ABSTRACT
Using survival models, we test whether short-term changes in the labour market affect poverty duration. Data are from the Brazilian Monthly Employment Survey. Such a monthly dataset permits more accurate estimations of events than using annual data, but its panel follows households for a short period. Then methods that control for both right- and left-censoring should be used. The results are as follows: households with zero income are not those with the lowest chances of exiting; changes in aggregate unemployment do not affect poverty duration; and increasing wages in the informal sector has a negative effect on poverty duration.
I. Introduction
The reasons that a family remains in poverty may be associated not only with its idiosyncratic features but also with characteristics of the environment where it lives (Adato et al., 2006; Carter and Barrett, 2006; Hoddinott, 2006). On the supply side, household characteristics are the critical determinants of leaving poverty. However, on the demand side, we are interested in discovering whether changes in the labour market, such as fluctuations in the unemployment rate and the average wage, have any effect on the duration of households in poverty.
VI. Conclusion
The results of the parametric survival models suggest that the probability of moving out of poverty decreases the longer the household has remained in poverty – mainly after the second month in this condition. Therefore, the longer the household stays in poverty, the greater the chances that it will remain there.
With regard to households that have entered poverty, we found that, in general, the greater the distance of their initial per capita income below the poverty line, the lower the probability of their exit from poverty. However, the households that entered into poverty with no income, or very low incomes, are not the ones with the lowest chance of exiting this state. For some households, the transitory nature of unemployment of the household head or other key working members puts them in the situation where their poverty income gap might be large but the probability of remaining in poverty is actually lower than that for households that have somewhat higher incomes but their poverty-level income is long-lasting.
