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Who Are the Chronic Poor?: Evidence on the Extent and the Composition of Chronic Poverty in Germany

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  • Martin Biewen

Abstract

Based on a multiple spells approach, this paper studies the extent and the composition of chronic poverty in Germany. The results indicate that about one third of cross-sectional poverty in a given year is chronic. The characteristics that are most closely associated with long-term poverty are economic inactivity and pensioner status, while the number of children and the gender of the household head do not seem to have a systematic effect. This is in contrast to cross-sectional results where the biggest poverty risk is usually unemployment and a large number of children, while pensioners do not face particularly high poverty risks. Estimates from a multiple spells hazard model further suggest that 6% of the population have unobserved characteristics that lead to low poverty exit and high re-entry rates, making these individuals likely candidates for chronic poverty. A comparison with results for Great Britain and the United States suggests that poverty is less persistent in Germany.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.40456.de/dp350.pdf
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Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 350.

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Length: 31 p.
Date of creation: 2003
Date of revision:
Handle: RePEc:diw:diwwpp:dp350

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Keywords: chronic poverty; poverty persistence; multiple spells; unobserved heterogeneity;

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References

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  1. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, Econometric Society, vol. 52(2), pages 271-320, March.
  2. 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.
  3. Meghir, Costas & Whitehouse, Edward, 1997. "Labour market transitions and retirement of men in the UK," Journal of Econometrics, Elsevier, Elsevier, vol. 79(2), pages 327-354, August.
  4. Francesco Devicienti, 2011. "Estimating poverty persistence in Britain," Empirical Economics, Springer, Springer, vol. 40(3), pages 657-686, May.
  5. Martin Biewen, 2002. "The Covariance Structure of East and West German Incomes and its Implications for the Persistence of Poverty and Inequality," Discussion Papers of DIW Berlin 292, DIW Berlin, German Institute for Economic Research.
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Cited by:
  1. Fertig, Michael & Tamm, Marcus, 2007. "Always poor or never poor and nothing in between? Duration of child poverty in Germany," Technical Reports, Technische Universität Dortmund, Sonderforschungsbereich 475: Komplexitätsreduktion in multivariaten Datenstrukturen 2007,05, Technische Universität Dortmund, Sonderforschungsbereich 475: Komplexitätsreduktion in multivariaten Datenstrukturen.
  2. Jorgen Hansen & Roger Wahlberg, 2009. "Poverty and its persistence: a comparison of natives and immigrants in Sweden," Review of Economics of the Household, Springer, Springer, vol. 7(2), pages 105-132, June.
  3. Andriopoulou, Eirini & Tsakloglou, Panos, 2011. "The Determinants of Poverty Transitions in Europe and the Role of Duration Dependence," IZA Discussion Papers 5692, Institute for the Study of Labor (IZA).
  4. Islam, Nizamul & Shimeles, Abebe, 2007. "Poverty dynamics in Ethiopia: state dependence," Working Papers in Economics, University of Gothenburg, Department of Economics 260, University of Gothenburg, Department of Economics.
  5. Hansen, Jörgen & Wahlberg, Roger, 2004. "Poverty Persistence in Sweden," IZA Discussion Papers 1209, Institute for the Study of Labor (IZA).
  6. Ayşenur Acar & Cem Baslevent, 2013. "Examination of the transition of Turkish households into and out of poverty between 2007-2010," EcoMod2013 5779, EcoMod.
  7. repec:hal:journl:hal-00393322 is not listed on IDEAS
  8. Maes, Marjan, 2008. "poverty persistence among belgian elderly: true or spurious?," Working Papers, Hogeschool-Universiteit Brussel, Faculteit Economie en Management 2008/10, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
  9. Natalia Nehrebecka & Agata Kocia, 2009. "Analysis of poverty in Poland in 1997 - 2000 using hazard models," Working Papers, Faculty of Economic Sciences, University of Warsaw 2009-09, Faculty of Economic Sciences, University of Warsaw.
  10. Marjan, MAES, 2008. "Poverty persistence among Belgian elderly in the transition from work to retirement : an empirical analysis," Discussion Papers (ECON - Département des Sciences Economiques), Université catholique de Louvain, Département des Sciences Economiques 2008042, Université catholique de Louvain, Département des Sciences Economiques.

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