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Do poverty traps exist ?

Author

Listed:
  • Kraay, Aart
  • McKenzie, David

Abstract

This paper reviews the empirical evidence on the existence of poverty traps, understood as self-reinforcing mechanisms through which poor individuals or countries remain poor. Poverty traps have captured the interest of many development policy makers, because poverty traps provide a theoretically coherent explanation for persistent poverty. They also suggest that temporary policy interventions may have long-term effects on poverty. However, a review of the reduced-form empirical evidence suggests that truly stagnant incomes of the sort predicted by standard models of poverty traps are in fact quite rare. Moreover, the empirical evidence regarding several canonical mechanisms underlying models of poverty traps is mixed.

Suggested Citation

  • Kraay, Aart & McKenzie, David, 2014. "Do poverty traps exist ?," Policy Research Working Paper Series 6835, The World Bank.
  • Handle: RePEc:wbk:wbrwps:6835
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Rural Poverty Reduction; Achieving Shared Growth; Economic Theory&Research; Debt Markets; Poverty Reduction Strategies;
    All these keywords.

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