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Measuring State Dependence in Individual Poverty Status : Are there Feedback Effects to Employment Decisions and Household Composition?

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Author Info
Martin Biewen

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Abstract

Using a sample of prime-aged men from the German Socio-Economic Panel (GSOEP), this paper examines the effects of past poverty experience on future poverty status, future employment status and household composition. The empirical results suggest that even after controlling for observed and unobserved characteristics, past poverty experience increases the poverty risk of future periods. Moreover, there is evidence that experiencing poverty has a negative effect on future employment behaviour and on household cohesion. Apart from its economic significance, the existence of such feedback effects is interesting from an econometric point of view, as they represent a violation of the strict exogeneity assumption, which is usually invoked in estimating dynamic qualitative response models with unobserved heterogeneity.

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Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 429.

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Length: 27 p.
Date of creation: 2004
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Handle: RePEc:diw:diwwpp:dp429

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Related research
Keywords: Poverty persistence Dynamic binary response models Correlated random effects Initital conditions Strict exogeneity

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Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty
J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

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  4. Muhleisen, Martin & Zimmermann, Klaus F., 1994. "A panel analysis of job changes and unemployment," European Economic Review, Elsevier, vol. 38(3-4), pages 793-801, April. [Downloadable!] (restricted)
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  7. 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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Cited by:
(explanations, 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. Gianni Amisano & Maria Letizia Giorgetti, . "The Dynamics of Firms' Entry and Diversification: A Bayesian Panel Probit Approach. A Cross-country analysis," Working Papers ubs0408, University of Brescia, Department of Economics. [Downloadable!]
  2. repec:ese:iserwp: is not listed on IDEAS
  3. Gianni Amisano & Maria Letizia Giorgetti, 2005. "Entry in Pharmaceutical submarkets: A Bayesian Panel Probit Approach," Working Papers ubs0511, University of Brescia, Department of Economics. [Downloadable!]
  4. Nilsson, William, 2005. "Equality of Opportunity, Heterogeneity and Poverty," UmeÃ¥ Economic Studies 652, Umeå University, Department of Economics. [Downloadable!]
  5. Nilsson, William, 2005. "Heterogeneity or True State Dependence in Poverty - The tale told by twins," UmeÃ¥ Economic Studies 650, Umeå University, Department of Economics. [Downloadable!]
  6. Bettina Peters, 2005. "Persistence of Innovation: Stylised Facts and Panel Data Evidence," Development and Comp Systems 0511021, EconWPA. [Downloadable!]
    Other versions:
  7. Arnstein Aassve & Simon Burgess & Matt Dickson & Carol Propper, 2006. "Modelling poverty by not modelling poverty: An application of a simultaneous hazards approach to the UK," CASE Papers /106, Centre for Analysis of Social Exclusion, LSE. [Downloadable!]
    Other versions:
  8. Brenda Gannon, 2005. "A dynamic analysis of disability and labour force participation in Ireland 1995-2000," Health Economics, John Wiley & Sons, Ltd., vol. 14(9), pages 925-938. [Downloadable!]
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