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Modelling Vulnerability in the UK

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  • Sanghamitra Bandyopadhyay
  • Frank A Cowell

Abstract

In this paper we examine the concept of "vulnerability" (Townsend 1994) within thecontext of income mobility of the poor. We test for the dynamics of vulnerablehouseholds in the UK using Waves 1 - 12 of the British Household Panel Survey andfind that, of three different types of risks that we test for, household-specific shocksand economy-wide aggregate shocks have the greatest impact on consumption, incomparison to shocks to the income stream. Quantile-specific estimates revealspecific quantiles, particularly those around the poverty line which are mostsusceptible to be vulnerable to shocks to the income stream. The estimates are foundto be robust to household composition and year-specific shocks.

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Bibliographic Info

Paper provided by Suntory and Toyota International Centres for Economics and Related Disciplines, LSE in its series STICERD - Distributional Analysis Research Programme Papers with number 89.

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Date of creation: Feb 2007
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Handle: RePEc:cep:stidar:89

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Web page: http://sticerd.lse.ac.uk/_new/publications/default.asp

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Keywords: income variability; vulnerability; income dynamics; BHPS;

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References

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  1. Ligon, Ethan & Schechter, Laura, 2002. "Measuring Vulnerability," 2002 Annual meeting, July 28-31, Long Beach, CA 19899, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Deaton, A. & Paxson, C., 1993. "Intertemporal Choice and Inequality," Papers 168, Princeton, Woodrow Wilson School - Development Studies.
  3. Tullio Jappelli & Luigi Pistaferri, 2006. "Intertemporal Choice and Consumption Mobility," Journal of the European Economic Association, MIT Press, vol. 4(1), pages 75-115, 03.
  4. Stephen P. Jenkins, 2000. "Modelling household income dynamics," Journal of Population Economics, Springer, vol. 13(4), pages 529-567.
  5. Townsend, R.M., 1991. "Risk and Insurance in Village India," University of Chicago - Economics Research Center 91-3, Chicago - Economics Research Center.
  6. Ramos, Xavi & Schluter, Christian, 2006. "Subjective Income Expectations and Income Risk," IZA Discussion Papers 1950, Institute for the Study of Labor (IZA).
  7. Amin, Sajeda & Rai, Ashok S. & Topa, Giorgio, 2003. "Does microcredit reach the poor and vulnerable? Evidence from northern Bangladesh," Journal of Development Economics, Elsevier, vol. 70(1), pages 59-82, February.
  8. Costas Meghir & Luigi Pistaferri, 2004. "Income Variance Dynamics and Heterogeneity," Econometrica, Econometric Society, vol. 72(1), pages 1-32, 01.
  9. Richard Blundell & Ian Preston, 1997. "Consumption, inequality and income uncertainty," IFS Working Papers W97/15, Institute for Fiscal Studies.
  10. Buhmann, Brigitte, et al, 1988. "Equivalence Scales, Well-Being, Inequality, and Poverty: Sensitivity Estimates across Ten Countries Using the Luxembourg Income Study (LIS) Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 115-42, June.
  11. repec:ese:iserwp:99-25 is not listed on IDEAS
  12. 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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Cited by:
  1. Sanghamitra Bandyopadhyay, 2012. "The Vulnerable Are Not (Necessarily) the Poor," Working Papers 40, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
  2. Celidoni, Martina, 2011. "Vulnerability to poverty: An empirical comparison of alternative measures," MPRA Paper 33002, University Library of Munich, Germany.
  3. Nicholas Rohde & Kam Ki Tang & Prasada Rao, 2011. "Income volatility and insecurity in the U.S., Germany and Britain," Discussion Papers Series 434, School of Economics, University of Queensland, Australia.

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