Childbirth and poverty in Europe: A dynamic bivariate approach

Abstract

We use the 2015–2018 European Union Statistics on Income and Living Conditions panel data and a dynamic bivariate probit model to estimate the impact of childbirth on the risk of poverty in 25 European countries. We model both poverty and childbirth mechanisms, identifying genuine state dependence and accounting for feedback effects from past poverty to childbirth. We find that childbirth slightly increases the risk of poverty in Europe, but some heterogeneities emerge at the country level. When disentangling the effects of childbirth conditional on past poverty status, it appears that childbirth determines redistributive effects possibly induced by welfare systems. We find evidence of genuine state dependence and suggests that discouraging factors induced by the experience of poverty itself has increased over time. The risk of poverty is triggered by the presence of dependent members in the household, while education and employment stability are helpful to combat poverty.