Modelling state dependence and feedback effects between poverty, employment and parental home emancipation among European youth

Sara Ayllón

No 10, Working Papers from VATT Institute for Economic Research

Abstract: Youth is one of the phases in the life-cycle when some of the most decisive life transitions take place. Entering the labour market or leaving parental home are events with important consequences for the economic well-being of young adults. In this paper, the interrelationship between employment, residential emancipation and poverty dynamics is studied for eight European countries by means of an econometric model with feedback effects. Results show that youth poverty genuine state dependence is positive and highly significant. Evidence proves there is a strong causal effect between poverty and leaving home in Scandinavian countries, however, time in economic hardship does not last long. In Southern Europe, instead, youth tend to leave their parental home much later in order to avoid falling into a poverty state that is more persistent. Past poverty has negative consequences on the likelihood of employment.

Keywords: Youth poverty dynamics, trivariate multinomial probit, state dependence, feedback effects, unobserved heterogeneity, Income distribution, Tulonjako, International comparisons, Kansainväliset vertailut, Labour market, Työmarkkinat, Labor market and policies promoting economic growth, Työmarkkinat ja kasvua tukeva politiikka, C330 - Econometric Methods: Multiple/Simultaneous Equation Models; Multiple Variables: Models with Panel Data, I320 - Measurement and Analysis of Poverty, J130 - Fertility; Family Planning; Child Care; Children; Youth, (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-dcm
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https://www.doria.fi/handle/10024/148749

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Working Paper: Modelling State Dependence and Feedback Effects between Poverty, Employment and Parental Home Emancipation among European Youth (2009)
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