Longitudinal data on household living standards open the way to a deeper analysis of the nature and extent of poverty. While a number of studies have exploited this type of data to distinguish transitory from more chronic forms of income or expenditure poverty, this paper develops an asset-based approach to poverty analysis that makes it possible to distinguish deep-rooted, persistent structural poverty from poverty that passes naturally with time due to systemic growth processes. Drawing on the economic theory of poverty traps and bifurcated accumulation strategies, this paper briefly discusses some feasible estimation strategies for empirically identifying poverty traps and long-term, persistent structural poverty, as well as relevant extensions of the popular Foster-Greer-Thorbecke class of poverty measures. The paper closes with reflections on how asset-based poverty can be used to underwrite the design of persistent poverty reduction strategies.
This paper analyzes the effects of credit card holding on the structure and distribution of household expenditure in Mexico in 2016. To the effect, two-stage quantile regressions are used to estimate models for consumption determinants, using instrumental variables on credit card holding. The study evidences that credit cards have a positive effect on aggregate consumption, driven mainly by increased health expenditure and items such as clothing,
Recent theoretical work hypothesises that a polarised society like South Africa will suffer a legacy of ineffective social capital and blocked pathways of upward mobility that leaves large numbers of people trapped in poverty. To explore these ideas, this paper employs a mix of quantitative and qualitative methods. Novel econometric analysis of asset dynamics over the 1993-98 period identifies a dynamic asset poverty threshold that signals that large numbers of South Africans are indeed trapped without a pathway out of poverty. Qualitative analysis of this period and the period 1998-2001 more deeply examines patterns of mobility, and confirms the continuation of this pattern of limited upward mobility and a low-level poverty trap. In addition, the qualitative data permit a closer look at the specific role played by social relationships. While finding ample evidence of active social capital and networks, these are more helpful for non-poor households. For the poor, social capital at best helps stabilise livelihoods at low levels and does little to promote upward mobility. While there is thus some economic sense to sociability in South Africa, elimination of the polarised economic legacy of apartheid will ultimately require more proactive efforts to assure that households have access to a minimum bundle of assets and to the markets needed to effectively build on those assets over time.
This paper describes a novel effort at developing index-based insurance for locationaveraged livestock mortality as a means to fill an important void in the risk management instruments available to protect the main asset of pastoralists in the arid and semi-arid lands of Kenya, where insurance markets are effectively absent and uninsured risk exposure is a main cause of the existence of poverty traps. We describe the detailed methodology in designing such insurance contract with the underlying index uniquely constructed off explicit statistical predictions established using longitudinal observations of household-level herd mortality, fit to high quality, objectively verifiable remotely sensed vegetation data not manipulable by either party to the contract and available at low cost and in near-real time. The resulting index performs very well out of sample, both when tested against other complementing household-level herd mortality data from the same region and period and when compared qualitatively with community level drought experiences over the past 27 years. We describe contract pricing and potential risk exposures of the underwriter using a rich time series of satellite-based vegetation data available from 1982-present. And finally, implementation opportunities and challenges are discussed to spur the product's pilot potential.
Property rights reform is typically hypothesized to boost investment through investment demand and credit supply effects. Yet when the credit supply effect is muted, property rights reform would be expected to induce liquidity-constrained farms to reduce investment in movable capital even as they increase investment in attached capital. This expectation is corroborated by econometric analysis of panel data from Paraguay. While all farmers experience a positive investment demand effect, liquidity-constrained producers correspondingly reduce their demand for movable capital. Given an estimated pattern of wealth-biased liquidity constraints, property rights reform will get institutions “right” for only wealthier producers. Copyright 2003, Oxford University Press.
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