Journal
JOURNAL OF APPLIED ECONOMETRICS
Volume 32, Issue 1, Pages 37-55Publisher
WILEY
DOI: 10.1002/jae.2506
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Funding
- CUHK
- NSF [SES 0819612, 0819638]
- National Research Foundation of Korea - Korean Government [NRF-2014S1A3A2044637]
- Divn Of Social and Economic Sciences
- Direct For Social, Behav & Economic Scie [0819638] Funding Source: National Science Foundation
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This paper investigates measurement error biases in estimated poverty transition matrices. We compare transition matrices based on survey expenditure data to transition matrices based on measurement-error-free simulated expenditure. The simulation model uses estimates that correct for measurement error in expenditure. We find that time-varying measurement error in expenditure data magnifies economic mobility. Roughly 45% of households initially in poverty at time t - 1 are found to be out of poverty at time t using data from the Korean Labor and Income Panel Study. When measurement error is removed, this drops to between 26 and 31% of households initially in poverty. Copyright (C) 2016 John Wiley & Sons, Ltd.
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