Poverty traps and affluence shields: modelling the persistence of income position in Chile

Joaquin Prieto Suarez

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: I propose analysing the dynamics of income positions using dynamic panel ordered probit models. I disentangle, simultaneously, the roles of state dependence and heterogeneity (observed and non-observed) in explaining income position persistence, such as poverty persistence and affluence persistence. I apply my approach to Chile exploiting longitudinal data from the P-CASEN 2006–2009. First, I find that income position mobility at the bottom and the top of the income distribution is much higher than the expected, showing signs of high economic insecurity. Second, the observable individual characteristics have a much stronger impact than true state dependence to explain individuals’ current income position in the income distribution extremes.

Keywords: longitudinal data; poverty persistence; affluence persistence; income mobility; Chile; Latin America (search for similar items in EconPapers)
JEL-codes: D31 D63 I32 (search for similar items in EconPapers)
Pages: 44 pages
Date: 2021-05-01
New Economics Papers: this item is included in nep-dev and nep-lam
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:110719

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