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Modelling poverty by not modelling poverty: An application of a simultaneous hazards approach to the UK

  • Arnstein Aassve
  • Simon Burgess
  • Matt Dickson
  • Carol Propper

We pursue an economic approach to analysing poverty. This requires a focus on the variables that individuals can influence, such as forming or dissolving a union or having children. We argue that this indirect approach to modelling poverty is the right way to bring economic tools to bear on the issue. In our implementation of this approach, we focus on endogenous demographic and employment transitions as the driving forces behind changes in poverty. We construct a dataset covering event histories over a long window and estimate five simultaneous hazards with unrestricted correlated heterogeneity. The model fits the demographic and poverty data reasonably well. We investigate the important parameters and processes for differences in individuals' poverty likelihood. Employment, and particularly employment of disadvantaged women with children, is important.

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File URL: http://sticerd.lse.ac.uk/dps/case/cp/CASEpaper106.pdf
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Paper provided by Centre for Analysis of Social Exclusion, LSE in its series CASE Papers with number case106.

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Date of creation: Jan 2006
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Handle: RePEc:cep:sticas:case106
Contact details of provider: Web page: http://sticerd.lse.ac.uk/case/_new/publications/default.asp

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  1. 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.
  2. Dawn Upchurch & Lee Lillard & Constantijn Panis, 2002. "Nonmarital childbearing: Influences of education, marriage, and fertility," Demography, Springer, vol. 39(2), pages 311-329, May.
  3. Lorenzo Cappellari & Stephen P. Jenkins, 2004. "Modelling Low Pay Transition Probabilities, Accounting for Panel Attrition, Non-Response, and Initial Conditions," CESifo Working Paper Series 1232, CESifo Group Munich.
  4. Simon Burgess & Carol Propper, 1998. "An Economic Model of Household Income Dynamics, with an Application to Poverty Dynamics among American Women," CASE Papers case09, Centre for Analysis of Social Exclusion, LSE.
  5. Lorenzo Cappellari & Stephen P. Jenkins, 2002. "Modelling Low Income Transitions," Discussion Papers of DIW Berlin 288, DIW Berlin, German Institute for Economic Research.
  6. 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.
  7. Lillard, Lee A & Willis, Robert J, 1978. "Dynamic Aspects of Earning Mobility," Econometrica, Econometric Society, vol. 46(5), pages 985-1012, September.
  8. Stevens, Ann Huff, 1994. "The Dynamics of Poverty Spells: Updating Bane and Ellwood," American Economic Review, American Economic Association, vol. 84(2), pages 34-37, May.
  9. Arnstein Aassve & Simon Burgess & Carol Propper & Matt Dickson, 2003. "Employment, family union, and childbearing decisions in Great Britain," MPIDR Working Papers WP-2003-027, Max Planck Institute for Demographic Research, Rostock, Germany.
  10. Lillard, L.A. & Waite, L.J., 1993. "A Joint Model of Marital Childbearing and Marital Disruption," Papers 93-02, RAND - Labor and Population Program.
  11. Richard Dickens & David Ellwood, 2001. "Whither Poverty in Great Britain and the United States? The Determinants of Changing Poverty and Whether Work Will Work," CEP Discussion Papers dp0506, Centre for Economic Performance, LSE.
  12. Burtless, Gary, 1999. "Effects of growing wage disparities and changing family composition on the U.S. income distribution," European Economic Review, Elsevier, vol. 43(4-6), pages 853-865, April.
  13. Peter Gottschalk & Sheldon Danziger, 2003. "Wage Inequality, Earnings Inequality and Poverty in the U.S. Over the Last Quarter of the Twentieth Century," Boston College Working Papers in Economics 560, Boston College Department of Economics.
  14. 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.
  15. Richard Dickens & David T. Ellwood, 2001. "Whither poverty in Great Britain and the United States? The determinants of changing poverty and whether work will work," LSE Research Online Documents on Economics 20109, London School of Economics and Political Science, LSE Library.
  16. Lillard, Lee A., 1993. "Simultaneous equations for hazards : Marriage duration and fertility timing," Journal of Econometrics, Elsevier, vol. 56(1-2), pages 189-217, March.
  17. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
  18. repec:ese:iserwp:2004-10 is not listed on IDEAS
  19. Stephen P. Jenkins, 2000. "Modelling household income dynamics," Journal of Population Economics, Springer, vol. 13(4), pages 529-567.
  20. 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.
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