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The determinants of poverty transitions in Europe and the role of duration dependence

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  • Andriopoulou, Eirini
  • Tsakloglou, Panagiotis

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 University Library of Munich, Germany in its series MPRA Paper with number 30659.

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Date of creation: 03 May 2011
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Handle: RePEc:pra:mprapa:30659

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Keywords: Poverty dynamics; EU;

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References

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  1. Stephen P. Jenkins & Christian Schluter, 2003. "Why Are Child Poverty Rates Higher in Britain than in Germany?: A Longitudinal Perspective," Journal of Human Resources, University of Wisconsin Press, vol. 38(2).
  2. Francesco Devicienti, 2002. "Poverty persistence in Britain: A multivariate analysis using the BHPS, 1991–1997," Journal of Economics, Springer, Springer, vol. 77(1), pages 307-340, December.
  3. 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).
  4. Francesco Devicienti & Valentina Gualtieri, 2007. "The Dynamics and Persistence of Poverty: Evidence from Italy," LABORatorio R. Revelli Working Papers Series 63, LABORatorio R. Revelli, Centre for Employment Studies.
  5. Lorenzo Cappellari & Stephen P. Jenkins, 2004. "Modelling low income transitions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 19(5), pages 593-610.
  6. Ambra Poggi, 2003. "Does persistence of social exclusion exist in Spain?," Working Papers wpdea0308, Department of Applied Economics at Universitat Autonoma of Barcelona.
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  8. White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, Econometric Society, vol. 48(4), pages 817-38, May.
  9. Signe-Mary McKernan & Caroline Ratcliffe, 2005. "Events that Trigger Poverty Entries and Exits," Social Science Quarterly, Southwestern Social Science Association, vol. 86(s1), pages 1146-1169.
  10. Muffels, Ruud & Fouarge, Didier & Dekker, Ronald, 2000. "Longitudinal Poverty and Income Inequality A Comparative Panel Study for The Netherlands, Germany and the UK," MPRA Paper 13298, University Library of Munich, Germany.
  11. 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.
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  13. Aassve, Arnstein & Burgess, Simon & Dickson, Matt & Propper, Carol, 2005. "Modelling poverty by not modelling poverty: an application of a simultaneous hazards approach to the UK," ISER Working Paper Series 2005-26, Institute for Social and Economic Research.
  14. Van Kerm, Philippe, 2004. "Une évaluation économétrique des flux vers et hors de la pauvreté en Belgique," IRISS Working Paper Series, IRISS at CEPS/INSTEAD 2004-04, IRISS at CEPS/INSTEAD.
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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. Ondrich, Jan & Rhody, Stephen E., 1999. "Multiple spells in the Prentice-Gloeckler-Meyer likelihood with unobserved heterogeneity," Economics Letters, Elsevier, Elsevier, vol. 63(2), pages 139-144, May.
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  19. Hansen, Jörgen & Wahlberg, Roger, 2004. "Poverty Persistence in Sweden," IZA Discussion Papers 1209, Institute for the Study of Labor (IZA).
  20. Sarah Jarvis & Stephen P. Jenkins, 1997. "Low income dynamics in 1990s Britain," Fiscal Studies, Institute for Fiscal Studies, vol. 18(2), pages 123-142, May.
  21. Annelies Debels & Leen Vandecasteele, 2008. "The Time Lag In Annual Household-Based Income Measures: Assessing And Correcting The Bias," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(1), pages 71-88, 03.
  22. 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.
  23. 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.
  24. 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.
  25. Philippe Kerm, 2002. "How much low income turnover is there in Belgium?," Journal of Economics, Springer, Springer, vol. 77(1), pages 341-363, December.
  26. Duncan, Greg J, et al, 1993. "Poverty Dynamics in Eight Countries," Journal of Population Economics, Springer, Springer, vol. 6(3), pages 215-34.
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Citations

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Cited by:
  1. Stephen Jenkins & Philippe Van Kerm, 2014. "The Relationship Between EU Indicators of Persistent and Current Poverty," Social Indicators Research, Springer, Springer, vol. 116(2), pages 611-638, April.
  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. Sèna Kimm Gnangnon, 2012. "An analysis of duration dependence of government revenue expansions and contractions in Developing Countries," Working Papers halshs-00722083, HAL.
  4. repec:cep:sticas:case169 is not listed on IDEAS

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