Poverty Dynamics of Households in Rural China

The objective of our study is to identify patterns and causes of households' transitions into and out of poverty using the long household panel data on rural China in 1989–2009. We propose a discrete‐time multi‐spell duration model that not only corrects for unobserved heterogeneity, but also addresses the endogeneity due to dynamic selection associated with household's livelihood strategies. The household choosing farming or out‐migration as a main livelihood strategy was more likely to escape from persistent poverty than those taking local non‐agricultural employment. The present study emphasizes the central role of agriculture in helping the chronically poor escape from poverty.     

On Maximum Likelihood Estimation of Dynamic Panel Data Models

We analyse the finite sample properties of maximum likelihood estimators for dynamic panel data models. In particular, we consider transformed maximum likelihood (TML) and random effects maximum likelihood (RML) estimation. We show that TML and RML estimators are solutions to a cubic first‐order condition in the autoregressive parameter. Furthermore, in finite samples both likelihood estimators might lead to a negative estimate of the variance of the individual‐specific effects. We consider different approaches taking into account the non‐negativity restriction for the variance. We show that these approaches may lead to a solution different from the unique global unconstrained maximum. In an extensive Monte Carlo study we find that this issue is non‐negligible for small values of T and that different approaches might lead to different finite sample properties. Furthermore, we find that the Likelihood Ratio statistic provides size control in small samples, albeit with low power due to the flatness of the log‐likelihood function. We illustrate these issues modelling US state level unemployment dynamics.     

Income distribution and income dynamics in the United Kingdom

In this paper, we propose a model of income dynamics which takes account of mobility both within and between jobs. The model is a hybrid of the mover‐stayer model of income dynamics and a geometric random walk. In any period, individuals face a discrete probability of ‘moving’, in which case their income is a random drawn from a stationary recurrent distribution. Otherwise, they ‘stay’ and incomes follow a geometric random walk. The model is estimated on income transition data for the United Kingdom from the British Household Panel Survey (BHPS) and provides a good explanation of observed non‐linearities in income dynamics. The steady‐state distribution of the model provides a good fit for the observed, cross‐sectional distribution of earnings. We also evaluate the impact of tertiary education on income transitions and on the long‐run distribution of incomes. Copyright © 2001 John Wiley & Sons, Ltd.     

Mobility and the dynamics of poverty in Iran: Evidence from the 1992–1995 panel survey

In the last three decades, revolutionary Iran has experienced large shocks to its political and economic system with likely effects on poverty, inequality, and economic mobility. While poverty has declined, inequality has remained relatively high and stable over nearly four decades. In this paper, for the first time, we examine poverty and inequality in a dynamic context using a 4-year panel data, collected during 1992–1995. We show that short-term income mobility is relatively high, which helps mitigate persistent high inequality. We offer a range of estimates of transition probabilities, indicating that, for example, someone in the lowest (highest) quintile has between 25% and 50% chance of moving up (down) the income ladder. Focusing on the dynamics of poverty, we distinguish between short- and long-term poor and between chronic and transient poverty. Surprisingly, we find that chronic poverty is a more serious problem in urban than rural areas, while transient poverty is geographically more uniformly distributed. Finally, using Tobit and quantile regression, we examine the correlates of these two types of poverty. Both chronic and transient poverty are higher for households headed by women and by younger and less educated men. While minorities suffer more from transient poverty, they are less likely to be chronically poor. We discuss the implications of these findings for policy to alleviate chronic and transient poverty.     

Alternative Indicators for the Risk of Non‐response Bias: A Simulation Study

The growth of non‐response rates for social science surveys has led to increased concern about the risk of non‐response bias. Unfortunately, the non‐response rate is a poor indicator of when non‐response bias is likely to occur. We consider in this paper a set of alternative indicators. A large‐scale simulation study is used to explore how each of these indicators performs in a variety of circumstances. Although, as expected, none of the indicators fully depict the impact of non‐response in survey estimates, we discuss how they can be used when creating a plausible account of the risks for non‐response bias for a survey. We also describe an interesting characteristic of the fraction of missing information that may be helpful in diagnosing not‐missing‐at‐random mechanisms in certain situations.     

The Impact of Standard Setting on Relevance and Reliability of Accounting Information: Lower of Cost or Market Accounting Reforms in China

During the period from 1998 to 2000, China implemented several new asset write‐down regulations that mandate lower of cost or market accounting (LCM) for most non‐cash assets. This is a study of the relevance and reliability of those regulations for investors in China. The study measures the association of net asset value with market value of equity and the association of accounting income with stock return, on both a historical cost accounting (HCA) basis and on an LCM basis. A fixed‐effects model controlling both year and firm effects is used in a balanced panel sample. The panel regressions show high levels of explanatory power. LCM values can be relevant but may be measured with sufficient error that they do not improve the prediction of firm values. Reliability is measured using non‐nested, overlapping model comparison tests (J and Cox). The paper also considers whether discretionary motivations influence the amount of write‐down. The study supports the relevance of LCM reforms, but finds that reliability is not increased over HCA during the period under study. Reliability appears to be reduced by the voluntary nature of LCM provisions during part of the period and by the effects of opportunism for some firms in the sample.     

