“Poor stays poor” - Household asset poverty traps in rural semi-arid India
AbstractAlthough identifying the existence and the nature of household-level poverty traps would have important implications for the design of poverty reduction policies empirical evidence is still scant. A small, but growing empirical literature has begun testing for poverty traps as thresholds in non-linear welfare dynamics. Employing a variety of quantitative methods it has produced a variety of conclusions. This paper uses a uniquely long household panel from three villages in rural India to examine whether the detection of poverty traps may be contingent on the quantitative method used to model household welfare dynamics. It then employs a novel semiparametric panel data estimator that combines the advantages of the existing methods. Since in the context of dynamic poverty traps we are primarily concerned with expected, structural well-being it measures household welfare in assets. Structural immobility in these Indian villages is pervasive. Household asset holdings are stagnant over time. Absent any structural changes, the currently poor are likely to remain poor, suggesting a strong type of poverty trap that is qualitatively different from a dynamic thresholds-type poverty trap. While all types of households face static asset holdings, higher castes, larger landholders and more educated households are significantly less likely to be poor.
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Bibliographic InfoPaper provided by Agricultural and Applied Economics Association in its series 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin with number 49396.
Date of creation: Apr 2009
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Household Welfare Dynamics; Semiparametric Estimation; Penalized Splines; India; Panel Data; Asset Poverty; International Development; I32; C14; O12;
Find related papers by JEL classification:
- I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty
- C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-05-16 (All new papers)
- NEP-CWA-2009-05-16 (Central & Western Asia)
- NEP-DEV-2009-05-16 (Development)
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