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Poverty and social exclusion: two sides of the same coin or dynamically interrelated processes?
[journal article]
Abstract There is growing interest in the analysis and measurement of social exclusion, to complement the static and dynamic literature on income poverty. On theoretical grounds, social exclusion and income poverty are seen as different processes, but with closely interrelated dynamics. However, our empirica... view more
There is growing interest in the analysis and measurement of social exclusion, to complement the static and dynamic literature on income poverty. On theoretical grounds, social exclusion and income poverty are seen as different processes, but with closely interrelated dynamics. However, our empirical understanding of the way these two processes dynamically interact at the individual level is still very limited. To shed some light on the issue, we use a dynamic bivariate probit model, controlling for unobserved heterogeneity and Wooldridge (2005)-type initial conditions. Both first and second order Markov dynamics are examined. We estimate the model using the Italian sample of the ECHP, waves 1-8, and find a sizable extent of state dependence in both poverty and social exclusion. Moreover, there are dynamic cross-effects, implying that poverty and social exclusion are mutually reinforcing. Social policies aimed at eradicating poverty and avoiding individuals' social and economic marginalization should take these interaction effects explicitly into account.... view less
Keywords
Italy; social policy; social security; income; social deprivation; measurement; exclusion; poverty
Classification
Methods and Techniques of Data Collection and Data Analysis, Statistical Methods, Computer Methods
Social Problems
Method
empirical
Free Keywords
poverty dynamics; social exclusion; state dependence; dynamic bivariate probit model with random effects
Document language
English
Publication Year
2010
Page/Pages
42 p.
Journal
Applied Economics (2010)
DOI
https://doi.org/10.1080/00036841003670721
Status
Postprint; peer reviewed
Licence
PEER Licence Agreement (applicable only to documents from PEER project)