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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

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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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Paper provided by Centre for Analysis of Social Exclusion, LSE in its series CASE Papers with number /106.

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Date of creation: Jan 2006
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Handle: RePEc:cep:sticas:/106

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Related research
Keywords: poverty dynamics poverty transitions simultaneous hazards

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Find related papers by JEL classification:
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty

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References listed on IDEAS
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. 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. [Downloadable!] (restricted)
  2. 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. [Downloadable!]
  3. 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). [Downloadable!]
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  4. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March. [Downloadable!] (restricted)
  5. Lorenzo Cappellari & Stephen P. Jenkins, 2004. "Modelling Low Pay Transition Probabilities, Accounting for Panel Attrition, Non-Response, and Initial Conditions," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  6. Stevens, Ann Huff, 1994. "The Dynamics of Poverty Spells: Updating Bane and Ellwood," American Economic Review, American Economic Association, vol. 84(2), pages 34-37, May. [Downloadable!] (restricted)
  7. 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. [Downloadable!] (restricted)
  8. 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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  9. Ann Huff Stevens, 1995. "Climbing Out of Poverty, Falling Back In: Measuring the Persistence of Poverty over Multiple Spells," NBER Working Papers 5390, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. Richard Dickens & David Ellwood, 2001. "Whither Poverty in Great Britain and the United States? The Determinants of Changing Poverty and Whether Work Will Work," CEP Discussion Papers 0506, Centre for Economic Performance, LSE. [Downloadable!]
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  11. Simon Burgess & Carol Propper & Matt Dickson, 2006. "The analysis of poverty data with endogenous transitions," Fiscal Studies, Institute for Fiscal Studies, vol. 27(1), pages 75-98, March.
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  12. Lillard, L.A. & Waite, L.J., 1993. "A Joint Model of Marital Childbearing and Marital Disruption," Papers 93-02, RAND - Labor and Population Program.
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  13. Lillard, Lee A & Willis, Robert J, 1978. "Dynamic Aspects of Earning Mobility," Econometrica, Econometric Society, vol. 46(5), pages 985-1012, September. [Downloadable!] (restricted)
  14. 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. [Downloadable!] (restricted)
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  15. Stephen P. Jenkins, 2000. "Modelling household income dynamics," Journal of Population Economics, Springer, vol. 13(4), pages 529-567. [Downloadable!] (restricted)
  16. Arnstein Aassve & Simon Burgess & Matt Dickson & Carol Propper, 2004. "Employment, Family Union, and Childbearing Decisions in Great Britain," CASE Papers 084, Centre for Analysis of Social Exclusion, LSE. [Downloadable!]
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Cited by:
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  1. Michael Fertig & Marcus Tamm, 2007. "Always Poor or Never Poor and Nothing in Between? Duration of Child Poverty in Germany," Working Papers 59, ECINEQ, Society for the Study of Economic Inequality. [Downloadable!]
    Other versions:
  2. Jungho Kim & Arnstein Aassve, 2006. "Fertility and its Consequence on Family Labour Supply," IZA Discussion Papers 2162, Institute for the Study of Labor (IZA). [Downloadable!]
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