Poverty Dynamics, Family Events, Labour Market Events

Ever since the mid-1980’s and the use of longitudinal data, it has been widely recognized that poverty is a dynamic situation: there is a high degree of poverty turnover from one year to another (Duncan et al., 1984; Bane and Ellwood, 1986; Huff Stevens, 1994, 1995; Burguess and Propper, 1996). Naturally, these results concerning the nature of poverty lead to a desire to understand its causes. What makes households likely to move into poverty and what makes them likely to move out of it? A survey of the empirical studies shows that labour market events as well as demographic events have an important role in determining movements into and out of poverty. The basic results regarding the links between these events and poverty can be readily summarized as follows: employment and union are economically favourable events, and, on the contrary, unemployment and union dissolution are economically unfavourable events (Duncan et al., 1993; Muffels et al., 1999; Oxley et al., 2000; Finnie, 2000). Furthermore, there is a large body of evidence indicating that a family event such as a divorce is more important for women’s economic well being than for that of men (Jenkins, 1998; Jarvis and Jenkins, 1999; BianchiLekha and Kahn, 1999; Finnie, 2000; Fritzell and Henz, 2002). The aim of this article is then to look at whether and to what extent it is appropriate to make a distinction between men and women in order to understand the role of labour market transitions and life-cycle events with regard to movements into and out of poverty. In particular, the article will focus on the impact of four events: access to employment, loss of employment, union and union dissolution. Earlier studies on these effects are based on panel data for different countries and consequently provide findings for one country at a time. In this article, we make use of data from Waves 1, 2 and 3 of the European Community Household Panel (ECHP). One advantage of these longitudinal data is the existence of homogeneous information about twelve European countries (in 1996). This will then give us the opportunity to carry out the analysis at the European level. The structure of this article is as follows. In the next section we describe our data and our definitions. Then we focus on the events associated with poverty exits and entries. In the fourth section, we present logit analyses. Section 5 summarizes our results and makes suggestions for further research.