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Understanding the Drivers of Poverty Dynamics in Australian Households

  • Buddelmeyer, Hielke

    ()

    (Melbourne Institute of Applied Economic and Social Research)

  • Verick, Sher

    ()

    (ILO International Labour Organization)

Using longitudinal household data and an econometric model of conditional poverty transitions, this paper contributes to the growing literature on poverty dynamics in Australian households. The results reveal that a range of household head, partner and demographic characteristics in addition to life-changing events have an impact on both the likelihood of remaining poor and slipping into poverty. These findings have important implications for Australian policymakers: tertiary education and employment are key factors in keeping households out of poverty; having a disability increases the probability of becoming poor and remaining in such a situation; households in outer-regional or remote areas are more likely to become poor and continue to live under such hardship; and finally, life-changing events, especially becoming separated, can lead households into persistent poverty. These results are robust to a range of poverty definitions. By drawing on research that utilizes such longitudinal data, policymakers will be much better informed about the drivers of material deprivation in Australia and subsequently how best to design policies that target and support the most vulnerable households.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2827.

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Length: 29 pages
Date of creation: Jun 2007
Date of revision:
Publication status: published in: Economic Record, 2008, 84 (266), 310-321
Handle: RePEc:iza:izadps:dp2827
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References listed on IDEAS
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  1. Cappellari, Lorenzo & Jenkins, Stephen P., 2002. "Modelling Low Income Transitions," IZA Discussion Papers 504, Institute for the Study of Labor (IZA).
  2. Peter Saunders & Bruce Bradbury, 2006. "Monitoring Trends in Poverty and Income Distribution: Data, Methodology and Measurement," The Economic Record, The Economic Society of Australia, vol. 82(258), pages 341-364, 09.
  3. Ann Huff Stevens, 1999. "Climbing out of Poverty, Falling Back in: Measuring the Persistence of Poverty Over Multiple Spells," Journal of Human Resources, University of Wisconsin Press, vol. 34(3), pages 557-588.
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