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Modelling poverty by not modelling poverty: an application of a simultaneous hazards approach to the UK

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Author Info

  • Arnstein Aassve
  • Simon Burgess
  • Matt Dickson
  • Carol Propper

Abstract

We pursue an economic approach to analysing poverty. This requires a focus on the variables that individuals can influence, such as forming or dissolving a union or having children. We argue that this indirect approach to modelling poverty is the right way to bring economic tools to bear on the issue. In our implementation of this approach, we focus on endogenous demographic and employment transitions as the driving forces behind changes in poverty. We construct a dataset covering event histories over a long window and estimate five simultaneous hazards with unrestricted correlated heterogeneity. The model fits the demographic and poverty data reasonably well. We investigate the important parameters and processes for differences in individuals’ poverty likelihood. Employment, and particularly employment of disadvantaged women with children, is important.

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File URL: http://eprints.lse.ac.uk/6243/
File Function: Open access version.
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 6243.

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Length: 70 pages
Date of creation: Jan 2006
Date of revision:
Handle: RePEc:ehl:lserod:6243

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Phone: +44 (020) 7405 7686
Web page: http://www.lse.ac.uk/
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Related research

Keywords: poverty dynamics; poverty transitions; simultaneous hazards;

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References

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  1. Richard Dickens & David T. Ellwood, 2001. "Whither poverty in Great Britain and the United States? The determinants of changing poverty and whether work will work," LSE Research Online Documents on Economics 20109, London School of Economics and Political Science, LSE Library.
  2. Lillard, L.A. & Waite, L.J., 1994. "A Joint Model of Marital Childbearing and Marital Disruption," Papers 94-16, RAND - Reprint Series.
  3. Dawn Upchurch & Lee Lillard & Constantijn Panis, 2002. "Nonmarital childbearing: Influences of education, marriage, and fertility," Demography, Springer, vol. 39(2), pages 311-329, May.
  4. Lillard, Lee A & Willis, Robert J, 1978. "Dynamic Aspects of Earning Mobility," Econometrica, Econometric Society, vol. 46(5), pages 985-1012, September.
  5. Cappellari, Lorenzo & Jenkins, Stephen P., 2002. "Modelling Low Income Transitions," IZA Discussion Papers 504, Institute for the Study of Labor (IZA).
  6. Richard Dickens & David Ellwood, 2001. "Whither Poverty in Great Britain and the United States? The Determinants of Changing Poverty and Whether Work Will Work," CEP Discussion Papers dp0506, Centre for Economic Performance, LSE.
  7. Arnstein Aassve & Simon Burgess & Carol Propper & Matt Dickson, 2006. "Employment, family union and childbearing decisions in Great Britain," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 169(4), pages 781-804.
  8. Simon Burgess & Carol Propper, 1998. "An Economic Model of Household Income Dynamics, with an Application to Poverty Dynamics among American Women," CASE Papers case09, Centre for Analysis of Social Exclusion, LSE.
  9. Ann Huff Stevens, 1995. "Climbing Out of Poverty, Falling Back In: Measuring the Persistence of Poverty over Multiple Spells," NBER Working Papers 5390, National Bureau of Economic Research, Inc.
  10. Peter Gottschalk & Sheldon Danziger, 2003. "Wage Inequality, Earnings Inequality and Poverty in the U.S. Over the Last Quarter of the Twentieth Century," Boston College Working Papers in Economics 560, Boston College Department of Economics.
  11. Lillard, Lee A., 1993. "Simultaneous equations for hazards : Marriage duration and fertility timing," Journal of Econometrics, Elsevier, vol. 56(1-2), pages 189-217, March.
  12. Martin Biewen, 2004. "Measuring State Dependence in Individual Poverty Status: Are there Feedback Effects to Employment Decisions and Household Composition?," Discussion Papers of DIW Berlin 429, DIW Berlin, German Institute for Economic Research.
  13. Stevens, Ann Huff, 1994. "The Dynamics of Poverty Spells: Updating Bane and Ellwood," American Economic Review, American Economic Association, vol. 84(2), pages 34-37, May.
  14. repec:ese:iserwp:96-19 is not listed on IDEAS
  15. Lorenzo Cappellari & Stephen P. Jenkins, 2004. "Modelling Low Pay Transition Probabilities, Accounting for Panel Attrition, Non-Response, and Initial Conditions," CESifo Working Paper Series 1232, CESifo Group Munich.
  16. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
  17. Burtless, Gary, 1999. "Effects of growing wage disparities and changing family composition on the U.S. income distribution," European Economic Review, Elsevier, vol. 43(4-6), pages 853-865, April.
  18. Simon Burgess & Carol Propper & Matt Dickson, 2006. "The analysis of poverty data with endogenous transitions," Fiscal Studies, Institute for Fiscal Studies, vol. 27(1), pages 75-98, March.
  19. 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.
  20. repec:ese:iserwp:97-19 is not listed on IDEAS
  21. Stephen P. Jenkins, 2000. "Modelling household income dynamics," Journal of Population Economics, Springer, vol. 13(4), pages 529-567.
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Citations

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Cited by:
  1. FUSCO Alessio & ISLAM Nizamul, 2012. "Understanding the drivers of low income transitions in Luxembourg," CEPS/INSTEAD Working Paper Series 2012-31, CEPS/INSTEAD.
  2. Eirini Andriopoulou & Panagiotis Tsakloglou, . "The determinants of poverty transitions in Europe and the role of duration dependence," DEOS Working Papers 1119, Athens University of Economics and Business.
  3. 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) 2008042, Université catholique de Louvain, Département des Sciences Economiques.
  4. Michael Fertig & Marcus Tamm, 2007. "Always Poor or Never Poor and Nothing in Between? Duration of Child Poverty in Germany," Working Papers 65, ECINEQ, Society for the Study of Economic Inequality.
  5. Polin, Veronica & Raitano, Michele, 2009. "Dimensione e dinamica della povertà nell’Unione Europea dopo l’allargamento: un’analisi comparata delle determinanti dei movimenti delle famiglie
    [Poverty and inequality dynamics in the enla
    ," MPRA Paper 25567, University Library of Munich, Germany.
  6. Martin Biewen, 2009. "Measuring state dependence in individual poverty histories when there is feedback to employment status and household composition," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(7), pages 1095-1116.
  7. repec:ese:iserwp:2008-24 is not listed on IDEAS
  8. Kim, Jungho & Aassve, Arnstein, 2006. "Fertility and its Consequence on Family Labour Supply," IZA Discussion Papers 2162, Institute for the Study of Labor (IZA).
  9. Sara Ayllón, 2013. "Understanding poverty persistence in Spain," SERIEs, Spanish Economic Association, vol. 4(2), pages 201-233, June.

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