Testing for true state dependence in poverty dynamics

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 23.11.2010, 12:15 - 13:30


Presentation by 

Ugo Trivellato (University of Padova)


Evidence from several countries is that any household experiencing poverty today is much more likely to experience it again, which may be due to both true state dependence (TSD) and unobserved heterogeneity (UH). We deal with UH by specifying two sources of it: (i) the household’s ability to obtain income in a specific, initial time period, and (ii) the way in which this ability evolves from that time period onwards. We test for TSD using the panel component of the Italian Survey on Household Income and Wealth. After ascertaining the ignorability of the process that generates the massive attrition plaguing the panel, we do not find any sign of TSD.

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