Working Paper 2009-123
Poverty rates among households with children in Spain have been shown to be persistently higher than those among households without children. These higher rates prevail for chronic, transitory and, most remarkably, for recurrent poverty. In order to study the dynamics of poverty transitions in Spain we estimate a dynamic random effects probit model that controls for unobserved heterogeneity and initial conditions using the European Community Household Panel. Our results show differential effects of several individual and household characteristics on the probability of being poor for households with and without children. Of special interest is how labour instability factors can help to explain the outstandingly higher recurrence in poverty among households with children in Spain, compared with other countries.