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Is There a Poverty Trap in Paraguay? Evidence from Pseudo-panels and Nonlinear Income Dynamics

Author

Listed:
  • Lanusse Serena
  • Delait Bruno Norbert

Abstract

In this study we examine the existence of income poverty traps in Paraguay’s urban and rural areas. In order to do so, we use dynamic pseudo panels to overcome difficulties that arise with traditional panels: lack of long panels in developing countries, measurement errors and attrition. For rural areas, we find non linear income dynamics, but no evidence of poverty traps, even allowing for cohort heterogeneity. On the other hand, our outcomes for urban areas vary between models, as we find that under some specifications there is an unstable equilibrium indicating there could be a trap affecting households that fall under a critical threshold, although this threshold is below the data range for urban income.

Suggested Citation

  • Lanusse Serena & Delait Bruno Norbert, 2025. "Is There a Poverty Trap in Paraguay? Evidence from Pseudo-panels and Nonlinear Income Dynamics," Asociación Argentina de Economía Política: Working Papers 4812, Asociación Argentina de Economía Política.
    • Handle: RePEc:aep:anales:4812
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    References listed on IDEAS

    as
    1. McKenzie, D.J.David J., 2004. "Asymptotic theory for heterogeneous dynamic pseudo-panels," Journal of Econometrics, Elsevier, vol. 120(2), pages 235-262, June.
    2. Clare Balboni & Oriana Bandiera & Robin Burgess & Maitreesh Ghatak & Anton Heil, 2023. "Why Do People Stay Poor?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(2), pages 785-844.
    3. Clare Balboni & Oriana Bandiera & Robin Burgess & Maitreesh Ghatak & Anton Heil, 2022. "Why Do People Stay Poor? [“Exploring Poverty Traps and Social Exclusion in South Africa Using Qualitative and Quantitative Data,”]," The Quarterly Journal of Economics, Oxford University Press, vol. 137(2), pages 785-844.
    4. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-298, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    JEL classification:

    • I3 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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