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Poverty and social exclusion: two sides of the same coin or dynamically interrelated processes?

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Author Info
Francesco Devicienti
Ambra Poggi

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Abstract

There 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 first and second order Markov dynamics are examined. We estimate the model using the Italian sample of the 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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Publisher Info
Paper provided by LABORatorio R. Revelli, Centre for Employment Studies in its series LABORatorio R. Revelli Working Papers Series with number 62.

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Length: 42 pages
Date of creation: 2007
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Handle: RePEc:cca:wplabo:62

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Related research
Keywords: poverty dynamics; social exclusion; state dependence; dynamic bivariate probit model with random effects.;

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Find related papers by JEL classification:
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
C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models
C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Francesco Devicienti & Valentina Gualtieri, 2004. "Dinamiche e persistenza della povertà in Italia: Un’analisi con microdati panel di fonte ECHP," LABORatorio R. Revelli Working Papers Series 34, LABORatorio R. Revelli, Centre for Employment Studies. [Downloadable!]
  2. Satya R. Chakravarty & Conchita D'Ambrosio, 2006. "The Measurement Of Social Exclusion," Review of Income and Wealth, Blackwell Publishing, vol. 52(3), pages 377-398, 09. [Downloadable!] (restricted)
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  3. Tindara Addabbo, 2000. "Poverty Dynamics: Analysis of Household Incomes in Italy," LABOUR, CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd, vol. 14(1), pages 119-144, 03. [Downloadable!] (restricted)
  4. Alessie, Rob & Stefan Hochguertel & Arthur van Soest, 2002. "Ownership of Stocks and Mutual Funds: A Panel Data Analysis," Royal Economic Society Annual Conference 2002 3, Royal Economic Society. [Downloadable!]
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  5. Lorenzo Cappellari & Stephen P. Jenkins, 2004. "Modelling low income transitions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(5), pages 593-610. [Downloadable!]
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  6. Ambra Poggi, 2004. "Social exclusion mobility in Spain, 1994-2000," Working Papers wpdea0409, Department of Applied Economics at Universitat Autonoma of Barcelona. [Downloadable!]
  7. Joseph Deutsch & Jacques Silber, 2005. "Measuring Multidimensional Poverty: An Empirical Comparison Of Various Approaches," Review of Income and Wealth, Blackwell Publishing, vol. 51(1), pages 145-174, 03. [Downloadable!] (restricted)
  8. Walter Bossert & Conchita D'Ambrosio & Vito Peragine, 2007. "Deprivation and Social Exclusion," Economica, London School of Economics and Political Science, vol. 74(296), pages 777-803, November. [Downloadable!] (restricted)
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  9. Stephen P. Jenkins, 2000. "Modelling household income dynamics," Journal of Population Economics, Springer, vol. 13(4), pages 529-567. [Downloadable!] (restricted)
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