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The analysis of poverty data with endogenous transitions

Author

Listed:
  • Simon Burgess
  • Carol Propper
  • Matt Dickson

Abstract

It is common to analyse poverty data broken down by household or economic status. Implicitly, it is assumed that people change state (for example, single, married, children, no children) for exogenous reasons. If we bring economic behaviour into the problem, then such transitions become endogenous. The data are then insufficient to identify the claims made from them. The distribution of the characteristics of the individuals in the states will be endogenous, and the state average poverty rate will depend on the composition of the individuals in the state as well as on the economic impact of being in that state per se. In this paper, we set out a simple model with endogenous transitions to make our point, and apply this to Family Expenditure Survey data for Britain. We show that our argument has empirical content for Britain.

Suggested Citation

  • Simon Burgess & Carol Propper & Matt Dickson, 2006. "The analysis of poverty data with endogenous transitions," Fiscal Studies, Institute for Fiscal Studies, vol. 27(1), pages 75-98, March.
    • Handle: RePEc:ifs:fistud:v:27:y:2006:i:1:p:75-98
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    Cited by:

    1. FUSCO Alessio & ISLAM Nizamul, 2012. "Understanding the drivers of low income transitions in Luxembourg," LISER Working Paper Series 2012-31, Luxembourg Institute of Socio-Economic Research (LISER).
    2. Biewen, Martin, 2004. "Measuring State Dependence in Individual Poverty Status: Are There Feedback Effects to Employment Decisions and Household Composition?," IZA Discussion Papers 1138, Institute of Labor Economics (IZA).
    3. Burgess, Simon & Dickson, Matt & Propper, Carol & Aassve, Arnstein, 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.
    4. Martin Biewen, 2009. "Measuring state dependence in individual poverty histories when there is feedback to employment status and household composition," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(7), pages 1095-1116, November.
    5. Zimmer David M., 2010. "State Dependence among the Uninsured: Accounting for Feedback to Health and Employment," Forum for Health Economics & Policy, De Gruyter, vol. 13(2), pages 1-33, May.

    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • J12 - Labor and Demographic Economics - - Demographic Economics - - - Marriage; Marital Dissolution; Family Structure

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