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Once Poor, Always Poor? Do Initial Conditions Matter? Evidence from the ECHP

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  • Andriopoulou, Eirini

    () (Athens University of Economics and Business)

  • Tsakloglou, Panos

    () (Athens University of Economics and Business)

Abstract

The paper analyzes the effects of individual and household characteristics on current poverty status, while controlling for initial conditions, past poverty status and unobserved heterogeneity in 14 European Countries for the period 1994-2000, using the European Community Household Panel. The distinction between true state dependence and individual heterogeneity has very important policy implications, since if the former is the main cause of poverty it is of paramount importance to break the "vicious circle" of poverty using income-supporting social policies, whereas if it is the latter anti-poverty policies should focus primarily on education, training, development of personal skills and other labour market oriented policies. The empirical results are similar in qualitative but rather different in quantitative terms across EU countries. State dependence remains significant in all specifications, even after controlling for unobserved heterogeneity or when removing possible endogeneity bias.

Suggested Citation

  • Andriopoulou, Eirini & Tsakloglou, Panos, 2011. "Once Poor, Always Poor? Do Initial Conditions Matter? Evidence from the ECHP," IZA Discussion Papers 5971, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp5971
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    References listed on IDEAS

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    1. John F. Henry & L. Randall Wray, 1998. "Economic Time," Macroeconomics 9811004, EconWPA.
    2. Castrén, Olli & Fitzpatrick, Trevor & Sydow, Matthias, 2006. "What drives EU banks' stock returns? Bank-level evidence using the dynamic dividend-discount model," Working Paper Series 677, European Central Bank.
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    Cited by:

    1. Eirini Andriopoulou & Alexandros Karakitsios & Panos Tsakloglou, 2017. "Inequality and Poverty in Greece:Changes in Times of Crisis," GreeSE – Hellenic Observatory Papers on Greece and Southeast Europe 116, Hellenic Observatory, LSE.
    2. Marjan Maes, 2013. "Poverty persistence among the elderly in the transition from work to retirement," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 11(1), pages 35-56, March.
    3. Carlos Gradín & Olga Cantó, 2009. "Why are child poverty rates so persistently high in Spain?," Working Papers 123, ECINEQ, Society for the Study of Economic Inequality.
    4. REINSTADLER Anne & RAY Jean-Claude, 2010. "Macro Determinants of Individual Income Poverty in 93 Regions of Europe," LISER Working Paper Series 2010-13, LISER.
    5. Maciej Bukowski & Sonia Buchholtz & Piotr Lewandowski & Pawel Chrostek & Agnieszka Kaminska & Maciej Lis & Monika Potoczna & Michal Myck & Michal Kundera & Monika Oczkowska, 2013. "Employment in Poland 2011. Poverty and Jobs," Books and Reports published by IBS, Instytut Badan Strukturalnych, number zwp2011 edited by Maciej Bukowski & Iga Magda, january.
      • Magda, Iga & Bukowski, Maciej & Buchholz, Sonia & Lewandowski, Piotr & Chrostek, Paweł & Kamińska, Agnieszka & Lis, Maciej & Potoczna, Monika & Myck, Michał & Kundera, Michał & Oczkowska, Monika, 2013. "Employment in Poland 2011 - Poverty and jobs," MPRA Paper 50185, University Library of Munich, Germany.
    6. Raluca Iorgulescu, 2014. "Poverty, Well-Being And Sustainable Development: Official And Experimental Measures In Postmodern Societies," Annals - Economy Series, Constantin Brancusi University, Faculty of Economics, vol. 1, pages 34-41, February.

    More about this item

    Keywords

    poverty dynamics; EU; ECHP;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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