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Risk-adjusted poverty in Argentina: measurement and determinants

Listed author(s):
  • Cruces, Guillermo Antonio
  • Wodon, Quentin

Abstract This paper presents a methodology for adjusting measures of income and poverty for the risk faced by a household. The approach draws on the standard economic concept of risk aversion, and it is based on the intuition that households will prefer a steady stream of income to a variable one with the same mean. Relying on a Constant Relative Risk Aversion utility function, we use panel data for Argentina to compute risk-adjusted income and poverty measures. At the aggregate level, we find that taking risk into account substantially increases the poverty headcount. Moreover, a regression analysis suggests that many household characteristics are correlated not only with the average income of the household over time, but also with its variability.

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File URL: http://repositorio.cepal.org/handle/11362/5158
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Paper provided by Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL) in its series Financiamiento para el Desarrollo with number 182.

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Date of creation: Nov 2006
Handle: RePEc:ecr:col035:5158
Note: Includes bibliography
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  6. Mehra, Rajnish & Prescott, Edward C., 1985. "The equity premium: A puzzle," Journal of Monetary Economics, Elsevier, vol. 15(2), pages 145-161, March.
  7. Guillermo Cruces & Quentin T. Wodon, 2003. "Transient and chronic poverty in turbulent times: Argentina 1995-2002," Economics Bulletin, AccessEcon, vol. 9(3), pages 1-12.
  8. Guillermo Cruces & Quentin Wodon, 2003. "Argentinas Crises and the Poor, 1995-2002," STICERD - Distributional Analysis Research Programme Papers 71, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  9. Chisari, Omar & Ferro, Gustavo & González, Mariano & León, Sonia & Maquieryra, Javier & Mastronardi, Leonardo & Roitman, Mauricio & Romero, Carlos & Theller, Ricardo, 2010. "Modelo de Equilibrio General Computado para la Argentina 2006," UADE Textos de Discusión 63_2010, Instituto de Economía, Universidad Argentina de la Empresa.
  10. Bucheli, Marisa & Ferreira-Coimbra, Natalia & Forteza, Alvaro J. & Rossi, Ianina, 2006. "El acceso a la jubilación o pensión en Uruguay: ¿cuántos y quiénes lo lograrían?," Estudios y Perspectivas – Oficina de la CEPAL en Montevideo 4, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
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  13. Jalan, Jyotsna & Ravallion, Martin, 1999. "Are the poor less well insured? Evidence on vulnerability to income risk in rural China," Journal of Development Economics, Elsevier, vol. 58(1), pages 61-81, February.
  14. Christopher Scott, 2000. "Mixed fortunes: A study of poverty mobility among small farm households in Chile, 1968-86," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 155-180.
  15. Stefan Dercon & Pramila Krishnan, 2000. "Vulnerability, seasonality and poverty in Ethiopia," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 25-53.
  16. Damill, Mario & Frenkel, Roberto & Maurizio, Roxana, 2003. "Políticas macroeconómicas y vulnerabilidad social: la Argentina en los años noventa," Financiamiento para el Desarrollo 135, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
  17. Ravallion, Martin, 1988. "Expected Poverty under Risk-Induced Welfare Variability," Economic Journal, Royal Economic Society, vol. 98(393), pages 1171-1182, December.
  18. Bob Baulch & John Hoddinott, 2000. "Economic mobility and poverty dynamics in developing countries," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 1-24.
  19. Paul Makdissi & Quentin Wodon, 2003. "Risk-adjusted measures of wage inequality and safety nets," Economics Bulletin, AccessEcon, vol. 9(1), pages 1-10.
  20. Hildreth, Clifford & Knowles, Glenn J., 1982. "Some Estimates of Farmers' Utility Functions," Technical Bulletins 54545, University of Minnesota, Agricultural Experiment Station.
  21. Bertranou, Fabio & Grushka, Carlos O. & Shulthess, Walter, 2000. "Proyección de responsabilidades fiscales asociadas a la reforma previsional en Argentina," Financiamiento para el Desarrollo 94, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
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