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Climbing out of poverty, falling back in: low income stability in Spain

  • Olga Canto

The study of the probability of entering or escaping a low income spell is not sufficient to fully describe a household's experience in deprivation. If poverty spells are recurrent in time, the persistency of poverty for a given household is not completely described unless the household's likelihood of a fall back into deprivation shortly after exit is considered. It is found that by combining the re-entry equation results with those of the exit equation, one can discuss, in a comprehensive way, which household characteristics promote welfare stability or instability and poverty persistence or transience. Results indicate that one-third of households who manage to leave poverty in Spain return to it shortly after exit. This upward income mobility, if maintained for a year, appears to enable a state of non-poverty for a lengthy period. Better-educated households and households with a spouse are more stable in their income level. Also, the point reached in the income distribution after a jump out of poverty is more a determinant for reducing the household's re-entry probability than is the duration out of poverty.

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Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 34 (2002)
Issue (Month): 15 ()
Pages: 1903-1916

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Handle: RePEc:taf:applec:v:34:y:2002:i:15:p:1903-1916
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