Resumen de Are income poverty and perceptions of financial difficulties dynamically interrelated?
The economic well-being of an individual can be measured in several ways. The standard income poverty approach aims at determining objectively whether individuals' income fall short from a pre-de ned income poverty line.
Alternatively, one may rely on subjective information about perceived nancial diculties to assess individuals' welfare. Income poverty and perceived nancial diculties are therefore complementary concepts based on di erent types of information. Knowledge about how these two concepts are dynamically interrelated is however limited. By estimating dynamic bivariate models controlling for state dependence, unobserved heterogeneity and initial conditions, we precisely aim at determining whether there are dynamic cross-e ects between both concepts implying for example that past income poverty inuence current perception of nancial diculties. The data used for our empirical application are those from the Luxembourg Socio-economic panel \Liewen zu Letzebuerg" (PSELL3) for the years 2003 to 2011.
