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Distinguishing Chronic Poverty from Transient Poverty in Brazil: Developing a Model for Pseudo-Panel Data

  • Rafael Perez Ribas

    ()

    (International Poverty Centre)

  • Ana Flávia Machado

    ()

    (Center for Development and Regional Planning (Cedeplar), UFMG)

Although many studies have addressed poverty in Brazil, very few of them have analyzed the dynamic nature of this phenomenon. In order to fill this gap, this Working Paper seeks to identify the features that determine the permanence of poverty and the downward mobility into poverty of adults in urban areas. Due to the scarcity of Brazilian panel surveys, we use a ?pseudo-panel? obtained from PNAD, a cross-sectional National Household Survey. The probabilities of staying in states (poor or non-poor) and changing states (such as from poor to non-poor) are estimated with a bivariate probit for grouped data. Our analysis distinguishes between persistent and observed components that can condition the probability of being poor and helps identify the groups that are particularly affected by either transient or chronic poverty. We find that between 1995 and 2003, 73 per cent of urban relative poverty in Brazil was chronic and most of this level was due to an initial persistent condition of poverty. In other words, most poor people are subject to poverty mainly because of their past persistent condition of poverty. These findings suggest that an effective policy of reducing poverty should involve not only a systematic multi-sectoral approach, such as improving human capital and the access to public services, but also an extensive programme of income redistribution.

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File URL: http://www.ipc-undp.org/pub/IPCWorkingPaper36.pdf
File Function: First version, 2007
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Paper provided by International Policy Centre for Inclusive Growth in its series Working Papers with number 36.

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Length: 34
Date of creation: Apr 2007
Date of revision:
Publication status: Published by UNDP - International Poverty Centre, April 2007, pages 1-34
Handle: RePEc:ipc:wpaper:36
Contact details of provider: Web page: http://www.ipc-undp.org
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  13. Baulch, Bob & Masset, Edoardo, 2003. "Do Monetary and Nonmonetary Indicators Tell the Same Story About Chronic Poverty? A Study of Vietnam in the 1990s," World Development, Elsevier, vol. 31(3), pages 441-453, March.
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  17. Deaton, Angus, 1985. "Panel data from time series of cross-sections," Journal of Econometrics, Elsevier, vol. 30(1-2), pages 109-126.
  18. Lorenzo Cappellari & Stephen P. Jemkins, 2002. "Who Stays Poor? Who Becomes Poor? Evidence from the British Household Panel Survey," Economic Journal, Royal Economic Society, vol. 112(478), pages C60-C67, March.
  19. Bourguignon, Francois & Goh, Chor-ching & Kim, Dae Il, 2004. "Estimating individual vulnerability to poverty with pseudo-panel data," Policy Research Working Paper Series 3375, The World Bank.
  20. Bird, Kate & Shepherd, Andrew, 2003. "Livelihoods and Chronic Poverty in Semi-Arid Zimbabwe," World Development, Elsevier, vol. 31(3), pages 591-610, March.
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