The institutions of poverty
Institutions shape the incentives and opportunities people find and create. The institutions of poverty discourage accumulations of assets, disable accountability of governance, and dilute potential. After an empirical overview of past and present prevalence of poverty and its scholarly explanations, the macro-economic conditions of poverty are outlined. At the core of the chapter is the discussion of four institutions of poverty within economies; those are lack of assets, lack of accountability, lack of income predictability, and unfavorable spatial distribution. Analyzing the four institutions concurrently will explain poverty within any one country, either low- or high-income, and will allow establishing the level and persistence of poverty in any given country. Their relative weight as determinants of poverty persistence is situation-specific, i. e. differs from region to region, country to country, and social set-up to social-set-up. Selected case-studies – of worldwide microfinance, of Germany's labor market reform, of India's Rural Employment Guarantee act – illustrate the heuristic framework that this chapter proposes to students and policy makers concerned of poverty.
|Date of creation:||2008|
|Date of revision:|
|Publication status:||Published in Welfare Economics Chapter 1 (2009): pp. 35-59|
|Contact details of provider:|| Postal: Ludwigstraße 33, D-80539 Munich, Germany|
Web page: https://mpra.ub.uni-muenchen.de
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- Rodrik, Dani & Subramanian, Arvind & Trebbi, Francesco, 2002.
"Institutions Rule: The Primacy of Institutions Over Geography and Integration in Economic Development,"
CEPR Discussion Papers
3643, C.E.P.R. Discussion Papers.
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