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Decomposing Permanent and Transitory Poverty

Jan Goebel ()

No 256, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: This paper proposes a new method of calculating the proportion of permanently impoverished persons among persons in poverty as a whole. The paper shows that the widely used Shorrocks-Index for decomposing permanent and transitory inequality can also be acquired to describe poverty. This method overcomes certain difficulties involved in the methods of Rodgers & Rodgers (1993). The characteristics of the proposed Poverty-Stability- Index allow for an intuitive differentiation between the relative sizes of permanent and transitional poverty. Empirical results using data from the German Socio-Economic Panel (GSOEP) will be presented for East- and West- Germany. In der vorliegenden Arbeit wird eine neue Berechnungsweise des Anteils permanenter Armut an der gesamten vorhandenen Armut vorgestellt. Es wird gezeigt, dass der weithin genutzte Shorrocks-Index zur Zerlegung von permanenter und transitorischer Ungleichheit auch zur Beschreibung von Armut genutzt werden kann. Damit können Unzulänglichkeiten in der von Rodgers & Rodgers (1993) gewählten Berechnung behoben werden. Die Nutzung des hier vorgeschlagenen Armuts-Stabilitäts-Koeffizienten erlaubt eine gut interpretierbare Unterscheidung der relativen Größe von permanenter und transitorischer Armut. Empirische Ergebnisse werden anhand des Sozio-oekonomischen Panels für Ost- und Westdeutschland dargestellt.

Keywords: Permanent poverty; transitory poverty; poverty dynamics; panel data (search for similar items in EconPapers)
JEL-codes: D63 I32 (search for similar items in EconPapers)
Pages: 12 p.
Date: 2001
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