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Abstract for:

Modelling poverty by not modelling poverty: An application of a simultaneous hazards approach to the UK

Arnstein Aassve,  Simon Burgess,  Matt Dickson,  Carol Propper,  January 2006
Paper No' CASE/106: Full paper (pdf)
Tags: poverty, exclusion and equalities; poverty and social exclusion; methodology, concepts and measures; measurement, concepts and measures; poverty dynamics; poverty transitions; simultaneous hazards


We pursue an economic approach to analysing poverty. This requires a focus on the variables that individuals can influence, such as forming or dissolving a union or having children. We argue that this indirect approach to modelling poverty is the right way to bring economic tools to bear on the issue. In our implementation of this approach, we focus on endogenous demographic and employment transitions as the driving forces behind changes in poverty. We construct a dataset covering event histories over a long window and estimate five simultaneous hazards with unrestricted correlated heterogeneity. The model fits the demographic and poverty data reasonably well. We investigate the important parameters and processes for differences in individuals’ poverty likelihood. Employment, and particularly employment of disadvantaged women with children, is important.