DATA GAPS,DATA INCOMPARABILITY,AND DATA IMPUTATION: A REVIEW OF POVERTY MEASUREMENT METHODS FOR DATA‐SCARCE ENVIRONMENTS

Questions that often come up in contexts where household consumption data are unavailable or missing include: what are the best existing methods to obtain poverty estimates at a single snapshot in time? and over time? and what are the best available methods to study poverty dynamics? A variety of different techniques have been developed to tackle these questions, but unfortunately, they are presented in different forms and lack unified terminology. We offer a review of poverty imputation methods that address contexts ranging from completely missing and partially missing consumption data in cross‐sectional household surveys, to missing panel household data. We present the various existing methods under a common framework, with pedagogical discussion on their intuition. Empirical illustrations are provided using several rounds of household survey data from Vietnam. Furthermore, we also offer a practical guide with detailed instructions on computer programs that can be used to implement the reviewed techniques.     

Precautionary motives and portfolio decisions

This paper studies the empirical relevance of precautionary and other motives for household portfolio behaviour using recent panel data from the Netherlands. Dutch households' portfolios exhibit low degrees of risk taking and diversification. It is possible that this is the outcome of a rational, precautionary response to unavoidable exposure to background risk (stemming from the labour market or health conditions, etc.). We consider as alternative explanations liquidity needs and habits. The endogenous variable is the fraction of clearly safe in total financial assets at the household level. Parametric and semi‐parametric censored regression models for pooled cross‐sections and random and fixed effects models for panel data show that both heteroscedasticity and unobserved heterogeneity are of major importance in the data. With subjective indicators of income uncertainty we find a limited role for precautionary motives. Copyright © 2002 John Wiley & Sons, Ltd.     

Precautionary and Entrepreneurial Savings: New Evidence from German Households*

Various studies interpret the positive correlation between income risk and wealth as evidence of significant precautionary savings. However, these high estimates emerge from pooling non‐entrepreneurs and entrepreneurs, without controlling for heterogeneity. This article provides evidence for Germany based on representative panel data that includes private wealth balance sheets. Entrepreneurs, who face high income risk, hold more wealth than employees, but this tendency is not because of precautionary motives. Instead, they appear to save more for their old age, because they are usually not covered by statutory pension insurance. The analysis accounts for endogeneity in entrepreneurial choice and heterogeneous risk attitudes.     

Estimation of sons' intergenerational earnings mobility in the presence of censoring

Based on intergenerational data from the Panel Study of Income Dynamics, I provide estimates of income mobility across generations for men. Special attention is paid to issues of censoring caused by a son's unemployment. Employing non‐parametric bounds estimates, I illustrate that previous income mobility estimates rely heavily on (unjustified) assumptions of exogenous selection. Assuming a son's potential income is instead a function of his reason for unemployment and work history, I re‐estimate mobility. Allowing for sampling variability, the range of feasible slopes consistent with these modified bounds restrictions is 0.27 to 0.55. Copyright © 2002 John Wiley & Sons, Ltd.     

STATE DEPENDENCE AND HETEROGENEITY IN HEALTH USING A BIAS‐CORRECTED FIXED‐EFFECTS ESTIMATOR

This paper estimates a dynamic ordered probit model of self‐assessed health with two fixed effects: one in the linear index equation and one in the cut‐points. This robustly controls for heterogeneity in unobserved health status and in reporting behavior, although we cannot separate both sources of heterogeneity. We find important state dependence effects, and small but significant effects of income and other socioeconomic variables. Having dynamics and flexibly accounting for unobserved heterogeneity matters for those estimates. We also contribute to the bias correction literature in nonlinear panel models by comparing and applying two of the existing proposals to our model. Copyright © 2012 John Wiley & Sons, Ltd.     

The effect of household characteristics on living standards in South Africa 1993–1998: a quantile regression analysis with sample attrition

This paper examines whether the dismantling of apartheid has resulted in an improvement in the standard of living for the vast majority of South Africans. The study is based on a panel data set from the Kwazulu‐Natal province. We use weighted quantile regressions to examine the distribution of standards of living, which corrects for the potential bias arising from non‐random sample attrition. Our results show that there has been a significant increase in the spread of the distribution of household expenditure of the non‐white households residing in Kwazulu‐Natal province. Copyright © 2006 John Wiley & Sons, Ltd.     

Poverty in America 1970–1990: who did gain ground? An application of stochastic dominance criteria employing simultaneous inequality tests in a partial panel

Atkinson ( 1987 ) proposed stochastic dominance criteria for analysing poverty which, under certain conditions, establish orderings of states for any poverty line and any poverty measure within given class, refocusing debate on the nature of the income distribution of the poor. Employing new empirical techniques, these criteria are implemented for the United States from 1970 to 1990 using the Panel Study of Income Dynamics. Results highlight the pivotal role of family size scale economies in consumption, indicate different experiences for white versus non‐white groups and suggest that optimism over the progress of the poor is not warranted. Copyright © 2003 John Wiley & Sons, Ltd.     

