Using panel data for the Netherlands, Germany and the UK for seven years in the late 1980s and early 1990s the paper examines the comparative evidence on longitudinal income and persistent poverty for the three countries. Elaborating on the existing methodological literature of income dynamics, a panel regression model has been estimated to arrive at population wide estimates of the population in persitent and transitory poverty in a comparative perspective. What the model actually pursues is to disentangle income over time in a permanent and transitory part. The idea behind the approach is that what really matters for people’s welfare in the long run is their permanentincome. The basic assumption is that people have a kind of latent long-term income-toneeds level from which occasional departures are possible due to temporary income shortfalls or income surpluses associated with the occurrence of events such as(un)employment, disability or illness, overtime work or working time reductions. According to this framework, poverty can be seen as a state in which permanent income falls below a predefined threshold being the long-term poverty line. The approach can therefore be helpful in estimating the size of the population in persistent poverty. When appropriate variables are added to the empirical model, it is possible to monitor the effect of socio-economic events on the permanent income-to-needs level. Following Esping-Andersen’s seminal work on welfare-state regimes, one might perceive the UK as a liberal welfare state although in a less prototypical sense as it exists in the US. Germany should clearly be considered to belong to the corporatist prototype and the Netherlands to the social-democratic type. Then, presumably, the UK has the lowest permanent income-to-needs level, the highest persistent poverty incidence and the highest income mobility. The findings confirm the presumption that permanent income is lower in a liberal welfare state as the UK although not very much lower than in the other countries. Hence, the transitory part of income is slightly larger in this liberal type of welfare state. The results also show that permanent income is more unequally distributed in the UK than in the Netherlands and Germany and that income inequalities have a less permanent character in the Netherlands. Besides, transitory shocks in income have a less permanent effect in the Netherlands than in the two other countries. The inclusion of household composition or labour market variables does not alter the main results. Viewing the effect of labour market status variables, like living in a household with a not working head, it is shown that members of these households are more likely persistent poor, particularly when the head is female. The effects of household structure on persistent poverty appear quite large. Especially, lone-parents households seem prone to persistent poverty in all three welfare regimes but single elderly particularly in the UK.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
page. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
13297.
Find related papers by JEL classification: D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty
References listed on IDEAS 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.:
Did you know? Each page is provided with a technical contact, in case something is not right with the supplied information. See under "publisher info".