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How strong is the evidence for the existence of poverty traps? A multi country assessment

Author

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  • Andy McKay

    () (Department of Economics, University of Sussex)

  • Emilie Perge

    ()

Abstract

In this paper, we focus on the role of assets in relation to chronic poverty. In particular, we consider the issue of whether it is not just low levels of assets which identify and explain chronic poverty, but also whether the asset accumulation process displays non-linearities and non-convexities that could explain why some households experience persistent poverty. We use parametric and nonparametric methods to test for evidence of the existence of an asset-based poverty trap mechanism across seven panel data sets, in five countries from Africa, Asia and Latin America, and in so doing add substantially to the existing evidence base on this issue.

Suggested Citation

  • Andy McKay & Emilie Perge, 2011. "How strong is the evidence for the existence of poverty traps? A multi country assessment," Working Paper Series 2511, Department of Economics, University of Sussex.
  • Handle: RePEc:sus:susewp:2511
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    File URL: http://www.sussex.ac.uk/economics/documents/wps25-2011-mckay-perge.pdf
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    References listed on IDEAS

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    1. Giesbert, Lena & Schindler, Kati, 2012. "Assets, Shocks, and Poverty Traps in Rural Mozambique," World Development, Elsevier, vol. 40(8), pages 1594-1609.
    2. Sahn, David E. & Stifel, David C., 2000. "Poverty Comparisons Over Time and Across Countries in Africa," World Development, Elsevier, vol. 28(12), pages 2123-2155, December.
    3. Azariadis, Costas & Stachurski, John, 2005. "Poverty Traps," Handbook of Economic Growth,in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 5 Elsevier.
    4. Travis J. Lybbert & Christopher B. Barrett & Solomon Desta & D. Layne Coppock, 2004. "Stochastic wealth dynamics and risk management among a poor population," Economic Journal, Royal Economic Society, vol. 114(498), pages 750-777, October.
    5. Michelle Adato & Michael Carter & Julian May, 2006. "Exploring poverty traps and social exclusion in South Africa using qualitative and quantitative data," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 226-247.
    6. Costas Azariadis & Allan Drazen, 1990. "Threshold Externalities in Economic Development," The Quarterly Journal of Economics, Oxford University Press, vol. 105(2), pages 501-526.
    7. Ruppert,David & Wand,M. P. & Carroll,R. J., 2003. "Semiparametric Regression," Cambridge Books, Cambridge University Press, number 9780521785167, May.
    8. David E. Sahn & David Stifel, 2003. "Exploring Alternative Measures of Welfare in the Absence of Expenditure Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 49(4), pages 463-489, December.
    9. Michael Carter & Christopher Barrett, 2006. "The economics of poverty traps and persistent poverty: An asset-based approach," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 178-199.
    10. Mckay, Andrew & Lawson, David, 2003. "Assessing the Extent and Nature of Chronic Poverty in Low Income Countries: Issues and Evidence," World Development, Elsevier, vol. 31(3), pages 425-439, March.
    11. Christopher Barrett & Paswel Phiri Marenya & John Mcpeak & Bart Minten & Festus Murithi & Willis Oluoch-Kosura & Frank Place & Jean Claude Randrianarisoa & Jhon Rasambainarivo & Justine Wangila, 2006. "Welfare dynamics in rural Kenya and Madagascar," Journal of Development Studies, Taylor & Francis Journals, vol. 42(2), pages 248-277.
    12. Ruppert,David & Wand,M. P. & Carroll,R. J., 2003. "Semiparametric Regression," Cambridge Books, Cambridge University Press, number 9780521780506, May.
    13. Haroon Bhorat & Carlene van der Westhuizen & Pranushka Naidoo, 2006. "Shifts in Non-Income Welfare in South Africa: 1993-2004," Working Papers 06108, University of Cape Town, Development Policy Research Unit.
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    Cited by:

    1. Takashi Kurosaki, 2013. "Dynamics of Household Assets and Income Shocks in the Long-run Process of Economic Development: The Case of Rural Pakistan," Asian Development Review, MIT Press, vol. 30(2), pages 76-109, September.

    More about this item

    Keywords

    poverty traps; assets; chronic poverty; parametric and non-parametric tests;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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