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  9. Biewen, Martin, 2004. "Measuring State Dependence in Individual Poverty Status: Are There Feedback Effects to Employment Decisions and Household Composition?," IZA Discussion Papers 1138, Institute for the Study of Labor (IZA).
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  13. Richard Dickens & David T. Ellwood, 2001. "Whither poverty in Great Britain and the United States? The determinants of changing poverty and whether work will work," LSE Research Online Documents on Economics 20109, London School of Economics and Political Science, LSE Library.
  14. Lorenzo Cappellari & Stephen P. Jenkins, 2004. "Modelling low income transitions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(5), pages 593-610.
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  17. Ann Huff Stevens, 1999. "Climbing out of Poverty, Falling Back in: Measuring the Persistence of Poverty Over Multiple Spells," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 557-588.
  18. Stephen P. Jenkins, 2000. "Modelling household income dynamics," Journal of Population Economics, Springer, vol. 13(4), pages 529-567.
  19. 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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  21. Lillard, Lee A., 1993. "Simultaneous equations for hazards : Marriage duration and fertility timing," Journal of Econometrics, Elsevier, vol. 56(1-2), pages 189-217, March.
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Citations

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Cited by:
  1. Michael Fertig & Marcus Tamm, 2007. "Always Poor or Never Poor and Nothing in Between? Duration of Child Poverty in Germany," RWI Discussion Papers 0056, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
  2. Martin Biewen, 2009. "Measuring state dependence in individual poverty histories when there is feedback to employment status and household composition," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(7), pages 1095-1116.
  3. Maes, Marjan, 2008. "poverty persistence among belgian elderly: true or spurious?," Working Papers 2008/10, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
  4. Sara Ayllón, 2013. "Understanding poverty persistence in Spain," SERIEs, Spanish Economic Association, vol. 4(2), pages 201-233, June.
  5. Andriopoulou, Eirini & Tsakloglou, Panagiotis, 2011. "The determinants of poverty transitions in Europe and the role of duration dependence," MPRA Paper 30659, University Library of Munich, Germany.
  6. Francesco Devicienti & Fernando Groisman & Ambra Poggi, 2009. "Informality and poverty: Are these processes dynamically interrelated? Evidence from Argentina," Working Papers 146, ECINEQ, Society for the Study of Economic Inequality.
  7. Marjan, MAES, 2008. "Poverty persistence among Belgian elderly in the transition from work to retirement : an empirical analysis," Discussion Papers (ECON - Département des Sciences Economiques) 2008042, Université catholique de Louvain, Département des Sciences Economiques.
  8. Francesco Devicienti & Valentina Gualtieri & Mariacristina Rossi, 2010. "The Dynamics and Persistence of Poverty: Evidence from Italy," Carlo Alberto Notebooks 173, Collegio Carlo Alberto.
  9. FUSCO Alessio & ISLAM Nizamul, 2012. "Understanding the drivers of low income transitions in Luxembourg," CEPS/INSTEAD Working Paper Series 2012-31, CEPS/INSTEAD.
  10. Polin, Veronica & Raitano, Michele, 2009. "Dimensione e dinamica della povertà nell’Unione Europea dopo l’allargamento: un’analisi comparata delle determinanti dei movimenti delle famiglie
    [Poverty and inequality dynamics in the enla
    ," MPRA Paper 25567, University Library of Munich, Germany.
  11. Kim, Jungho & Aassve, Arnstein, 2006. "Fertility and its Consequence on Family Labour Supply," IZA Discussion Papers 2162, Institute for the Study of Labor (IZA).
  12. Arranz, José Maria & Cantó, Olga, 2010. "Measuring the Effect of Spell Recurrence on Poverty Dynamics," Working Paper Series wp2010-72, World Institute for Development Economic Research (UNU-WIDER).

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