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Poverty traps and affluence shields: Modelling the persistence of income position in Chile

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  • Joaquín Prieto

    (International Inequalities Institute, London School of Economics and Political Science)

Abstract

I propose analysing the dynamics of income positions using dynamic panel ordered probit models. I disentangle, simultaneously, the roles of state dependence and heterogeneity (observed and non-observed) in explaining income position persistence, such as poverty persistence and affluence persistence. I apply my approach to Chile exploiting longitudinal data from the P-CASEN 2006–2009. First, I find that income position mobility at the bottom and the top of the income distribution is much higher than the expected, showing signs of high economic insecurity. Second, the observable individual characteristics have a much stronger impact than true state dependence to explain individuals’ current income position in the income distribution extremes.

Suggested Citation

  • Joaquín Prieto, 2021. "Poverty traps and affluence shields: Modelling the persistence of income position in Chile," Working Papers 576, ECINEQ, Society for the Study of Economic Inequality.
  • Handle: RePEc:inq:inqwps:ecineq2021-576
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    More about this item

    Keywords

    Longitudinal data; poverty persistence; affluence persistence; income mobility; Chile; Latin America.;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • 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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