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Pathways from Poverty toward Middle Class: Determinants of Socio-economic Class Mobility in the Rural Philippines

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  • Fuwa, Nobuhiko

Abstract

Exploiting a unique set of longitudinal household data collected in a Philippine village over a thirty year period (1962-1994), this paper seeks to identify the pathways of exiting rural poverty and also the determinants of middle class stability. We also test the changes in the returns on assets in exiting poverty after the 1980s. We find that better access to land facilitates accumulation in agriculture while schooling has positive effects on upward mobility in both agricultural and non-agricultural sectors. Macroeconomic growth was, however, the key determinant of poverty-exit probabilities until the early 1980s. After the 1980s, poverty exit-paths through ‘agricultural ladder’ narrowed, schooling and growth became equally crucial determinants due to the increased returns to schooling (mainly due to the expansion of the international migration opportunities), and labor endowments also became important for the lower, but not upper, social strata (providing an economic incentive to have more children for the poor). Unlike the typical findings from poverty dynamics in the US, we find no evidence of state dependence in the poverty spells. This suggests that the village economy under study is quite dynamic so that policy interventions addressing the observed determinants (especially access to education and economic growth) could well go a long way in pulling the poor out of poverty in the rural Philippines.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 23690.

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Date of creation: Feb 2003
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Handle: RePEc:pra:mprapa:23690

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Related research

Keywords: economic mobility; poverty dynamics; human capital; rural poverty; Philippines;

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References

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  1. Mary Jo Bane & David T. Ellwood, 1986. "Slipping into and out of Poverty: The Dynamics of Spells," Journal of Human Resources, University of Wisconsin Press, vol. 21(1), pages 1-23.
  2. Adelman, Irma & Morley, Samuel & Schenzler, Christoph & Warning, Matthew, 1994. "Estimating income mobility from census data," Journal of Policy Modeling, Elsevier, vol. 16(2), pages 187-213, April.
  3. Lillard, Lee A & Willis, Robert J, 1978. "Dynamic Aspects of Earning Mobility," Econometrica, Econometric Society, vol. 46(5), pages 985-1012, September.
  4. Fuwa, Nobuhiko, 1999. "An Analysis of Social Mobility in a Village Community: The Case of a Philippine Village," Journal of Policy Modeling, Elsevier, vol. 21(1), pages 101-138, January.
  5. Ann Huff Stevens, 1995. "Climbing Out of Poverty, Falling Back In: Measuring the Persistence of Poverty over Multiple Spells," NBER Working Papers 5390, National Bureau of Economic Research, Inc.
  6. Abhijit V. Banerjee & Andrew F. Newman, 1990. "Occupational Choice and the Process of Development," Discussion Papers 911, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  7. D. McFadden & J. Hausman, 1981. "Specification Tests for the Multinominal Logit Model," Working papers 292, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Eswaran, Mukesh & Kotwal, Ashok, 1986. "Access to Capital and Agrarian Production Organisation," Economic Journal, Royal Economic Society, vol. 96(382), pages 482-98, June.
  9. Ljungqvist, Lars, 1993. "Economic underdevelopment : The case of a missing market for human capital," Journal of Development Economics, Elsevier, vol. 40(2), pages 219-239, April.
  10. Bob Baulch & John Hoddinott, 2000. "Economic mobility and poverty dynamics in developing countries," The Journal of Development Studies, Taylor and Francis Journals, vol. 36(6), pages 1-24.
  11. Loury, Glenn C, 1981. "Intergenerational Transfers and the Distribution of Earnings," Econometrica, Econometric Society, vol. 49(4), pages 843-67, June.
  12. Jyotsna Jalan & Martin Ravallion, 2000. "Is transient poverty different? Evidence for rural China," The Journal of Development Studies, Taylor and Francis Journals, vol. 36(6), pages 82-99.
  13. Galor, Oded & Zeira, Joseph, 1993. "Income Distribution and Macroeconomics," Review of Economic Studies, Wiley Blackwell, vol. 60(1), pages 35-52, January.
  14. Swaminathan, Madhura, 1991. "Measuring Mobility in Wealth: Some Estimates from a South Indian Village," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 53(2), pages 171-83, May.
  15. Hanratty, Maria J & Blank, Rebecca M, 1992. "Down and Out in North America: Recent Trends in Poverty Rates in the United States and Canada," The Quarterly Journal of Economics, MIT Press, vol. 107(1), pages 233-54, February.
  16. Arsenio M. Balisacan, 2001. "Poverty in the Philippines : An Update and Reexamination," Philippine Review of Economics, University of the Philippines School of Economics and Philippine Economic Society, vol. 38(1), pages 15-52, June.
  17. Stevens, Ann Huff, 1994. "The Dynamics of Poverty Spells: Updating Bane and Ellwood," American Economic Review, American Economic Association, vol. 84(2), pages 34-37, May.
  18. John Dreze & Peter Lanjouw & Nicholas Stern, 1992. "Economic Mobility and Agricultural Labour in Rural India: A Case Study," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 27, pages 25-54.
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Cited by:
  1. Stefan Dercon & Joseph S. Shapiro, 2007. "Moving On, Staying Behind, Getting Lost: Lessons on poverty mobility from longitudinal data," Economics Series Working Papers GPRG-WPS-075, University of Oxford, Department of Economics.

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