Chapter 14 Understanding the Drivers of Low-Income Transitions in Luxembourg

Alessio Fusco and Nizamul Islam

A chapter in Inequality, Mobility and Segregation: Essays in Honor of Jacques Silber, 2012, pp 367-391 from Emerald Group Publishing Limited

Abstract: We analyse the determinants of poverty transitions, defined as movements across a low-income threshold, in Luxembourg. Data used are those from the Luxembourg socio-economic panel ‘Liewen zu Lëtzebuerg’ (PSELL3) running from 2003 to 2009. Using an endogenous switching first-order Markov model, we control for potential endogeneity to low-income transitions due to both initial conditions and non-random attrition. We find that employment protects from both remaining poor and entering poverty while several characteristics of the head of the household, such as low education or citizenship, and also household composition and housing tenure status are correlated to poverty entry but not to poverty persistence. In addition, attrition and initial low income are found to be endogenous processes with respect to low-income transitions. Finally, genuine state dependence accounts for a substantial level of aggregate state dependence.

Keywords: Poverty dynamics; Luxembourg; Markov transitions models; attrition; initial condition; state dependence (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eme:reinzz:s1049-2585(2012)0000020017

DOI: 10.1108/S1049-2585(2012)0000020017

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