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Poverty Traps and Affluence Shields: Modeling the Persistence of Income Position in Chile

In: Research on Economic Inequality: Poverty, Inequality and Shocks

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  • Joaquín Prieto

Abstract

The author proposes analyzing the dynamics of income positions using dynamic panel ordered probit models. The author disentangles, simultaneously, the roles of state dependence and heterogeneity (observed and non-observed) in explaining income position persistence, such as poverty persistence and affluence persistence. The author applies the approach to Chile exploiting longitudinal data from the P-CASEN 2006–2009. First, the author finds that income position mobility at the bottom and the top of the income distribution is much higher than expected, showing signs that income mobility in the case of Chile might be connected to economic insecurity. Second, the observable individual characteristics have a much stronger impact than true state dependence to explain individuals’ current income position in the income distribution extremes.

Suggested Citation

  • Joaquín Prieto, 2021. "Poverty Traps and Affluence Shields: Modeling the Persistence of Income Position in Chile," Research on Economic Inequality, in: Research on Economic Inequality: Poverty, Inequality and Shocks, volume 29, pages 169-207, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:reinzz:s1049-258520210000029009
    DOI: 10.1108/S1049-258520210000029009
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    More about this item

    Keywords

    Longitudinal data; poverty persistence; affluence persistence; income mobility; Chile; Latin America; D31; D63; I32;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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