The economics of poverty traps and persistent poverty: An asset-based approach

Abstract

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.

Adaptation of agriculture to climate change in semi-arid Borena, Ethiopia

“…The strong relationship between livestock wealth and income diversification can be explained by a 'banking' effect: selling livestock (products) can provide capital to, for example, 'start trade' (Ouma et al 2011), as a diversification strategy (cf. Carter and Barrett 2006;Little et al 2001). Thus, a policy to support investment in institutions (such as the banks) may stimulate households to save and access credit and enhance their ability to adapt.…”

Horizontal Inequalities: Explaining Persistence and Change

“…and with two groups, 1 and 2, income HIs at time t, are given by: Carter & Barrett, 2006). To the extent that such discontinuities exist, incomes of low-income individuals/groups may grow slowly, while richer individuals/groups escape these discontinuities and show faster growth.…”

The Role of Markets for Managing Agricultural Risks in Developing Countries

“…There is a growing literature showing that repeated income shocks and asset losses can conspire to keep poor households trapped in poverty. Credit, which might offer a viable pathway out of poverty, is also much less likely to be available to small farmers caught in poverty traps (Carter and Barrett, 2006).…”