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Heterogeneity or True State Dependence in Poverty - The tale told by twins

  • Nilsson, William


    (Department of Economics, Umeå University)

This study focuses on the persistence of poverty in Sweden. The purpose is to distinguish between two different reasons why poverty could persist on an individual level. By using a sample of identical twins, this study takes advantage of the similarity within pairs of twins to separate family specific heterogeneity from true state dependence, where the experience of poverty leads to a higher risk of future poverty. The results, based on a four variate probit model, show the importance of true state dependence in poverty. When using the information on whether an individual received social assistance as a measure of poverty, family specific heterogeneity explains between 24 and 31 percent of the poverty persistence in the sample.

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Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number 650.

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Length: 40 pages
Date of creation: 08 Apr 2005
Date of revision:
Handle: RePEc:hhs:umnees:0650
Contact details of provider: Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden
Phone: 090 - 786 61 42
Fax: 090 - 77 23 02
Web page:

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  1. 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).
  2. Hansen, Jörgen & Löfström, Magnus, 2000. "Immigrant Assimilation And Welfare Participation: Do Immigrants Assimilate Into Or Out Of Welfare?," CEPR Discussion Papers 2430, C.E.P.R. Discussion Papers.
  3. Gunnar Isacsson, 2004. "Estimating the economic return to educational levels using data on twins," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(1), pages 99-119.
  4. Stewart, Mark B & Swaffield, Joanna K, 1999. "Low Pay Dynamics and Transition Probabilities," Economica, London School of Economics and Political Science, vol. 66(261), pages 23-42, February.
  5. Stephen P. Jenkins, 2000. "Modelling household income dynamics," Journal of Population Economics, Springer, vol. 13(4), pages 529-567.
  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. Lorenzo Cappellari & Stephen P. Jenkins, 2003. "Multivariate probit regression using simulated maximum likelihood," Stata Journal, StataCorp LP, vol. 3(3), pages 278-294, September.
  8. Coulter, Fiona A E & Cowell, Frank A & Jenkins, Stephen P, 1992. "Equivalence Scale Relativities and the Extent of Inequality and Poverty," Economic Journal, Royal Economic Society, vol. 102(414), pages 1067-82, September.
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