How valid are synthetic panel estimates of poverty dynamics?

Hérault, Nicolas and Jenkins, Stephen P. ORCID: 0000-0002-8305-9774 (2019) How valid are synthetic panel estimates of poverty dynamics? Journal of Economic Inequality, 17 (1). pp. 51-76. ISSN 1569-1721

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Abstract

A growing literature uses repeated cross-section surveys to derive ‘synthetic panel’ data estimates of poverty dynamics statistics. It builds on the pioneering study by Dang et al. (‘DLLM’, Journal of Development Economics, 2014) providing bounds estimates and the innovative refinement proposed by Dang and Lanjouw (‘DL’, World Bank Policy Research Working Paper 6504, 2013) providing point estimates of the statistics of interest. We provide new evidence about the accuracy of synthetic panel estimates relative to benchmarks based on estimates derived from genuine household panel data, employing high quality data from Australia and Britain, while also examining the sensitivity of results to a number of analytical choices. For these two high-income countries we show that DL-method point estimates are distinctly less accurate than estimates derived in earlier validity studies, all of which focus on low- and middle-income countries. We also demonstrate that estimate validity depends on choices such as the age of the household head (defining the sample), the poverty line level, and the years analyzed. DLLM parametric bounds estimates virtually always include the true panel estimates, though the bounds can be wide.

Item Type:	Article
Additional Information:	© 2019 © Springer Science+Business Media
Divisions:	Social Policy
Subjects:	H Social Sciences > HN Social history and conditions. Social problems. Social reform
JEL classification:	I - Health, Education, and Welfare > I3 - Welfare and Poverty > I32 - Measurement and Analysis of Poverty D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions C - Mathematical and Quantitative Methods > C5 - Econometric Modeling > C52 - Model Evaluation and Selection
Date Deposited:	06 Feb 2019 17:15
Last Modified:	16 Apr 2024 03:48
URI:	http://eprints.lse.ac.uk/id/eprint/100043

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