Table of Contents
Economics Research International
Volume 2010 (2010), Article ID 854634, 17 pages
http://dx.doi.org/10.1155/2010/854634
Research Article

Joint Estimation of the Characteristics and Intensity of Poverty in Spain: The Case of Imputed Rent

1Department of Economic Analysis I, UNED, 28040 Madrid, Spain
2Department of Applied Economics and Statistics, UNED, 28040 Madrid, Spain

Received 12 July 2010; Accepted 28 September 2010

Academic Editor: Russell Smyth

Copyright © 2010 José L. Calvo et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

In 2007 the Spanish National Institute of Statistics modified the methodological approach to the Survey of Income and Living Conditions and included an estimate of Imputed Rent. It removes one of the main criticisms of Spanish poverty studies since this variable is associated with home ownership, and because more than 80% of Spanish families are homeowners, its exclusion biased the estimates of the size of Spain's poor population and poverty intensity. We estimate a Heckman model with a selection equation in which the dependent variable is the probability of being poor, and a truncated regression to explain poverty intensity. Our findings have at least two economic policy implications: Spanish social policy against poverty should take into account geographical differences but, at the same time, should consider Imputed Rent. Without this variable efforts should concentrate in Spanish less developed regions and rural areas, but if we include it poverty increases in urban population. The article has also reveals that most retired people cannot be considered poor if we take into account wealth (imputed rent included) instead of current income (pension).