Quotation Ahammer, Alexander, Kranzinger, Stefan. 2017. Poverty in Times of Crisis. INEQ Working Paper Series, 6.


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Abstract

This paper evaluates the impact of a large macroeconomic shock on poverty. In particular, we use longitudinal data from the European Survey on Income and Living Conditions (EU-SILC) comprising almost two million individuals from 29 European countries in order to quantify changes in poverty transition patterns caused by the 2007 global financial crisis. Because the crisis was largely unforeseeable, it provides an appealing natural experiment allowing us to isolate the causal effect of a substantial macroeconomic shock on poverty. Employing semiparametric mixed discrete time survival analysis, we find that conditional poverty entry hazards increased temporarily by 13.4% during the crisis, while post-crisis they are estimated to be 15.7% lower than before. Not only entry hazards have decreased, also conditional exit hazards are estimated to be 31.4% lower post-crisis compared to before. Ceteris paribus, the crisis therefore has made it more difficult to slip into poverty, yet those who were already poor face substantially lower prospects to escape. Exploring determinants of poverty transitions, we find that being retired, having a permanent job, owning one's dwelling instead of renting it, age, marital status, and household size are the most important protective factors against poverty. Finally, we show that mostly a housing cost overburden seems to be responsible for the persistence of poverty.

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  • INEQ Income & Wealth

Publication's profile

Status of publication Published
Affiliation WU
Type of publication Working/discussion paper, preprint
Language English
Title Poverty in Times of Crisis
Title of whole publication INEQ Working Paper Series, 6
Year 2017
URL http://epub.wu.ac.at/5444/1/WP_Poverty_in_Times_of_Crisis.pdf
JEL D31, I32

Associations

People
Kranzinger, Stefan (Details)
External
Ahammer, Alexander (JKU Linz, Austria)
Organization
Economics of Inequality FI (Details)
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