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Modelling State Dependence and Feedback Effects between Poverty, Employment and Parental Home Emancipation among European Youth

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  • Sara Ayllón

Abstract

Youth is one of the phases in the life-cycle when some of the most decisive life transitions take place. Entering the labour market or leaving parental home are events with important consequences for the economic well-being of young adults. In this paper, the interrelationship between employment, residential emancipation and poverty dynamics is studied for eight European countries by means of an econometric model with feedback effects. Results show that youth poverty genuine state dependence is positive and highly significant. Evidence proves there is a strong causal effect between poverty and leaving home in Scandinavian countries, however, time in economic hardship does not last long. In Southern Europe, instead, youth tend to leave their parental home much later in order to avoid falling into a poverty state that is more persistent. Past poverty has negative consequences on the likelihood of employment.

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Bibliographic Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 235.

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Length: 42 p.
Date of creation: 2009
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp235

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Keywords: Youth poverty dynamics; trivariate multinomial probit; state dependence; feedback effects; unobserved heterogeneity;

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References

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  1. Lorenzo Cappellari & Stephen P. Jemkins, 2002. "Who Stays Poor? Who Becomes Poor? Evidence from the British Household Panel Survey," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 112(478), pages C60-C67, March.
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  20. Wooldridge, Jeffrey M., 2000. "A framework for estimating dynamic, unobserved effects panel data models with possible feedback to future explanatory variables," Economics Letters, Elsevier, Elsevier, vol. 68(3), pages 245-250, September.
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  22. 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).
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Cited by:
  1. Carlos Gradín & Olga Cantó, 2009. "Why are child poverty rates so persistently high in Spain?," Working Papers, ECINEQ, Society for the Study of Economic Inequality 123, ECINEQ, Society for the Study of Economic Inequality.
  2. Pfeiffer, Friedhelm & Seiberlich, Ruben R., 2010. "A Socio-economic Analysis of Youth Disconnectedness," IZA Discussion Papers 4855, Institute for the Study of Labor (IZA).

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