Progress Toward The Sustainable Development Goal on Poverty: Assessing The Effect of Income Growth on The Exit Time from Poverty in Benin

There is a large and growing literature on the relation between economic growth and poverty reduction. The evidence points to a negative correlation between growth and poverty. However, many studies also find that growth does not mechanically reduce poverty, arguing that in many cases rapid economic growth has not necessarily been pro†poor. This paper uses the concept of ‘exit time from poverty’ to assess the potential of economic growth to reduce poverty in Benin; thus accelerating the progress of the country toward the achievement of the sustainable development goal of eliminating poverty by 2030. It uses nationally representative household data covering the period 2009–2011 and analyses the impacts of various growth scenarios on poverty. The results show that, with a growth rate in income per capita of 4.2% per year, it will take between 7 and 10 years for the average poor household to escape from poverty. The paper also finds that stronger economic growth leads to shorter average time to exit from poverty. However, there is a lot of heterogeneity in the exit time from poverty, with various households' characteristics such as households' size and human capital being important determinants. Taken together, the results suggest that policies to accelerate poverty reduction should emphasize the development of human capital and ensure that growth is inclusive and pro†poor. Copyright © 2017 John Wiley & Sons, Ltd and ERP Environment