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

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

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. poverty dynamics; poverty transitions; simultaneous hazards.

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Paper provided by Institute for Social and Economic Research in its series ISER Working Paper Series with number 2005-26.

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Date of creation: 01 Nov 2005
Date of revision:
Publication status: published
Handle: RePEc:ese:iserwp:2005-26
Contact details of provider: Postal: Publications Office, Institute for Social and Economic Research, University of Essex, Wivenhoe Park, Colchester, Essex CO4 3SQ UK
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  1. 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.
  2. 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.
  3. Simon Burgess & Carol Propper, 1998. "An economic model of household income dynamics, with an application to poverty dynamics among American women," LSE Research Online Documents on Economics 6525, London School of Economics and Political Science, LSE Library.
  4. repec:ese:iserwp:2004-08 is not listed on IDEAS
  5. Arnstein Aassve & Simon Burgess & Matt Dickson & Carol Propper, 2004. "Employment, Family Union, and Childbearing Decisions in Great Britain," CASE Papers 084, Centre for Analysis of Social Exclusion, LSE.
  6. 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.
  7. 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.
  8. 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," NBER Working Papers 8253, National Bureau of Economic Research, Inc.
  9. Markus Jantti & Stephen P. Jenkins, 2014. "Income Mobility," Working Papers 319, ECINEQ, Society for the Study of Economic Inequality.
  10. 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.
  11. Stephen P. Jenkins, 2000. "Modelling household income dynamics," Journal of Population Economics, Springer, vol. 13(4), pages 529-567.
  12. 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.
  13. 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 for the Study of Labor (IZA).
  14. Lee A. Lillard & Robert J. Willis, 1976. "Dynamic Aspects of Earnings Mobility," NBER Working Papers 0150, National Bureau of Economic Research, Inc.
  15. Lee Lillard & Linda Waite, 1993. "A joint model of marital childbearing and marital disruption," Demography, Springer, vol. 30(4), pages 653-681, November.
  16. 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.
  17. 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.
  18. repec:ese:iserwp:2004-10 is not listed on IDEAS
  19. Lorenzo Cappellari & Stephen P. Jenkins, 2004. "Modelling low income transitions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(5), pages 593-610.
  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.
  21. Dawn Upchurch & Lee Lillard & Constantijn Panis, 2002. "Nonmarital childbearing: Influences of education, marriage, and fertility," Demography, Springer, vol. 39(2), pages 311-329, May.
  22. 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.
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