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On the Definition and Measurement of Chronic Poverty

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  • Rolf Aaberge
  • Magne Mogstad

Abstract

As an alternative to the conventional methods for measuring chronic poverty, this paper proposes to use an interpersonal comparable measure of permanent income as a basis for defining and measuring chronic poverty. This approach accounts for the fact that individuals may undertake inter-period income transfers if it is to their advantage. Moreover, it allows for individual-specific interest rates on borrowing and saving as well as for the presence of liquidity constraints. Due to its general nature the proposed method proves useful for evaluating the theoretical basis of the standard methods for measuring chronic poverty.

Suggested Citation

  • Rolf Aaberge & Magne Mogstad, 2006. "On the Definition and Measurement of Chronic Poverty," ICER Working Papers 36-2006, ICER - International Centre for Economic Research.
    • Handle: RePEc:icr:wpicer:36-2006
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    Cited by:

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    2. Luigi Fabbris, Irene Sguotti, 2013. "Measuring Chronic Poverty In Italy," RIEDS - Rivista Italiana di Economia, Demografia e Statistica - The Italian Journal of Economic, Demographic and Statistical Studies, SIEDS Societa' Italiana di Economia Demografia e Statistica, vol. 67(2), pages 99-122, April-Jun.
    3. Werner Peña, 2017. "What are the determinants of chronic and transient poverty in El Salvador?," Global Development Institute Working Paper Series 112017, GDI, The University of Manchester.
    4. Mai, Tung & Mahadevan, Renuka, 2016. "A research note on the poverty dynamics and cost of poverty inequality: Case study of Indonesia," Economic Analysis and Policy, Elsevier, vol. 49(C), pages 100-107.
    5. Garza-Rodriguez, Jorge & Fernández-Ramos, Jennifer & Garcia-Guerra, Ana K. & Morales-Ramirez, Gabriela, 2015. "The dynamics of poverty in Mexico: A multinomial logistic regression analysis," MPRA Paper 77743, University Library of Munich, Germany.
    6. Maria Emma Santos, 2012. "Measuring Chronic Poverty," OPHI Working Papers 52, Queen Elizabeth House, University of Oxford.
    7. Jennifer Fernández-Ramos & Ana K. Garcia-Guerra & Jorge Garza-Rodriguez & Gabriela Morales-Ramirez, 2016. "The dynamics of poverty transitions in Mexico," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 43(11), pages 1082-1095, November.

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    More about this item

    Keywords

    Intertemporal choice; liquidity constraints; permanent income; chronic poverty.;
    All these keywords.

    JEL classification:

    • D71 - Microeconomics - - Analysis of Collective Decision-Making - - - Social Choice; Clubs; Committees; Associations
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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