How Much Should we Care about Consecutive Spells of Poverty? Proposal of a New Index

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Is cross-sectional poverty a reflection of real economic and social disadvantage? Doestotal number of years spent in poverty provide sufficient information about povertyseverity? Recent studies show that in some countries there are good reasons to believethat it is not (see, among others, Mendola et al., 2009).Traditional measures of poverty persistence, such as ‘poverty rate’ (i.e. the number ofyears spent in poverty upon total number of observations) or the ‘persistent-risk-ofpovertyrate’, do not devote enough attention to the sequence of poverty spells. Inparticular they are not good enough in underlining different effects associated tooccasional single spells of poverty and consecutive years of poverty.We propose here a new index which measures severity of poverty taking into accountthe way poverty and non-poverty spells follow one the other along the individual lifecourses. The index is normalized and does not depend from the number of waves in thepanel. It rises with the number of consecutive years in poverty along the sequence, andfalls with the increasing of the distance between two years of poverty. All the yearsspent in poverty concur to the measurement of the persistency in poverty but with adecreasing contribute as long as the distance between two years of poverty becomelonger.It can be easily proved that, given the number of waves, the index does not depend onthe total number of years spent in poverty, but it is affected by when they occur in thesequence, and mainly from their relative distance. These and others relevant propertiesof the index and in particular its validity are tested on a sample of European youngadults participating in ECHP for seven waves. Ireland, Italy, Portugal and UK show worst performance.
Lingua originaleEnglish
Numero di pagine0
Stato di pubblicazionePublished - 2009


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