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Interrelated Dynamics of Health and Poverty in Australia

Author

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  • Buddelmeyer, Hielke

    () (Melbourne Institute of Applied Economic and Social Research)

  • Cai, Lixin

    () (NILS, Flinders University)

Abstract

Using the Household, Income and Labour Dynamics in Australia (HILDA) Survey, this study examines the joint dynamics of health and poverty in Australian families. Taking advantage of panel data, the modelling approach used in this study allows a better estimation of the causal relationship between health and poverty. The results indicate that the causality between health and poverty runs both ways and the relationship is confounded by unobserved heterogeneity. In particular, it is found that families headed by a person in ill-health are more likely to be in poverty compared with families headed by a person with good health. On the other hand, a family head whose family is in poverty in the current year is more likely to be in ill-health in the next year compared with a family head whose family is not in poverty. In addition, there is evidence that health and poverty are affected by correlated unobservables, causing health to be endogenous to poverty even in the absence of a reverse effect from poverty on health. Consequently, treating health as exogenous in a poverty equation would produce biased estimates.

Suggested Citation

  • Buddelmeyer, Hielke & Cai, Lixin, 2009. "Interrelated Dynamics of Health and Poverty in Australia," IZA Discussion Papers 4602, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp4602
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    References listed on IDEAS

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    1. Mark Wooden & Simon Freidin & Nicole Watson, 2002. "The Household, Income and Labour Dynamics in Australia (HILDA)Survey: Wave 1," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 35(3), pages 339-348.
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    8. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521747387.
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    Cited by:

    1. Au, Nicole & Johnston, David W., 2014. "Self-assessed health: What does it mean and what does it hide?," Social Science & Medicine, Elsevier, vol. 121(C), pages 21-28.
    2. Ayllón, Sara & Fusco, Alessio, 2017. "Are income poverty and perceptions of financial difficulties dynamically interrelated?," Journal of Economic Psychology, Elsevier, vol. 61(C), pages 103-114.
    3. Miguel Sanchez-Martinez & Philip Davis, 2014. "A review of the economic theories of poverty," National Institute of Economic and Social Research (NIESR) Discussion Papers 435, National Institute of Economic and Social Research.
    4. Gunasekara, Fiona Imlach & Carter, Kristie & Blakely, Tony, 2011. "Change in income and change in self-rated health: Systematic review of studies using repeated measures to control for confounding bias," Social Science & Medicine, Elsevier, vol. 72(2), pages 193-201, January.
    5. Callander, Emily Joy & Schofield, Deborah J. & Shrestha, Rupendra N., 2011. "Multi-dimensional poverty in Australia and the barriers ill health imposes on the employment of the disadvantaged," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 40(6), pages 736-742.

    More about this item

    Keywords

    socio-economic status; poverty; health; recursive models; panel data;

    JEL classification:

    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

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