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

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IZA Seminar

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

Date: 09.03.2004, 12:15 - 13:30

   

Presentation by 

Martin Biewen (University of Tuebingen)
   

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 leads to lower employment probabilities and higher probabilities of living in a one-person-household in future periods, providing further causal links of past and future poverty status. The existence of such feedback effects is also interesting from an econometric viewpoint, 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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