‘I Wish I Had 100 Dollars a Month …’ The Determinants of Poverty in Mongolia

We consider extreme household poverty to be a risk factor in youth poverty in Mongolia, one of the 50 poorest countries in the world. The emphasis is placed on the identification of poverty trap mechanisms generated through selective access to education. We use a unique, nationally representative School-to-Work Transition survey. A young person born in a household living on US$1 a day has a ceteris paribus probability of school dropout that is four times higher than a contemporary born into a family living on more than $3 a day. Parental educational background is a good proxy of household poverty. Fairlie decomposition suggests that differences in characteristics expound only one-third of the gap. School dropout results in twice the probability of working poverty. It reduces the chances of women being employed and increases those of men, as women drop out of school to attend to domestic chores, while men pursue child labour in herding.