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Modelling low income transitions
Author(s) -
Cappellari Lorenzo,
Jenkins Stephen P.
Publication year - 2004
Publication title -
journal of applied econometrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.878
H-Index - 99
eISSN - 1099-1255
pISSN - 0883-7252
DOI - 10.1002/jae.778
Subject(s) - attrition , poverty , econometrics , panel data , economics , random effects model , markov chain , sample (material) , demographic economics , statistics , mathematics , economic growth , medicine , meta analysis , chemistry , dentistry , chromatography
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 non‐random sample) and for attrition (panel retention may also be non‐random). The model estimates, derived from British panel data for the 1990s, indicate that there is substantial state dependence in poverty, separate from persistence induced by heterogeneity. We also provide estimates of low income transition rates and lengths of poverty and non‐poverty spells for persons of different types. Copyright © 2004 John Wiley & Sons, Ltd.