Moving in and out of poverty - The impact of welfare regimes on poverty dynamics in the EU

Although many of the debates around social exclusion and cumulative disadvantage relate to processes that occur across time, there has been relatively little research into poverty dynamics except in a few notable countries such as Britain, the USA and Germany. This neglect is almost entirely because of the absence of comparative longitudinal data on income for other countries, but it is regrettable given the central importance of this area. By studying poverty dynamics we not only get a better insight into the processes leading to patterns of disadvantage and inequality, but we can also understand better the influence of different welfare state regimes on the social risks experienced by different types of individuals and households. The extent to which different national contexts protect their citizens from poverty persistence, or vary in the factors leading to poverty persistence, tells us a great deal about the workings of their socioeconomic systems and welfare regimes.

In this article we use the recent availability of five waves of the European Community Household Panel Survey to outline the nature of poverty persistence and poverty dynamics across a large number of countries. In doing so we ask three important questions. First, is poverty a more common experience when viewed longitudinally rather than cross-sectionally, and how is this affected by the income poverty line used? Second, can we identify a tendency toward poverty persistence, and does this vary in its extent across countries? Third and lastly, what types of events are more likely to lead to entry into and exit from poverty, and does the importance of these events differ between countries? The article shows that the experience of poverty is far wider than is appreciated from cross-sectional data, and also tends to be more concentrated on a particular population than would be expected from cross-sectional rates. Moreover, the pattern of poverty persistence is congruent with welfare regime theory. The importance of country institutions and welfare regimes is also underlined by the finding that social welfare and market incomes play different roles in poverty transitions across countries, and that Southern European, or residualist, welfare regimes focus poverty risks on the experience of the household's primary earner to a far greater extent than Northern European welfare states do.

Short-term poverty dynamics of rural households: Evidence from Central Sulawesi, Indonesia

The understanding of poverty dynamics is crucial for the design of appropriate poverty reduction strategies. Taking the case of Central Sulawesi, we investigate the determinants of both chronic and transitory poverty using data from 264 randomly selected households interviewed in 2005 and 2007. Regarding the US 1$/day poverty line, the headcount index declined from 19.3% in 2005 to 18.2% in 2007. However, we observed an increasing number of people living on less than US 2$/day expressed in purchasing power parity (PPP). The results of the estimated multinomial logit model applied in this study indicate that a lack of non-agricultural employment opportunities and low endowment of social capital are major determinants of chronic as well as transitory poverty in this province of Indonesia. These results are used to draw policy conclusions with respect to the alleviation of transitory and chronic poverty in Central Sulawesi.

The role of rice in poverty dynamics in rural Vietnam: 2002–2008

Using the Vietnamese Household Living Standards Surveys of 2002, 2004, 2006, and 2008, this paper investigates the role of rice in poverty dynamics in the recent context of Vietnam. We find that sizeable changes in rice prices in the 2000s, which were driven largely by the country's integration into the world markets, have not helped rural households escape poverty, even for households with large-scale rice production. Our results also document that changes in rice output and productivity did not help mitigate poverty either. The paper provides evidence to explain why a substantial exogenous increase in the rice prices between 2006 and 2008 did not help rural households to move out of poverty, while similar changes did help in the 1990s.

Poverty dynamics in Costa Rica with panel data from cross-sections

Includes bibliography

Poverty Dynamics: Empirical Evidence for Canada (Working Paper 29)

Poverty (low income) dynamics are explored using tax filer data covering the period 1992 to 1996. The distributions of short-and long-term episodes are identified, and reveal substantial differences by sex and family type. Entry and exit models explore the relationships between poverty transitions and sex, family status and other personal and situational attributes. Duration effects on exiting and re-entering poverty are found to be important, and models including past poverty experiences point to strong "occurrence dependence" for poverty entry and incidence. Fixed-effect panel data models confirm the above, and reveal asymmetries in the impacts of household transitions on poverty.

Analysis of Poverty Dynamics in Canada (Working Paper 9)

While we know much about poverty (or “low income”) in Canada in a static context, our understanding of the underlying dynamics remains very limited. This is particularly problematic from a policy perspective and the country has been increasingly left out on an international level in this regard. The contribution of this paper is to report the results of an empirical analysis of low income (“poverty”) dynamics in Canada using the recently available “LAD” tax-based database. The paper first describes the general nature of individuals’ poverty profiles (how many are short-term versus longterm, etc.)., the breakdown of the poor population in any given year amongst these different types, and the characterisation of poverty profiles by sex and family type. It then reports the estimation of various econometric models, starting with a set which specifies entry into and exit from poverty in any given year as a function of a variety of personal attributes and situational characteristics, including family status and changes therein, province of residence, inter-provincial mobility, language, area size of residence and calendar year (to capture trend effects). A set of proper hazard models then adds duration effects to these specifications to see how exit and re-entry probabilities shift with the amount of time spent in a poverty spell or after having exited a previous spell. A final set of specifications then investigates “occurrence dependence” effects by including past poverty spells first in an entry model and then with respect to the probability of being poor in a given year. Policy implications are discussed.

Dynamics of economic well-being : poverty, 1992-1993 : who stays poor? who doesn't? /

Mode of access: Internet.

