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Spatial poverty traps?

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Author Info
Jalan, Jyotsna
Ravallion, Martin

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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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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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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;

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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. Romer, Paul M, 1986. "Increasing Returns and Long-run Growth," Journal of Political Economy, University of Chicago Press, vol. 94(5), pages 1002-37, October. [Downloadable!] (restricted)
  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. [Downloadable!] (restricted)
  3. George J. Borjas, 1994. "Ethnicity, Neighborhoods, and Human Capital Externalities," NBER Working Papers 4912, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  4. Ravallion, Martin & Jalan, Jyotsna, 1996. "Growth divergence due to spatial externalities," Economics Letters, Elsevier, vol. 53(2), pages 227-232, November. [Downloadable!] (restricted)
  5. Costas Azariadis, 1996. "The Economics of Poverty Traps Part One: Complete Markets," Working Papers 9606, Centro de Investigacion Economica, ITAM.
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  6. 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. [Downloadable!] (restricted)
  7. Barro, Robert J & Sala-i-Martin, Xavier, 1992. "Convergence," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 223-51, April. [Downloadable!] (restricted)
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  8. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July. [Downloadable!] (restricted)
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  1. Stefan Dercon, 2004. "Growth and Shocks: evidence from rural Ethiopia," Development and Comp Systems 0409036, EconWPA. [Downloadable!]
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  2. William Easterly & Ross Levine, 2002. "It's Not Factor Accumulation: Stylized Facts and Growth Models," Working Papers Central Bank of Chile 164, Central Bank of Chile. [Downloadable!]
  3. Deichmann, Uwe & Fay, Marianne & Jun Koo & Lall, Somik V., 2002. "Economic structure, productivity, and infrastructure quality in southern Mexico," Policy Research Working Paper Series 2900, The World Bank. [Downloadable!]
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  4. 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. [Downloadable!]
  5. 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. [Downloadable!]
  6. W.J. Burke & T.S. Jayne, 2008. "Spatial Disadvantages or Spatial Poverty Traps: Household Evidence from Rural Kenya," International Development Working Papers 93, Department of Agricultural Economics, Michigan State University. [Downloadable!]
  7. 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. [Downloadable!]
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