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The Determinants of Poverty Transitions in Europe and the Role of Duration Dependence

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  • Andriopoulou, Eirini

    ()
    (Athens University of Economics and Business)

  • Tsakloglou, Panos

    ()
    (Athens University of Economics and Business)

Abstract

The paper examines the mobility into and out of poverty and identifies the determinants of poverty spell beginnings and endings in 14 European Countries for the period 1994-2000, using the European Community Household Panel. The first part of the paper offers a snapshot of poverty mobility in Europe calculating the entry and exit poverty rates, along with the conditional, to the duration of spell, exit probabilities and re-entry rates to poverty. In the second part observed characteristics of the household and the household head are examined in order to identify the determinants of the transitions into and out of poverty, taking into account unobserved heterogeneity across individuals and duration dependence. Multivariate discrete hazard analysis is used and the duration dependence is captured with time dummies. In almost all the 14 EU Member-States examined, the probability of exiting (re-entering) poverty is inversely related to the duration of the poverty (non-poverty) spell. The effect is significant to the inclusion of variables capturing observed heterogeneity (socioeconomic characteristics of the household head and the household and particular employment and demographic events), as well as to the inclusion of a random effects factor capturing the unobserved heterogeneity across individuals. With regards to the socio-economic variables, in most countries, households headed by young or elderly individuals, as well as households with dependent children are in higher risk of staying longer in poverty. In many cases, event variables improve the model significantly and highlight the mechanisms that bring individuals into and out of poverty.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5692.

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Length: 41 pages
Date of creation: May 2011
Date of revision:
Handle: RePEc:iza:izadps:dp5692

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Keywords: poverty dynamics; EU;

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References

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  1. Duncan, Greg J, et al, 1993. "Poverty Dynamics in Eight Countries," Journal of Population Economics, Springer, vol. 6(3), pages 215-34.
  2. Pablo Antolín & Thai-Thanh Dang & Howard Oxley, 1999. "Poverty Dynamics in Four OECD Countries," OECD Economics Department Working Papers 212, OECD Publishing.
  3. Lorenzo Cappellari & Stephen P. Jenkins, 2002. "Modelling Low Income Transitions," Discussion Papers of DIW Berlin 288, DIW Berlin, German Institute for Economic Research.
  4. Arnstein Aassve & Simon Burgess & Matt Dickson & Carol Propper, 2005. "Modelling Poverty by not Modelling Poverty: An Application of a Simultaneous Hazards Approach to the UK," The Centre for Market and Public Organisation 05/134, Department of Economics, University of Bristol, UK.
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  11. Philippe Kerm, 2002. "How much low income turnover is there in Belgium?," Journal of Economics, Springer, vol. 77(1), pages 341-363, December.
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  16. Stephen P. Jenkins & Christian Schluter & Gert G. Wagner, 2001. "The Dynamics of Child Poverty: Britain and Germany Compared," Discussion Papers of DIW Berlin 233, DIW Berlin, German Institute for Economic Research.
  17. Olga Cantó, 2003. "Finding out the Routes to Escape Poverty: The Relevance of Demographic vs. Labor Market Events in Spain," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 49(4), pages 569-588, December.
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Citations

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Cited by:
  1. Stephen P Jenkins & Philippe Van Kerm, 2013. "The relationship between EU indicators of persistent and current poverty," CASE Papers /169, Centre for Analysis of Social Exclusion, LSE.
  2. Jenkins, Stephen P. & Van Kerm, Philippe, 2011. "Patterns of persistent poverty: evidence from EU-SILC," ISER Working Paper Series 2011-30, Institute for Social and Economic Research.
  3. repec:cep:sticas:case169 is not listed on IDEAS
  4. Sèna Kimm Gnangnon, 2012. "An analysis of duration dependence of government revenue expansions and contractions in Developing Countries," Working Papers halshs-00722083, HAL.

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