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Poverty and social exclusion: two sides of the same coin or dynamically interrelated processes?

  • Francesco Devicienti
  • Ambra Poggi

There is growing interest in the analysis and measurement of social exclusion, to complement the static and dynamic literature on income poverty. On theoretical grounds, social exclusion and income poverty are seen as different processes, but with closely interrelated dynamics. However, our empirical understanding of the way these two processes dynamically interact at the individual level is still very limited. To shed some light on the issue, we use a dynamic bivariate probit model, controlling for unobserved heterogeneity and Wooldridge (2005)-type initial conditions. Both first and second order Markov dynamics are examined. We estimate the model using the Italian sample of the ECHP, waves 1-8, and find a sizable extent of state dependence in both poverty and social exclusion. Moreover, there are dynamic cross-effects, implying that poverty and social exclusion are mutually reinforcing. Social policies aimed at eradicating poverty and avoiding individuals’ social and economic marginalization should take these interaction effects explicitly into account.

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Paper provided by LABORatorio R. Revelli, Centre for Employment Studies in its series LABORatorio R. Revelli Working Papers Series with number 62.

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Length: 42 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:cca:wplabo:62
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  1. BOSSERT, Walter & D'AMBROSIO, Conchita & PERAGINE, Vito, 2004. "Deprivation and Social Exclusion," Cahiers de recherche 02-2004, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  2. repec:ese:iserwp:2002-08 is not listed on IDEAS
  3. Tsakloglou, Panos & Papadopoulos, Fotis, 2001. "Identifying Population Groups at High Risk of Social Exclusion: Evidence from the ECHP," IZA Discussion Papers 392, Institute for the Study of Labor (IZA).
  4. Martin Biewen, 2004. "Measuring State Dependence in Individual Poverty Status: Are there Feedback Effects to Employment Decisions and Household Composition?," Discussion Papers of DIW Berlin 429, DIW Berlin, German Institute for Economic Research.
  5. Satya R. Chakravarty & Conchita D'Ambrosio, 2003. "The Measurement of Social Exclusion," Discussion Papers of DIW Berlin 364, DIW Berlin, German Institute for Economic Research.
  6. Lorenzo Cappellari & Stephen P. Jenkins, 2004. "Modelling low income transitions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(5), pages 593-610.
  7. Rob Alessie & Stefan Hochguertel & Arthur van Soest, 2004. "Ownership of Stocks and Mutual Funds: A Panel Data Analysis," The Review of Economics and Statistics, MIT Press, vol. 86(3), pages 783-796, August.
  8. Francesco Devicienti & Valentina Gualtieri, 2004. "Dinamiche e persistenza della povertà in Italia: Un’analisi con microdati panel di fonte ECHP," LABORatorio R. Revelli Working Papers Series 34, LABORatorio R. Revelli, Centre for Employment Studies.
  9. Francesco Devicienti, 2002. "Poverty persistence in Britain: A multivariate analysis using the BHPS, 1991–1997," Journal of Economics, Springer, vol. 9(1), pages 307-340, December.
  10. Ambra Poggi, 2004. "Social exclusion mobility in Spain, 1994-2000," Working Papers wpdea0409, Department of Applied Economics at Universitat Autonoma of Barcelona.
  11. Joseph Deutsch & Jacques Silber, 2005. "Measuring Multidimensional Poverty: An Empirical Comparison Of Various Approaches," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 51(1), pages 145-174, 03.
  12. Tindara Addabbo, 2000. "Poverty Dynamics: Analysis of Household Incomes in Italy," LABOUR, CEIS, vol. 14(1), pages 119-144, 03.
  13. Stephen P. Jenkins, 2000. "Modelling household income dynamics," Journal of Population Economics, Springer, vol. 13(4), pages 529-567.
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