Modelling Low Income Transitions

Lorenzo Cappellari and Stephen Jenkins

No 504, IZA Discussion Papers from IZA Network @ LISER

Abstract: We examine the determinants of low income transitions using first-order Markov models that control for initial conditions effects (those found to be poor in the base year may be a nonrandom sample) and for attrition (panel retention may also be non-random). Our econometric model is a form of endogeneous switching regression, and is fitted using simulated maximum likelihood methods. The estimates, derived from British panel data for the 1990s, indicate that there is substantial genuine state dependence in poverty. We also provide estimates of low income transition rates and lengths of poverty and non-poverty spells for persons of different types.

Keywords: state dependence; simulated maximum likelihood; first-order Markov; poverty dynamics (search for similar items in EconPapers)
JEL-codes: C23 C35 D31 I32 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2002-05
New Economics Papers: this item is included in nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (15)

Published - published in: Journal of Applied Econometrics, 2004, 19 (5), 593-610

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Related works:
Journal Article: Modelling low income transitions (2004)
Working Paper: Modelling Low Income Transitions (2002)
Working Paper: Modelling low income transitions (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp504

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