Olga Cantó

Measuring poverty accounting for time

In this paper we make a methodological proposal to measure poverty accounting for time by proposing a new index that aims at reconciling the way poverty is measured in a static and a dynamic framework. Our index is able to consider the duration of the poverty spell and the social preference for equality in well-being given that, in contrast with others that have been previously proposed, it is sensitive to the level of inequality between individual complete poverty experiences over time. Moreover, other indices in the literature can be interpreted as special cases of our more general measure. An empirical illustration shows the relevance of considering the distribution of poverty experiences among the population in an international analysis.

Climbing out of poverty, falling back in: low income stability in Spain

The study of the probability of entering or escaping a low income spell is not sufficient to fully describe a households experience in deprivation. If poverty spells are recurrent in time, the persistency of poverty for a given household is not completely described unless the households likelihood of a fall back into deprivation shortly after exit is considered. It is found that by combining the re-entry equation results with those of the exit equation, one can discuss, in a comprehensive way, which household characteristics promote welfare stability or instability and poverty persistence or transience. Results indicate that one-third of households who manage to leave poverty in Spain return to it shortly after exit. This upward income mobility, if maintained for a year, appears to enable a state of non-poverty for a lengthy period. Better-educated households and households with a spouse are more stable in their income level. Also, the point reached in the income distribution after a jump out of poverty is more a determinant for reducing the households re-entry probability than is the duration out of poverty.

What helps households with children in leaving poverty? Evidence from Spain

Recent results on poverty in Europe show that households with children have a higher incidence of poverty than households without children. This incidence is not only higher but increasing. The literature on poverty has noted that the events that are most effective in pushing households out of deprivation should largely determine the design of poverty-alleviating social policy. Using longitudinal data for Spain for the 80’s and 90’s we account for the importance of relevant demographic and labour market events in helping households with and without children in leaving a poverty situation decomposing the relevance of each event in that generated by labour market policies and fertility or marriage institutions and welfare state policies implications. Similarly to results for other countries, the events that most help Spanish households in leaving poverty are related to the labour status and changes in employment of household members more than to demographic events. However, we should note that the transitions out of poverty of households with children are most strongly linked to the economic cycle in the economy mainly through labour market events while non-labour income changes appear as more important in determining a potential transition out of poverty of households without children, implying that their transitions are more linked to the social protection system.

Why are Child Poverty Rates so Persistently High in Spain

Poverty rates among households with children in Spain have been shown to be persistently higher than those among households without children. These higher rates prevail for chronic, transitory and, most remarkably, for recurrent poverty. In order to study the dynamics of poverty transitions in Spain we estimate a dynamic random effects probit model that controls for unobserved heterogeneity and initial conditions using the European Community Household Panel. Our results show differential effects of several individual and household characteristics on the probability of being poor for households with and without children. Of special interest is how labour instability factors can help to explain the outstandingly higher recurrence in poverty among households with children in Spain, compared with other countries.

Unemployment and spell duration during the Great Recession in the EU

The current economic recession has had unequal consequences on employment depending on the country considered. It is generally accepted that the negative impact of unemployment on individual welfare can be very different depending on its duration. However, conventional statistics on unemployment do not adequately capture to what extent the recession is not only increasing the incidence of unemployment but also its severity in terms of duration in time of ongoing unemployment spells. In this paper, we follow Shorrocks’s (2009a,b) proposal of a duration-sensitive measure of unemployment in order to analyze the different dynamic characteristics of unemployment in a selected group of European Union countries during the current Great Recession. Our results add some evidence on the relevance of incorporating the duration dimension in measuring unemployment and provide a tool for dynamic analysis based on cross-sectional data.

Poverty over time: empirical findings

In this chapter, we review the empirical literature on poverty over time that, since the end of the 1970s, has tried to find adequate answers to three main issues. The first is to provide an adequate measure of total inter-temporal poverty observed along a given time span in order to measure the relevance of chronic and transitory poverty. The second issue is to identify the main characteristics associated with each inter-temporal poverty type, its major determinants and consequences on individual well-being. Finally, a third key question is to identify which are the most effective policies in fighting against the poverty phenomenon by adequately focusing each alleviating policy on the individuals with a particular time poverty profile.

The Contribution of Income Mobility to Economic Insecurity in the US and Spain during the Great Recession

Recent evidence on the impact of the crisis on developed countries shows that the changes in income inequality and poverty have been relatively small in spite of the macroeconomic heterogeneity of the recession across different economies. However, when evaluating the main changes in individual perceptions linked to the crisis not only increases in inequality or poverty matter, also changes in individually-perceived chances to scale up or lose ground in the income ladder are crucial. Our aim is to analyze to what extent the recession may have had an impact on economic insecurity perceptions by increasing income losses in two developed countries where job losses have been large. The contribution of income losses to insecurity is approximated by the prevalence of downward income mobility. We identify the main socioeconomic characteristics of those most likely to suffer from a large income loss. In general, age, education and the presence of children in the household are key determinants of this event in both countries.