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Household Income Dynamics in Two Transition Economies

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Author Info
Michael Lokshin (World Bank)
Martin Ravallion (World Bank)

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Abstract

We test for the existence of poverty traps and distribution-dependent growth using a nonlinear dynamic panel data model of household incomes allowing for endogenous attrition. Our estimates for Hungary and Russia in the 1990s reveal significant nonlinearity in the dynamics, consistent with the claim that income inequality attenuates growth in mean income. However, we do not find evidence of a threshold effect at low incomes, as postulated by models of dynamic poverty traps. Our results indicate that households generally bounce back from transient shocks, though we find that the adjustment process is slower for households who are poorer in steady state.

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Publisher Info
Article provided by Berkeley Electronic Press in its journal Studies in Nonlinear Dynamics & Econometrics.

Volume (Year): 8 (2004)
Issue (Month): 3 ()
Pages: 1182-1182
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Handle: RePEc:bep:sndecm:8:2004:3:1182-1182

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Related research
Keywords: Nonlinear dynamics poverty traps multiple equilibria growth inequality Hungary Russia

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Martin Ravallion, 1997. "Famines and Economics," Journal of Economic Literature, American Economic Association, vol. 35(3), pages 1205-1242, September. [Downloadable!] (restricted)
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  2. Day, R H, 1992. "Complex Economic Dynamics: Obvious in History, Generic in Theory, Elusive in Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(S), pages S9-23, Suppl. De. [Downloadable!] (restricted)
  3. Mroz, Thomas A., 1999. "Discrete factor approximations in simultaneous equation models: Estimating the impact of a dummy endogenous variable on a continuous outcome," Journal of Econometrics, Elsevier, vol. 92(2), pages 233-274, October. [Downloadable!] (restricted)
  4. Costas Azariadis, 1996. "The Economics of Poverty Traps Part One: Complete Markets," Working Papers 9606, Centro de Investigacion Economica, ITAM.
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  5. Philippe Aghion & Eve Caroli & Cecilia Garcia-Penalosa, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Journal of Economic Literature, American Economic Association, vol. 37(4), pages 1615-1660, December. [Downloadable!] (restricted)
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  6. Mroz, Thomas A & Popkin, Barry M, 1995. "Poverty and the Economic Transition in the Russian Federation," Economic Development and Cultural Change, University of Chicago Press, vol. 44(1), pages 1-31, October.
  7. Banerjee, Abhijit V & Newman, Andrew F, 1994. "Poverty, Incentives, and Development," American Economic Review, American Economic Association, vol. 84(2), pages 211-15, May. [Downloadable!] (restricted)
  8. Bhargava, Alok & Sargan, J D, 1983. "Estimating Dynamic Random Effects Models from Panel Data Covering Short Time Periods," Econometrica, Econometric Society, vol. 51(6), pages 1635-59, November. [Downloadable!] (restricted)
  9. Jyotsna Jalan & Martin Ravallion, 1998. "Geographic Poverty Traps?," Boston University - Institute for Economic Development 86, Boston University, Institute for Economic Development.
  10. Simon Commander & Andrei Tolstopiatenko & Ruslan Yemtsov, 1999. "Channels of redistribution: Inequality and poverty in the Russian transition," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(2), pages 411-447, July. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Walter Sosa-Escudero & Mariana Marchionni & Omar Arias, 2006. "Sources of Income Persistence: Evidence from Rural El Salvador," Working Papers 0037, CEDLAS, Universidad Nacional de La Plata. [Downloadable!]
  2. Antman, Francisca & McKenzie, David J., 2005. "Poverty traps and nonlinear income dynamics with measurement error and individual heterogeneity," Policy Research Working Paper Series 3764, The World Bank. [Downloadable!]
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  3. Kraay, Aart & Raddatz, Claudio, 2005. "Poverty traps, aid, and growth," Policy Research Working Paper Series 3631, The World Bank. [Downloadable!]
    Other versions:
  4. Shahin Yaqub, 2003. "Relating Severe Poverty and Chronic Poverty," Working Papers wpdea0307, Department of Applied Economics at Universitat Autonoma of Barcelona. [Downloadable!]
  5. Jalan, Jyotsna & Ravallion, Martin, 2001. "Household income dynamics in rural China," Policy Research Working Paper Series 2706, The World Bank. [Downloadable!]
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