Abstract
The aim of this paper is to study the mechanisms behind poverty persistence in Spain. We examine the importance of past poverty experiences for explaining current poverty as opposed to observed and unobserved individual heterogeneity. Our results are based on the model proposed by Cappellari and Jenkins (J Appl Econometr 19:593–610, 2004a) that estimates poverty transitions while simultaneously controlling for attrition and initial conditions. We find that about 50% of aggregate state dependence is genuine: poverty in a given year increases in itself the chances of experiencing poverty again in the future. The remainder is explained, among other characteristics, by living with a head of household who has no educational qualifications, being an immigrant or cohabiting with teenagers. Our findings call for a comprehensive and coordinated strategy against poverty that should focus equally on income-support policies and on enhancing those characteristics that best protect against economic hardship. From a methodological point of view, we learn that unobservables affecting initial conditions and sample retention are exogenous to those related to poverty transience. However, results prove to be sensitive to the choice of poverty line.
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Acknowledgments
The present research was (co-)funded by the European Commission under the 6th Framework Programme’s Research Infrastructures Action (Trans-national Access contract RITA 026040) hosted by IRISS-C/I at CEPS/INSTEAD, Differdange (Luxembourg). I am grateful for the warm hospitality I received at CEPS/INSTEAD and at the Institute for Research on Poverty at the University of Wisconsin-Madison. I like to also thank Martin Biewen, Olga Cantó, Alessio Fusco, David Pujolar, Xavi Ramos and Philippe Van Kerm as well as participants at the XI Encuentro de Economía Aplicada (2008), at the 20th EALE Annual Conference (2008), at the UNU-WIDER Conference ‘Frontiers of Poverty Analysis’(2008) and at the 2nd General Conference of the International Microsimulation Association (2009) for comments on an earlier version of this paper. Any errors or misinterpretations are my own. Financial support is also greatly acknowledged from the Spanish project ECO2010-21668-C03-02 and XREPP (Direcció General de Recerca).
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Ayllón, S. Understanding poverty persistence in Spain. SERIEs 4, 201–233 (2013). https://doi.org/10.1007/s13209-012-0089-4
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DOI: https://doi.org/10.1007/s13209-012-0089-4