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Estimation of Joint Income? Wealth Poverty: A Sensitivity Analysis

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  • Kuypers, Sarah

    (University of Antwerp)

  • Marx, Ive

    (University of Antwerp)

Abstract

Most poverty studies build on measures that take account of recurring incomes from sources such as labour or social transfers. However, other financial resources such as savings and assets also affect living standards, often in very significant ways. Previous studies that have sought to incorporate assets into poverty measures suggest that (1) poverty estimates including wealth are considerably lower than income-based measures; (2) poverty rates of the elderly are more affected than those of the nonelderly and (3) poverty rates are especially affected by the household's main residence. This paper assesses the sensitivity of these conclusions to various plausible alternative assumptions, such as the poverty line calculation, the types of assets included in the wealth concept and choices with respect to the equivalence scale. Moreover, we check whether the impact of alternative assumptions is consistent across age and institutional settings. To that effect we compare Belgium and Germany, two countries with similar living standards and income poverty rates, but very different levels and distributions of wealth. Using data from the HFCS we show that accounting for wealth affects the incidence and age structure of poverty in a very substantial way. Country comparisons are also affected in very substantial ways.

Suggested Citation

  • Kuypers, Sarah & Marx, Ive, 2016. "Estimation of Joint Income? Wealth Poverty: A Sensitivity Analysis," IZA Discussion Papers 10391, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp10391
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    Cited by:

    1. Louis Chauvel & Eyal Bar-Haim & Anne Hartung & Emily Murphy, 2021. "Rewealthization in 21st Century Western Countries: The Defining Trend of the Socioeconomic Squeeze of the Middle Class," LIS Working papers 821, LIS Cross-National Data Center in Luxembourg.
    2. Achille Lemmi & Donatella Grassi & Alessandra Masi & Nicoletta Pannuzi & Andrea Regoli, 2019. "Methodological Choices and Data Quality Issues for Official Poverty Measures: Evidences from Italy," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(1), pages 299-330, January.
    3. Gustafsson, Björn Anders & Mac Innes, Hanna & Österberg, Torun, 2017. "Older People in Sweden Without Means: On the Importance of Age at Immigration for Being 'Twice Poor'," IZA Discussion Papers 11144, Institute of Labor Economics (IZA).
    4. Philip Müller, 2017. "Poverty in Europe: Sociodemographics, Portfolios, and Consumption of Wealth‐Poor Households," Poverty & Public Policy, John Wiley & Sons, vol. 9(3), pages 306-330, September.

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    More about this item

    Keywords

    poverty measurement; wealth; sensitivity analysis; income;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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