Regional household poverty and mobility analysis – a transition probability approach

Abstract

The main objective of this paper was to estimate and analyse transition-probability matrices for all 16 of Poland’s NUTS-2 level regions (voivodeship level). The analysis is conducted in terms of the transitions among six expenditure classes (per capita and per equivalent unit), focusing on poverty classes. The period of analysis was two years: 2015 and 2016. The basic aim was to identify both those regions in which the probability of staying in poverty was the highest and the general level of mobility among expenditure classes. The study uses a two-year panel sub-sample of unidentified unit data from the Central Statistical Office (CSO), specifically the data concerning household budget surveys. To account for differences in household size and demographic structure, the study used expenditures per capita and expenditures per equivalent unit simultaneously. To estimate the elements of the transition matrices, a classic maximum-likelihood estimator was used. The analysis used Shorrocks’ and Bartholomew’s mobility indices to assess the general mobility level and the Gini index to assess the inequality level. The results show that the one-year probability of staying in the same poverty class varies among regions and is lower for expenditures per equivalent units. The highest probabilities were identified in Podkarpackie (expenditures per capita) and Opolskie (expenditures per equivalent unit), and the lowest probabilities in Kujawsko-Pomorskie (expenditures per capita) and Małopolskie (expenditures per equivalent unit). The highest level of general mobility was noted in Małopolskie, for both categories of expenditures.