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Consumption growth and spatial poverty traps: an analysis of the effects of social services and community infrastructures on living standards in rural Peru

  • Philippe De Vreyer

    ()

    (Université de Lille II, DIAL)

  • Javier Herrera

    ()

    (DIAL, IRD, Paris)

  • Sandrine Mesplé-Somps

    ()

    (DIAL, IRD, Paris)

We test the effect of local geographic endowment of capital on household growth in living standards in rural Peru, using a four years unbalanced panel data set. Our theoretical model of household consumption growth allows for the effect of community variables to modify the returns to augmented capital in the household production function. Data are coming from three different sources: ENAHO 1997-2000 household surveys, the population census of 1993 and the district infrastructure census of 1997. Altogether the addition of these different data sources makes an unusually rich data set, at least when considered with developing country standards. As in Jalan and Ravallion (2002), we use a quasi-differencing method to identify the impact of locally determined geographic and socioeconomic variables, while removing unobserved household and community level fixed effects. GMM are then used to estimate the model parameters. Several significant interesting results appear, confirming that private consumption growth depends on local geographic variables. _________________________________ A partir d’un panel non cylindré de 4 années nous testons l’effet du capital géographique local sur la croissance du bien-être des ménages ruraux au Pérou. Le modèle théorique de croissance de la consommation autorise les variables mesurées au niveau communautaire à modifier le rendement du capital augmenté dans la fonction de production du ménage. Les données proviennent de trois sources : les enquêtes ménages ENAHO 1997-2000, le recensement de la population de 1993 et le recensement sur les infrastructures des municipalités de 1997. L’ensemble constitue une base de données d’une richesse exceptionnelle dans le contexte d’une économie en développement. A l’instar de Jalan et Ravallion (2002), nous utilisons la méthode de quasi-différenciation pour identifier les effets des variables géographiques tout en éliminant les effets fixes géographiques et individuels inobservés. L’estimation est effectuée moyennant l’emploi de la méthode des moments généralisés. Plusieurs résultats intéressants sont obtenus, confirmant l’hypothèse selon laquelle la croissance de la consommation des ménages dépend de facteurs géographiques locaux.

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File URL: http://www.dial.ird.fr/media/ird-sites-d-unites-de-recherche/dial/documents/publications/doc_travail/2002/2002-17
File Function: Revised version, 2003
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Paper provided by DIAL (Développement, Institutions et Mondialisation) in its series Working Papers with number DT/2002/17.

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Length: 34 pages
Date of creation: Dec 2002
Date of revision: Oct 2003
Handle: RePEc:dia:wpaper:dt200217
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  1. Alberto Alesina & Reza Baqir & William Easterly, 1997. "Public Goods and Ethnic Divisions," NBER Working Papers 6009, National Bureau of Economic Research, Inc.
  2. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  3. John Luke Gallup & Jeffrey D. Sachs & Andrew Mellinger, 1999. "Geography and Economic Development," CID Working Papers 1, Center for International Development at Harvard University.
  4. Durlauf, Steven N., 1994. "Spillovers, stratification, and inequality," European Economic Review, Elsevier, vol. 38(3-4), pages 836-845, April.
  5. Jyotsna Jalan & Martin Ravallion, 1998. "Geographic Poverty Traps?," Boston University - Institute for Economic Development 86, Boston University, Institute for Economic Development.
  6. Paul M Romer, 1999. "Increasing Returns and Long-Run Growth," Levine's Working Paper Archive 2232, David K. Levine.
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  8. Paxson, Christina & Schady, Norbert, 1999. "Do school facilities matter? : the case of the Peruvian Social Fund (FONCODES)," Policy Research Working Paper Series 2229, The World Bank.
  9. Schady, Norbert R., 2000. "Picking the poor : indicators for geographic targeting in Peru," Policy Research Working Paper Series 2477, The World Bank.
  10. Robert J. Barro & Paul Romer, 1993. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr93-1, April.
    • Robert J. Barro & Paul M. Romer, 1991. "Economic Growth," NBER Books, National Bureau of Economic Research, Inc, number barr91-1, April.
  11. Ahn, Seung Chan & Hoon Lee, Young & Schmidt, Peter, 2001. "GMM estimation of linear panel data models with time-varying individual effects," Journal of Econometrics, Elsevier, vol. 101(2), pages 219-255, April.
  12. Ravallion, Martin, 2001. "Growth, inequality, and poverty : looking beyond averages," Policy Research Working Paper Series 2558, The World Bank.
  13. David E. Bloom & Jeffrey D. Sachs, 1998. "Geography, Demography, and Economic Growth in Africa," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 29(2), pages 207-296.
  14. Ravallion, Martin & Wodon, Quentin, 1997. "Poor areas, or only poor people?," Policy Research Working Paper Series 1798, The World Bank.
  15. David Stifel & Harold Alderman, 2006. "The "Glass of Milk" Subsidy Program and Malnutrition in Peru," World Bank Economic Review, World Bank Group, vol. 20(3), pages 421-448.
  16. Edmundo Murrugarra & Martin Valdivia, 1999. "The Returns to Health for Peruvian Urban Adults: Differentials Across Genders, the Life Cycle and the Wage Distribution," Research Department Publications 3050, Inter-American Development Bank, Research Department.
  17. Javier Herrera, 2001. "Poverty dynamics in Peru, 1997-1999," Working Papers DT/2001/09, DIAL (Développement, Institutions et Mondialisation).
  18. Gallup, J.L. & Sachs, J.D. & Mullinger, A., 1999. "Geography and Economic Development," Papers 1, Chicago - Graduate School of Business.
  19. Miguel, Edward & Gugerty, Mary Kay, 2005. "Ethnic diversity, social sanctions, and public goods in Kenya," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2325-2368, December.
  20. 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.
  21. Máximo Torero & Javier Escobal, 2000. "Does Geography Explain Differences in Economic Growth in Peru?," Research Department Publications 3103, Inter-American Development Bank, Research Department.
  22. Escobal, Javier & Torero, Maximo, 2003. "Adverse Geography and Differences in Welfare in Peru," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
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