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Poverty Persistence in Sweden

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Author Info

  • Hansen, Jörgen

    ()
    (Concordia University)

  • Wahlberg, Roger

    (University of Gothenburg)

Abstract

This paper analyzes the persistence of poverty in Sweden using a hazard rate model based on multiple spells. The model also accounts for unobserved heterogeneity and possibly endogenous initial conditions. We estimate the model on a large representative Swedish panel data set, LINDA, for the years 1991 to 2001. The data contains precise information on household disposable income obtained from individual tax files. Poverty is defined using information on annual minimum needs standards determined by the Swedish National Board of Health and Welfare. The data indicates that poverty rates are highest for immigrants, especially refugee immigrants, and for households with children. Further, poverty rates declined, both for natives and for immigrants, between 1991 and 2001, partly as a result of improved labor market conditions. The empirical results suggest that there is significant negative duration dependence in both exit and entry hazard rates. Moreover, the transition rates are significantly affected by immigrant status, educational attainment, labor market conditions, age, and family status. Accounting for multiple spells shows that for two-parent families with two children who are represented by a male person, 44 percent of native households that falls into poverty at any given point in time remain poor in five or more out of the next ten years. For refugee and non-refugee households, the figures are 62 percent and 50 percent, respectively.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1209.

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Length: 46 pages
Date of creation: Jul 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1209

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Keywords: unobserved heterogeneity; poverty persistence; duration dependence; multiple spells;

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References

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  1. Edin, Per-Anders & Fredriksson, Peter, 2000. "LINDA - Longitudinal INdividual DAta for Sweden," Working Paper Series 2000:19, Uppsala University, Department of Economics.
  2. 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.
  3. Ross Finnie & Arthur Sweetman, 2003. "Poverty dynamics: empirical evidence for Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 36(2), pages 291-325, May.
  4. Hansen, Jörgen & Löfström, Magnus, 2001. "The Dynamics of Immigrant Welfare and Labour Market Behaviour," CEPR Discussion Papers 3028, C.E.P.R. Discussion Papers.
  5. Lee A. Lillard & Robert J. Willis, 1976. "Dynamic Aspects of Earnings Mobility," NBER Working Papers 0150, National Bureau of Economic Research, Inc.
  6. Lorenzo Cappellari & Stephen P. Jemkins, 2002. "Who Stays Poor? Who Becomes Poor? Evidence from the British Household Panel Survey," Economic Journal, Royal Economic Society, vol. 112(478), pages C60-C67, March.
  7. Francesco Devicienti, 2001. "Estimating Poverty Persistence in Britain," LABORatorio R. Revelli Working Papers Series 1, LABORatorio R. Revelli, Centre for Employment Studies.
  8. Eberwein, Curtis & Ham, John C & LaLonde, Robert J, 1997. "The Impact of Being Offered and Receiving Classroom Training on the Employment Histories of Disadvantaged Women: Evidence from Experimental Data," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 655-82, October.
  9. Biewen, Martin, 2003. "Who Are the Chronic Poor? Evidence on the Extent and the Composition of Chronic Poverty in Germany," IZA Discussion Papers 779, Institute for the Study of Labor (IZA).
  10. Ham, John C & LaLonde, Robert J, 1996. "The Effect of Sample Selection and Initial Conditions in Duration Models: Evidence from Experimental Data on Training," Econometrica, Econometric Society, vol. 64(1), pages 175-205, January.
  11. 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.
  12. Stephen V. Cameron & James J. Heckman, 2001. "The Dynamics of Educational Attainment for Black, Hispanic, and White Males," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 455-499, June.
  13. 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.
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Citations

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Cited by:
  1. Glauben, Thomas & Herzfeld, Thomas & Wang, Xiaobing, 2006. "The Persistence of Poverty in Rural China: Applying an Ordered Probit and a Hazard Approach," 2006 Annual Meeting, August 12-18, 2006, Queensland, Australia 25249, International Association of Agricultural Economists.
  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. Francesco Devicienti, 2011. "Estimating poverty persistence in Britain," Empirical Economics, Springer, vol. 40(3), pages 657-686, May.
  4. Fertig, Michael & Tamm, Marcus, 2007. "Always Poor or Never Poor and Nothing in Between? Duration of Child Poverty in Germany," IZA Discussion Papers 2645, Institute for the Study of Labor (IZA).
  5. Francesco Devicienti & Fernando Groisman & Ambra Poggi, 2009. "Informality and poverty: Are these processes dynamically interrelated? Evidence from Argentina," Working Papers 146, ECINEQ, Society for the Study of Economic Inequality.
  6. Maes, Marjan, 2008. "poverty persistence among belgian elderly: true or spurious?," Working Papers 2008/10, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
  7. Natalia Nehrebecka & Agata Kocia, 2009. "Analysis of poverty in Poland in 1997 - 2000 using hazard models," Working Papers 2009-09, Faculty of Economic Sciences, University of Warsaw.
  8. Matthew Lindquist & Gabriella Sjögren Lindquist, 2012. "The dynamics of child poverty in Sweden," Journal of Population Economics, Springer, vol. 25(4), pages 1423-1450, October.
  9. Bigsten, Arne & Shimeles, Abebe, 2008. "Poverty Transition and Persistence in Ethiopia: 1994-2004," World Development, Elsevier, vol. 36(9), pages 1559-1584, September.
  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) 2008042, Université catholique de Louvain, Département des Sciences Economiques.
  11. Persson, Anna, 2011. "Earnings, income and poverty among welfare leavers in Sweden," Working Paper Series 2011:17, IFAU - Institute for Evaluation of Labour Market and Education Policy.

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