published in: Research on Economic Inequality, 2006, 13 (1), 31-62
Based on a multiple spells approach, this paper studies the extent and the composition of
chronic poverty in Germany. The results indicate that about one third of cross-sectional
poverty in a given year is chronic. The characteristics that are most closely associated with
long-term poverty are economic inactivity and pensioner status, while the number of children
and the gender of the household head do not seem to have a systematic effect. This is in
contrast to cross-sectional results where the biggest poverty risk is usually unemployment
and a large number of children, while pensioners do not face particularly high poverty risks.
Estimates from a multiple spells hazard model further suggest that 6% of the population have
unobserved characteristics that lead to low poverty exit and high re-entry rates, making these
individuals likely candidates for chronic poverty. A comparison with results for Great Britain
and the United States suggests that poverty is less persistent in Germany.
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