Structural and stochastic transitions of poverty using household panel data in India

Abstract

The paper examines whether the poverty transition or poverty persistency in India, as well as in Indian rural states, is due to state dependence or unobserved heterogeneity. Using panel data from the India Human Development Survey for 2005 and 2012, the study found that structural chronic poverty is high in Bihar, Odisha, Maharashtra, and Uttar Pradesh. Furthermore, general caste and scheduled tribe households have achieved upward mobility due to structural reasons whereas other backward class households have made a stochastic transition and come out of poverty. The bivariate Probit model suggests that there exists a state dependence of the probability of being poor; meaning that past poverty experience does matter in determining the present poverty status of a given household in India. The findings also indicate that female education is one of the important indicators for moving out of poverty. Hence, a crucial policy decision is needed for reducing poverty in a more sustainable way, which will include a targeted social safety net program along with improving the skill level of the household.

Household poverty dynamics in tribal Madhya Pradesh, India: A case study of 54 villages

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Covariate Shocks, Women’s Bargaining Power, and Household Vulnerability

“…Welfare policies that have been put in place have emphasized social safety nets that lead to poverty alleviation (Dutta, 2021). However, poverty alleviation does not necessarily lead to reduction in vulnerability (Hallegate et al 2020).…”