Transition Events in the Dynamics of Poverty. Endnotes

09/01/2002

15.  The basic hazard model is defined in detail in Appendix A. The basic hazard model can be used to measure individuals’ likelihood of exiting poverty, but this more basic form of the model does not provide information about how different factors (i.e., transition events) affect the likelihood of exiting poverty.

16.  We use a discrete-time, not a continuous-time, multivariate hazard model because poverty transitions are observed in large discrete time periods—a month or a year.

17.  Some individuals enter (or exit) poverty more than once, so are included in the model more than once. Our standard errors are adjusted for this.

18.  See discussion of control variables that are tied to event variables below for additional information on how this event is measured relative to other household combinations.

19.  Changes in educational attainment are events only in the poverty exit model, so these last two variables pertain only to the exit model.

20.  For the poverty entry models, the probability individual i enters poverty at time t is expressed as , where and Xi and Ti represent individual i's own characteristics (see Equations 4 and 5). When calculating the estimated probability of entering poverty when an event is assumed to occur, individual's own characteristics are used except for the one transition event that is assumed to occur (i.e., the event indicator variable is set to one).

21.  These average likelihood values are calculated as described above.

22.  Stevens (1999) is also concerned about bias from omitting left-censored spells from her examination of demographic characteristics (i.e., not transition events) associated with poverty exit and reentry. She finds the bias from omitting left-censored spells from her exit and reentry probabilities is extremely small (p. 572).

23.  Stevens (1999) is also concerned about bias from omitting left-censored spells from her models that estimate exit and reentry rates. She similarly argues that omitting left-censored spells may over-estimate poverty exit rates at long durations. Stevens (1999) estimates her models both with and without left-censored spells. She finds the bias from omitting left-censored spells from her exit and reentry probabilities is extremely small (p. 572).

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