Modelling Vulnerability in the UK

Bandyopadhyay, Sanghamitra; Cowell, Frank

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Modelling Vulnerability in the UK

LSE STICERD Research Paper No. 89

39 Pages Posted: 9 Apr 2008

See all articles by Sanghamitra Bandyopadhyay

Sanghamitra Bandyopadhyay

London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)

Frank Cowell

London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)

Date Written: February 2007

Abstract

In this paper we examine the concept of "vulnerability" (Townsend 1994) within thecontext of income mobility of the poor. We test for the dynamics of vulnerablehouseholds in the UK using Waves 1 - 12 of the British Household Panel Survey andfind that, of three different types of risks that we test for, household-specific shocksand economy-wide aggregate shocks have the greatest impact on consumption, incomparison to shocks to the income stream. Quantile-specific estimates revealspecific quantiles, particularly those around the poverty line which are mostsusceptible to be vulnerable to shocks to the income stream. The estimates are foundto be robust to household composition and year-specific shocks.

JEL Classification: D1, D31, I32

Suggested Citation: Suggested Citation

Bandyopadhyay, Sanghamitra and Cowell, Frank A., Modelling Vulnerability in the UK (February 2007). LSE STICERD Research Paper No. 89, Available at SSRN: https://ssrn.com/abstract=1117708