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Who Are the Chronic Poor? Evidence on the Extent and the Composition of Chronic Poverty in Germany

Discussion Papers 350, 31 S.

Martin Biewen

2003. Mai.

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Abstract

Based on a multiple spells approach, this paper studies the extent and the composition of chronic poverty in Germany. The results indicate that about one third of cross-sectional poverty in a given year is chronic. The characteristics that are most closely associated with long-term poverty are economic inactivity and pensioner status, while the number of children and the gender of the household head do not seem to have a systematic effect. This is in contrast to cross-sectional results where the biggest poverty risk is usually unemployment and a large number of children, while pensioners do not face particularly high poverty risks. Estimates from a multiple spells hazard model further suggest that 6% of the population have unobserved characteristics that lead to low poverty exit and high re-entry rates, making these individuals likely candidates for chronic poverty. A comparison with results for Great Britain and the United States suggests that poverty is less persistent in Germany.



JEL-Classification: C23;D31;I32
Keywords: chronic poverty, poverty persistence, multiple spells, unobserved heterogeneity
Frei zugängliche Version: (econstor)
http://hdl.handle.net/10419/18086

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