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Once Poor, Always Poor? Do Initial Conditions Matter? Evidence from the ECHP

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  • Andriopoulou, Eirini

    ()
    (Athens University of Economics and Business)

  • Tsakloglou, Panos

    ()
    (Athens University of Economics and Business)

Abstract

The paper analyzes the effects of individual and household characteristics on current poverty status, while controlling for initial conditions, past poverty status and unobserved heterogeneity in 14 European Countries for the period 1994-2000, using the European Community Household Panel. The distinction between true state dependence and individual heterogeneity has very important policy implications, since if the former is the main cause of poverty it is of paramount importance to break the "vicious circle" of poverty using income-supporting social policies, whereas if it is the latter anti-poverty policies should focus primarily on education, training, development of personal skills and other labour market oriented policies. The empirical results are similar in qualitative but rather different in quantitative terms across EU countries. State dependence remains significant in all specifications, even after controlling for unobserved heterogeneity or when removing possible endogeneity bias.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 5971.

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Length: 27 pages
Date of creation: Sep 2011
Date of revision:
Handle: RePEc:iza:izadps:dp5971

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Keywords: poverty dynamics; EU; ECHP;

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Cited by:
  1. Carlos Gradín & Olga Cantó, 2009. "Why are child poverty rates so persistently high in Spain?," Working Papers 123, ECINEQ, Society for the Study of Economic Inequality.
  2. REINSTADLER Anne & RAY Jean-Claude, 2010. "Macro Determinants of Individual Income Poverty in 93 Regions of Europe," CEPS/INSTEAD Working Paper Series 2010-13, CEPS/INSTEAD.
  3. Magda, Iga & Bukowski, Maciej & Buchholz, Sonia & Lewandowski, Piotr & Chrostek, Paweł & Kamińska, Agnieszka & Lis, Maciej & Potoczna, Monika & Myck, Michał & Kundera, Michał & Oczkowska, Monika, 2013. "Employment in Poland 2011 - Poverty and jobs," MPRA Paper 50185, University Library of Munich, Germany.

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