This chapter takes the next step and studies the dynamics of poverty and informality using longitudinal data. Our empirical analysis is based on a bivariate dynamic random-effect probit model and recent panel data from Argentina. The method used provides a means of assessing the persistence over time of poverty and informal employment at the individual level, while controlling for both observed and unobserved determinants of the two processes. The results show that both poverty and informal employment are highly persistent processes. Moreover, positive spillover effects are found from past poverty on current informal employment and from past informality to current poverty status, corroborating the view that the two processes are also shaped by interrelated dynamics in segmented labor markets.
Devicienti, F., Groisman, F. and Poggi, A. (2010), "Chapter 4 Are informality and poverty dynamically interrelated? Evidence from Argentina", Bishop, J. (Ed.) Studies in Applied Welfare Analysis: Papers from the Third ECINEQ Meeting (Research on Economic Inequality, Vol. 18), Emerald Group Publishing Limited, Bingley, pp. 79-106. https://doi.org/10.1108/S1049-2585(2010)0000018007Download as .RIS
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