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Spatial poverty traps?

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  • Jalan, Jyotsna
  • Ravallion, Martin

Abstract

Can place of residence make the difference between growth and contraction in living standards for otherwise identical households? The authors test for the existence of spatial poverty traps, using a micro model of consumption growth incorporating geographic externalities, whereby neighborhood endowments of physical and human capital influence the productivity of a household's own capital. By allowing for nonstationary but unobserved individual effects on growth rates, they are able to deal with latent heterogeneity (whereby hidden factors entail that seemingly identical households see different consumption gains over time), yet identify the effects of stationary geographic variables. They estimate the model using farm-household panel data from post-reform rural China. They find strong evidence of spatial poverty traps. Their results strengthen the case -- both for efficiency and equity -- for investing in the geographic capital of poor people.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1862.

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Date of creation: 31 Dec 1997
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Handle: RePEc:wbk:wbrwps:1862

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Related research

Keywords: Environmental Economics&Policies; Economic Theory&Research; Public Health Promotion; Health Monitoring&Evaluation; Economic Conditions and Volatility; Achieving Shared Growth; Economic Theory&Research; Environmental Economics&Policies; Inequality; Health Monitoring&Evaluation;

References

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  1. George J. Borjas, 1994. "Ethnicity, Neighborhoods, and Human Capital Externalities," NBER Working Papers 4912, National Bureau of Economic Research, Inc.
  2. Chen, Shaohua & Ravallion, Martin, 1996. "Data in transition: Assessing rural living standards in Southern China," China Economic Review, Elsevier, vol. 7(1), pages 23-56.
  3. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  4. Azariadis, Costas, 1996. " The Economics of Poverty Traps: Part One: Complete Markets," Journal of Economic Growth, Springer, vol. 1(4), pages 449-96, December.
  5. Hall, Alastair R., 2004. "Generalized Method of Moments," OUP Catalogue, Oxford University Press, number 9780198775201, Octomber.
  6. Ravallion, Martin & Jalan, Jyotsna, 1996. "Growth divergence due to spatial externalities," Economics Letters, Elsevier, vol. 53(2), pages 227-232, November.
  7. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
  8. Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988. "Estimating Vector Autoregressions with Panel Data," Econometrica, Econometric Society, vol. 56(6), pages 1371-95, November.
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Citations

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Cited by:
  1. Van de Walle, Dominique, 1998. "Protecting the poor in Vietnam's emerging market economy," Policy Research Working Paper Series 1969, The World Bank.
  2. Siegel, Paul B., 2005. "Using an asset-based approach to identify drivers of sustainable rural growth and poverty reduction in Central America : a conceptual framework," Policy Research Working Paper Series 3475, The World Bank.
  3. Burke, William J. & Jayne, Thomas S., 2008. "Spatial Disadvantages or Spatial Poverty Traps: Household Evidence from Rural Kenya," Food Security International Development Working Papers 54560, Michigan State University, Department of Agricultural, Food, and Resource Economics.
  4. Baliamoune-Lutz, Mina & Lutz, Stefan H., 2004. "Rural-urban inequality in Africa: A panel study of the effects of trade liberalization and financial deepening," ZEI Working Papers B 06-2004, ZEI - Center for European Integration Studies, University of Bonn.
  5. Carvalho, Alexandre & Lall, Somik V. & Timmins, Christopher, 2006. "Regional subsidies and industrial prospects of lagging regions," Policy Research Working Paper Series 3843, The World Bank.
  6. Ravallion, Martin & Shaohua Chen, 1998. "When economic reform is faster than statistical reform - measuring and explaining inequality in rural China," Policy Research Working Paper Series 1902, The World Bank.
  7. Uwe Deichmann & Marianne Fay & Jun Koo & Somik V. Lall, 2004. "Economic structure, productivity, and infrastructure quality in Southern Mexico," The Annals of Regional Science, Springer, vol. 38(3), pages 361-385, 09.
  8. Stefan Dercon, 2004. "Growth and Shocks: evidence from rural Ethiopia," Development and Comp Systems 0409036, EconWPA.
  9. Michael Epprecht & Daniel Müller & Nicholas Minot, 2011. "How remote are Vietnam’s ethnic minorities? An analysis of spatial patterns of poverty and inequality," The Annals of Regional Science, Springer, vol. 46(2), pages 349-368, April.
  10. McCulloch, Neil & Calandrino, Michele, 2003. "Vulnerability and Chronic Poverty in Rural Sichuan," World Development, Elsevier, vol. 31(3), pages 611-628, March.

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