Poverty comparisons with dependent samples

Standard inference procedures for poverty comparisons require samples to be independent. For many commonly used income samples, however, this requirement is not fulfilled since samples are rotated. This article introduces an easy‐to‐use method of correction for sample dependency. We also apply the method to test changes in US poverty in the 1990s and to evaluate the marginal effects of public assistance on poverty before and after the recent welfare reform. Copyright © 2004 John Wiley & Sons, Ltd.     

Simplified Jackknife Variance Estimates for Fuzzy Measures of Multidimensional Poverty

In this paper, we present a practical methodology for variance estimation for multi‐dimensional measures of poverty and deprivation of households and individuals, derived from sample surveys with complex designs and fairly large sample sizes. The measures considered are based on fuzzy representation of individuals' propensity to deprivation in monetary and diverse non‐monetary dimensions. We believe this to be the first original contribution for estimating standard errors for such fuzzy poverty measures. The second objective is to describe and numerically illustrate computational procedures and difficulties in producing reliable and robust estimates of sampling error for such complex statistics. We attempt to identify some of these problems and provide solutions in the context of actual situations. A detailed application based on European Union Statistics on Income and Living Conditions data for 19 NUTS2 regions in Spain is provided.     

The measurement of marketing efficiency in the presence of spillovers: theory and evidence

We develop a model of marketing efficiency based on a directional distance function that allows for marketing spillovers. A parametric model is used to test for spillovers from rival marketing and from a firm's marketing activity of its other related products. We then show how this information can be incorporated into a non‐parametric model and used to estimate marketing inefficiency. We apply brand level data from the US brewing industry to the non‐parametric model to determine the effectiveness of television, radio, and print advertising. We find that advertising spillovers are important in brewing and show that efficiency estimates are inaccurate when spillover effects are ignored. Our results also suggest that marketing efficiency may be an important component to firm success in brewing, a result that may apply to other consumer goods industries. Copyright © 2006 John Wiley & Sons, Ltd.     

新型农村合作医疗的减贫、增收和再分配效果研究

本文使用2003~2006年覆盖全国30个省区的微观面板数据,对新型农村合作医疗的减贫、增收和再分配效果进行了评估。结果表明:新农合的减贫效果明显,不仅能在农户层面上显著降低贫困发生概率,而且能在省区层面上显著降低贫困率;新农合能显著促进低收入和中等收入农民增收,但需要有利的外部经济环境作为支持条件;新农合能显著降低村庄内部的收入分配不均等程度,但对省区范围内的农民收入分配状况没有产生显著影响。     

Smoothed binary regression quantiles

This paper extends results regarding smoothed median binary regression to general smoothed binary quantile regression, discusses the interpretation of the resulting estimators under alternative assumptions, and shows how they may be used to obtain semiparametric estimates of counterfactual probabilities. The estimators are applied to a model of labour force participation of married women in the USA. We find that the elasticity with respect to non‐labour income is significantly negative only for women that belong to the middle of the conditional willingness‐to‐participate (WTP) distribution. In comparing the quantile models with parametric logit and semiparametric single‐index specifications, we find that the models agree closely for women around the centre of the WTP distribution, but there are considerable disagreements as we move towards the tails of the distribution. Copyright © 2006 John Wiley & Sons, Ltd.     

A Bounded Model of Time Variation in Trend Inflation,Nairu and the Phillips Curve

In this paper, we develop a bivariate unobserved components model for inflation and unemployment. The unobserved components are trend inflation and the non‐accelerating inflation rate of unemployment (NAIRU). Our model also incorporates a time‐varying Phillips curve and time‐varying inflation persistence. What sets this paper apart from the existing literature is that we do not use unbounded random walks for the unobserved components, but rather bounded random walks. For instance, NAIRU is assumed to evolve within bounds. Our empirical work shows the importance of bounding. We find that our bounded bivariate model forecasts better than many alternatives, including a version of our model with unbounded unobserved components. Our model also yields sensible estimates of trend inflation, NAIRU, inflation persistence and the slope of the Phillips curve. Copyright © 2015 John Wiley & Sons, Ltd.     

Supply,Factor Shares and Inflation Persistence: Re‐examining Euro‐area New‐Keynesian Phillips Curves*

Using euro‐area data, we re‐examine the empirical success of New‐Keynesian Phillips curves (NKPCs). We re‐estimate with a suitably specified optimizing supply side (which attempts to treat non‐stationarity in factor income shares and mark‐ups) that allows us to derive estimates of technology parameters, marginal costs and ‘price gaps’. Our resulting estimates of the euro‐area NKPCs are robust, provide reasonable estimates for fixed‐price durations and discount rates and embody plausible dynamic properties. Our method for identifying the underlying determinants of NKPCs has general applicability to a wide set of countries as well as of use for sectoral studies.