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Fluctuations and persistence in poverty: a transient-chronic decomposition model for pseudo-panel data

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Author Info
Rafael Perez Ribas (Cedeplar-UFMG)
Ana Flávia Machado (Cedeplar-UFMG)
André Braz Golgher (Cedeplar-UFMG)

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Abstract

Although many studies addressed poverty issues, very few of then did analyze the transient or persistent nature of this phenomenon. Encouraged by this lack of dynamic poverty analyses, the objective of this paper is to evaluate which features determine the relative position and the dynamics of the destitution state of the individual. Due to the scarcity of panel surveys in Brazil, it was used a pseudo-panel obtained from the Pesquisa Nacional por Amostra de Domicílios (PNAD/IBGE) database in this study. With these data, the state permanence and the state transience probabilities were estimated in a Markov matrix with the application of a bivariate probit model with endogenous switching for grouped data. It was chosen as the welfare indicator the per capita household income, which was analyzed in relation to a relative poverty line. Moreover, in order to verify the sensibility of the parameters estimated in the econometric analysis, distinct poverty lines were used and also different assumptions of household scale economies and of intrahousehold relative costs were made. The transient-chronic analysis is based on the distinction between stationary and transient components of intertemporal propensity to poverty. The results enabled to identify which groups in the population were especially sensitive to the chronic and to the transient types of poverty.

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Publisher Info
Paper provided by Cedeplar, Universidade Federal de Minas Gerais in its series Textos para Discussão Cedeplar-UFMG with number td290.

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Length: 34 pages
Date of creation: May 2006
Date of revision:
Handle: RePEc:cdp:texdis:td290

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Postal: Cedeplar-FACE-UFMG Av. Antonio Carlos, 6627 Belo Horizonte, MG 31270-901 Brazil

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Related research
Keywords: chronic poverty; transient poverty; state persistence; state transition; endogenous switching probit model; pseudo-panel; Brazil;

Find related papers by JEL classification:
C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models
C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty

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References listed on IDEAS
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