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Title:Measuring State Dependence in Individual Poverty Status : Are There Feedback Effects to Employment Decisions and Household Composition? PDF Logo
Authors:Biewen, Martin
Issue Date:2004
Series/Report no.:IZA Discussion paper series 1138
Abstract: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.
Subjects:poverty persistence
dynamic binary response models
correlated random effects
initital conditions
strict exogeneity
JEL:J12
D31
C33
I32
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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