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Decomposing Permanent and Transitory Poverty

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  • Jan Goebel

Abstract

This paper proposes a new method of calculating the proportion of permanently impoverished persons among persons in poverty as a whole. The paper shows that the widely used Shorrocks-Index for decomposing permanent and transitory inequality can also be acquired to describe poverty. This method overcomes certain difficulties involved in the methods of Rodgers & Rodgers (1993). The characteristics of the proposed Poverty-Stability- Index allow for an intuitive differentiation between the relative sizes of permanent and transitional poverty. Empirical results using data from the German Socio-Economic Panel (GSOEP) will be presented for East- and West- Germany. In der vorliegenden Arbeit wird eine neue Berechnungsweise des Anteils permanenter Armut an der gesamten vorhandenen Armut vorgestellt. Es wird gezeigt, dass der weithin genutzte Shorrocks-Index zur Zerlegung von permanenter und transitorischer Ungleichheit auch zur Beschreibung von Armut genutzt werden kann. Damit können Unzulänglichkeiten in der von Rodgers & Rodgers (1993) gewählten Berechnung behoben werden. Die Nutzung des hier vorgeschlagenen Armuts-Stabilitäts-Koeffizienten erlaubt eine gut interpretierbare Unterscheidung der relativen Größe von permanenter und transitorischer Armut. Empirische Ergebnisse werden anhand des Sozio-oekonomischen Panels für Ost- und Westdeutschland dargestellt.

Suggested Citation

  • Jan Goebel, 2001. "Decomposing Permanent and Transitory Poverty," Discussion Papers of DIW Berlin 256, DIW Berlin, German Institute for Economic Research.
    • Handle: RePEc:diw:diwwpp:dp256
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    References listed on IDEAS

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    1. Richard V. Burkhauser & John G. Poupore, 1997. "A Cross-National Comparison Of Permanent Inequality In The United States And Germany," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 10-17, February.
    2. Duncan, Greg J & Gustafsson, Bjorn & Hauser, Richard & Schmauss, Gunther & Messinger, Hans & Muffels, Ruud & Nolan, Brian, 1993. "Poverty Dynamics in Eight Countries," Journal of Population Economics, Springer;European Society for Population Economics, vol. 6(3), pages 215-234.
    3. Bradbury,Bruce & Jenkins,Stephen P. & Micklewright,John (ed.), 2001. "The Dynamics of Child Poverty in Industrialised Countries," Cambridge Books, Cambridge University Press, number 9780521803106.
    4. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    5. Joan R. Rodgers & John L. Rodgers, 1993. "Chronic Poverty in the United States," Journal of Human Resources, University of Wisconsin Press, vol. 28(1), pages 25-54.
    6. Bradbury,Bruce & Jenkins,Stephen P. & Micklewright,John (ed.), 2001. "The Dynamics of Child Poverty in Industrialised Countries," Cambridge Books, Cambridge University Press, number 9780521004923.
    7. Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Permanent poverty; transitory poverty; poverty dynamics; panel data;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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