Measuring state dependence in individual poverty status : are there feedback effects to employment decisions and household composition?

Arbeitspapier

Using a sample of prime-aged men from the German Socio-Economic Panel (GSOEP), this paper examines the effects of past poverty experience on future poverty status, future employment status and household composition. The empirical results suggest that even after controlling for observed and unobserved characteristics, past poverty experience increases the poverty risk of future periods. Moreover, there is evidence that experiencing poverty has a negative effect on future employment behaviour and on household cohesion. Apart from its economic significance, the existence of such feedback effects is interesting from an econometric point of view, as they represent a violation of the strict exogeneity assumption, which is usually invoked in estimating dynamic qualitative response models with unobserved heterogeneity.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 429

Classification and Topics

• Classification: Wirtschaft ; Personal Income, Wealth, and Their Distributions ; Measurement and Analysis of Poverty ; Marriage; Marital Dissolution; Family Structure; Domestic Abuse ; Multiple or Simultaneous Equation Models: Panel Data Models; Spatio-temporal Models
• Subject: Poverty persistence ; dynamic binary response models ; correlated random effects ; initital conditions ; strict exogeneity ; Armut ; Arbeitsangebot ; Privater Haushalt ; Schätzung ; Deutschland

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Biewen, Martin
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2004

Further information

• Handle: http://hdl.handle.net/10419/18165