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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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  1. Richard Blundell & Ian Preston, 1997. "Consumption, inequality and income uncertainty," IFS Working Papers, Institute for Fiscal Studies W97/15, Institute for Fiscal Studies.
  2. Townsend, Robert M, 1994. "Risk and Insurance in Village India," Econometrica, Econometric Society, Econometric Society, vol. 62(3), pages 539-91, May.
  3. Costas Meghir & Luigi Pistaferri, 2004. "Income Variance Dynamics and Heterogeneity," Econometrica, Econometric Society, Econometric Society, vol. 72(1), pages 1-32, 01.
  4. Deaton, Angus & Paxson, Christina, 1994. "Intertemporal Choice and Inequality," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 102(3), pages 437-67, June.
  5. 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.
  6. Ramos, Xavi & Schluter, Christian, 2006. "Subjective Income Expectations and Income Risk," IZA Discussion Papers 1950, Institute for the Study of Labor (IZA).
  7. 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.
  8. 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.
  9. Jappelli, Tullio & Pistaferri, Luigi, 2005. "Intertemporal choice and consumption mobility," CFS Working Paper Series 2005/28, Center for Financial Studies (CFS).
  10. Ligon, Ethan & Laura Schechter, 2002. "Measuring Vulnerability," Royal Economic Society Annual Conference 2002, Royal Economic Society 128, Royal Economic Society.
  11. Stephen P. Jenkins, 2000. "Modelling household income dynamics," Journal of Population Economics, Springer, vol. 13(4), pages 529-567.
  12. repec:ese:iserwp:99-25 is not listed on IDEAS
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Cited by:
  1. 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.
  2. Celidoni, Martina, 2011. "Vulnerability to poverty: An empirical comparison of alternative measures," MPRA Paper 33002, University Library of Munich, Germany.
  3. 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.

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