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Who Are the Chronic Poor? Evidence on the Extent and the Composition of Chronic Poverty in Germany

  • Biewen, Martin

    ()

    (University of Tuebingen)

Based on a multiple spells approach, this paper studies the extent and the composition of chronic poverty in Germany. The results indicate that about one third of cross-sectional poverty in a given year is chronic. The characteristics that are most closely associated with long-term poverty are economic inactivity and pensioner status, while the number of children and the gender of the household head do not seem to have a systematic effect. This is in contrast to cross-sectional results where the biggest poverty risk is usually unemployment and a large number of children, while pensioners do not face particularly high poverty risks. Estimates from a multiple spells hazard model further suggest that 6% of the population have unobserved characteristics that lead to low poverty exit and high re-entry rates, making these individuals likely candidates for chronic poverty. A comparison with results for Great Britain and the United States suggests that poverty is less persistent in Germany.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 779.

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Length: 34 pages
Date of creation: May 2003
Date of revision:
Publication status: published in: Research on Economic Inequality, 2006, 13 (1), 31-62
Handle: RePEc:iza:izadps:dp779
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  1. Martin Biewen, 2002. "The Covariance Structure of East and West German Incomes and its Implications for the Persistence of Poverty and Inequality," Discussion Papers of DIW Berlin 292, DIW Berlin, German Institute for Economic Research.
  2. Mary Jo Bane & David T. Ellwood, 1986. "Slipping into and out of Poverty: The Dynamics of Spells," Journal of Human Resources, University of Wisconsin Press, vol. 21(1), pages 1-23.
  3. Francesco Devicienti, 2011. "Estimating poverty persistence in Britain," Empirical Economics, Springer, vol. 40(3), pages 657-686, May.
  4. Costas Meghir & Edward Whitehouse, 1993. "Labour market transitions and retirement of men in the UK," IFS Working Papers W93/12, Institute for Fiscal Studies.
  5. Heckman, James & Singer, Burton, 1984. "A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data," Econometrica, Econometric Society, vol. 52(2), pages 271-320, March.
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