ISER Working Paper Series 2005-26
Modelling poverty by not modelling poverty: an application of a simultaneous hazards approach to the UK
01 Nov 2005
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.
poverty dynamics; poverty transitions; simultaneous hazards.