The Dynamics of Energy Poverty : Evidence from Spain

Peer reviewed

The Dynamics of Energy Poverty : Evidence from Spain

Peer reviewed

Social Class Variation in Risk: A Comparative Analysis of the Dynamics of Economic Vulnerability

A joint concern with multidimensionality and dynamics is a defining feature of the pervasive use of the terminology of social exclusion in the European Union. The notion of social exclusion focuses attention on economic vulnerability in the sense of exposure to risk and uncertainty. Sociological concern with these issues has been associated with the thesis that risk and uncertainty have become more pervasive and extend substantially beyond the working class. This paper combines features of recent approaches to statistical modelling of poverty dynamics and multidimensional deprivation in order to develop our understanding of the dynamics of economic vulnerability. An analysis involving nine countries and covering the first five waves of the European Community Household Panel shows that, across nations and time, it is possible to identify an economically vulnerable class. This class is characterized by heightened risk of falling below a critical resource level, exposure to material deprivation and experience of subjective economic stress. Cross-national differentials in persistence of vulnerability are wider than in the case of income poverty and less affected by measurement error. Economic vulnerability profiles vary across welfare regimes in a manner broadly consistent with our expectations. Variation in the impact of social class within and across countries provides no support for the argument that its role in structuring such risk has become much less important. Our findings suggest that it is possible to accept the importance of the emergence of new forms of social risk and acknowledge the significance of efforts to develop welfare states policies involving a shift of opportunities and decision making on to individuals without accepting the 'death of social class' thesis.

Understanding the mismatch between income poverty and deprivation: A dynamic comparative analysis

In this paper we seek to shed light on the mismatch between income poverty and deprivation through a comparative and dynamic analysis of both forms of disadvantage. By extending analysis over five waves of the ECHP we are able to take into account the key dimensions characterizing poverty profiles overtime. Our conclusions turn out to be remarkably stable across countries. While persistent income poverty measures are systematically related to both cross-sectional and longitudinal measures of deprivation, the scale of mismatch is no less at the latter than at the former level. There is some evidence that although rates of volatility for income and deprivation measures are roughly similar, the processes of change themselves are somewhat different. Further light is shed on the underlying processes by cross-classifying the forms of deprivation. Those exposed to both types of deprivation are differentiated from others in terms of need and resource variables. Conclusions relating to the socio-demographic influences on risk levels are influenced by choice and combination of indicators. The results of our analysis confirm the need to devote considerably more attention than heretofore to the analysis of multi-dimensional poverty dynamics.

Assets, markets and poverty in Brazil

Esse artigo estabelece uma base para pesquisas que tratam da relação entre pobreza, distribuição de recursos e operação do mercado de capitais no Brasil. O principal objetivo é auxiliar a implementação de políticas de reforço de capital dos pobres. A disponibilidade de novas fontes de dados abriu condições inéditas para implementar uma análise de posse de ativos e pobreza nas áreas metropolitanas brasileiras. A avaliação de distribuição de recursos foi estruturada sobre três itens: Capital físico, capital humano e capital social. A estratégia empírica seguida é de analisar três diferentes tipos de impactos que o aumento dos ativos dos pobres podem exercer no nível de bem estar social. A primeira parte do artigo avalia a posse de diferentes tipos de capitais através da distribuição de renda. Esse exercício pode ser encarado como uma ampliação de medidas de pobreza baseadas em renda pela incorporação de efeitos diretos exercidos pela posse de ativos no bem estar social. A segunda parte do artigo descreve o impacto de geração de renda que a posse de ativos pode ter sobre os pobres. Estudamos como a acumulação de diferentes tipos de capital impactam os índices de pobreza baseados na renda usando regressões logísticas. A terceira parte estuda o efeito que o aumento da posse de ativos dos pobres tem no melhoramento da habilidade dos indivíduos pobres em lidar com choques adversos da renda. Estudamos a interação entre a dinâmica da renda, imperfeições do mercado de capitais e comportamentos financeiros levando em consideração diferentes horizontes de tempo. As questões de longo prazo estão relacionadas com o estudo das flutuações de renda de baixa freqüência e ciclo da vida da posse de ativos usando análise de coorte. As questões de curto prazo estão relacionadas com o comportamento do pobre e as perdas de bem estar ao lidar com hiatos de alta freqüência entre renda e consumo desejado. A análise da dinâmica de renda e pobreza é conduzida a partir da combinação de dados de painel de renda com dados qualitativos sobre comportamento financeiro de curto prazo das famílias.

Human Capital Investment and Poverty Reduction over Generations: A Case from the Rural Philippines, 1979-2003

This paper attempts to identify a pathway out of poverty over generations in the rural Philippines, based on long-term panel data spanning for nearly a quarter of a century. Specifically, it sequentially examines the determinants of schooling, subsequent occupational choices, and current non-farm earnings for the same individuals. We found that an initial rise in parental income, brought about by the land reform and the Green Revolution, among other things, improves the schooling of children, which later allows them to obtain remunerative non-farm jobs. These results suggest that the increased agricultural income, improved human capital through schooling and the development of non-farm sectors are the keys to reducing poverty in the long run. It must be also pointed out that the recent development of the rural non-farm sector offers ample employment opportunities for the less educated, which also significantly contributed to the poverty reduction.