Determinants of poverty – binary logit model with interaction terms approach

The problem of monetary aspect of welfare in employees’ household was undertaken in this paper. In order to identify the households in danger of poverty, the binary logit models approach was applied. It was found that the estimation of models without the interaction terms results in misspecification error. Due to this, the interaction terms, between the socio-economic factors of households were included in the model. The obtained results can have significant importance in the aspect of social policy in Poland.