Why growth is not enough: Household poverty dynamics in Northeast Gujarat,India

Despite high growth rates in Gujarat, exceeding 9 per cent per year over the decade of the 1990s, poverty in 36 villages located in the northeastern part of this state has changed hardly at all. In these villages, 9.5 per cent of households escaped from poverty over the past 25 years, but 6.3 per cent of households became poor at the same time. Escape and descent are not symmetric: different reasons account for escaping poverty than those for declining into poverty. Growth alone is hardly sufficient to achieve poverty reduction on any significant scale. Public policies will be needed to address directly the separate causes for descent into poverty.     

Is Poverty in Africa Mostly Chronic or Transient? Evidence from Synthetic Panel Data

Absent actual panel household survey data, we construct for the first time synthetic panel data for more than 20 countries accounting for two-thirds of the population in sub-Saharan Africa. We employ in this process repeated cross sections that span, on average, a six-year period for each country. Our analysis suggests that all these countries as a whole have had pro-poor growth. In particular, one third of the poor population escaped poverty during the studied period, which is larger than the proportion of the population that fell into poverty in the same period. The region also saw a 28 per cent increase in the size of the middle class. Chronic poverty, however, remains high and a considerable proportion of the population is vulnerable to falling into poverty.     

Standard of Living and Disability in Cambodia

Little is known about the extra costs faced by households with disabled members in low resource settings and the impact of these costs on living standards. In this paper we estimate the direct cost associated with disability for households in Cambodia. Using the Standard of Living approach, the direct cost associated with having a member with disabilities is estimated to be 19 per cent of monthly household consumption expenditure. Accounting for the direct cost of disability doubles the poverty rate amongst households with disabled members from 18 per cent to 37 per cent, and increases the poverty gap from 3 to 8 per cent. A comparison of the direct cost associated with disability and income support received from government and family sources reveals that only 7 per cent of the costs of disability are met. Our findings suggest that, in the absence of increased coverage of public income support, households with disabled members will continue to experience a lower standard of living compared to households without disability in Cambodia.     

Fertility and the household's economic status: A natural experiment using Indian micro data

We model fertility as endogenous to the family's economic status because poor households choose to have large families in the absence of adequate social insurance. Because of a strong son preference in India, having two girls first can proxy an exogenous increase in fertility, and is therefore a good instrument for fertility in determining poverty of rural households. The 1993–1994 Indian Quinquennial Survey data shows that even though poverty rates are comparable, 74 per cent of two-girl families have a third child compared to 63 per cent of other families. Fertility significantly positively affects poverty when treated as exogenous, but vanishes once endogenised. These results are robust to omitting states with skewed sex ratios and to proxying economic status by expenditures.     

Income and Asset Poverty among Pastoralists in Northern Kenya

In this study we use household panel data collected in Marsabit district of Northern Kenya, to analyse the patterns of livelihood sources and poverty among pastoralists in that area. We estimate income poverty using imputed household income relative to the adjusted poverty line and asset poverty using a regression-based asset index and tropical livestock units (TLU) per capita. Our results indicate that keeping livestock is still the pastoralists’ main source of livelihood, although there is a notable trend of increasing livelihood diversification, especially among livestock-poor households. The majority of households (over 70%) are both income and livestock-poor with few having escaped poverty within the five-year study period. Disaggregating income and asset poverty also reveals an increasing trend of both structurally poor and stochastically nonpoor households. The findings show that the TLU-based asset poverty is a more appropriate measure of asset poverty in a pastoral setting.     

Pathways into and out of Poverty: A Study of Rural Household Wealth Dynamics in Kenya

This study identifies the factors associated with smallholder farm households that have risen out of poverty or descended into poverty between 1997 and 2007 in Kenya. The study uses data from a nationwide balanced panel of 1,275 households and data from detailed retrospective ‘life history’ survey of 84 households that had experienced either an appreciable improvement or decline in their asset wealth over the 10-year panel period. The results indicate that household welfare dynamics are associated with a disparate set of idiosyncratic and unexpected shocks, such as death and chronic illness, demographic factors, proximity to infrastructural facilities, as well as intergenerational wealth transfers.     

Environmental Income as a Pathway Out of Poverty? Empirical Evidence on Asset Accumulation in Nepal

Using unique, environmentally augmented household panel data reflecting households’ annual cash and subsistence income portfolios, we model change over time in the value of four assets – livestock, implements, savings, and jewellery. A seemingly unrelated regression model reveals that although environmental resources on average contribute 16 per cent of the total household income, the contribution to asset accumulation is limited. Hence, environmental income does not constitute a pathway out of poverty in Nepal under the current set of regulations and tenure regimes. Asset accumulation was instead associated (both negatively and positively) with agricultural income (particularly as subsistence income), wage and business income. Most environmental income was obtained as subsistence income indicating that the environmental resources that households have access to present little opportunity for cash generation. Securing access of the poor to environmental resources may increase its role in poverty alleviation.     

Rice Land Designation Policy in Vietnam and the Implications of Policy Reform for Food Security and Economic Welfare

With the aim of promoting national food security, the Vietnamese government enforces the designation of around 35 per cent of agricultural land strictly for paddy rice cultivation. We investigate the economic effects of adjusting this policy, using an economy-wide model of Vietnam with detailed modelling of region-specific land use, agricultural activity, poverty and food security measures. Our results show that the removal of the rice land designation policy increases real private consumption by an average of 0.35 per cent per annum over 2011–2030, while also reducing poverty, improving food security and contributing to more nutritionally balanced diets among Vietnamese households.     

Trends in poverty and destitution in Wollo,Ethiopia 1

According to several studies, poverty in rural Ethiopia has fallen significantly since the early 1990s, thanks to improved governance and economic liberalisation policies. This paper presents several arguments that challenge this view. The first questions the methodological foundations of the data from which these positive trends are derived: we argue that the original sampling frame was too small and unrepresentative to provide a basis for extrapolating national poverty levels or trends. The second argument questions the conceptual underpinnings of these studies: poverty estimates based on levels of current consumption fail to allow for non-income dimensions of wellbeing, nor for confounding factors such as seasonality, annual rainfall and food aid receipts. The third strand considers alternative sources of data on changes in wellbeing in Ethiopia: recent qualitative studies report that the poor perceive themselves as poorer and more vulnerable than poverty headcount figures suggest.

Finally, we report findings from our own survey in chronically poor and historically famine-prone Wollo. First, a significant proportion of households in the study area are destitute – destitution being defined as inability to meet basic needs, lack of key productive assets, and dependence on transfers. Secondly, the numbers of destitute people, and of people vulnerable to becoming destitute, have increased over the past ten years. Thirdly, the crisis of livelihoods underlying this trend is affecting entire communities – the dominant pattern is an aggregate downward shift, rather than stratification – and the decline of wealthier households is exacerbating the vulnerability of the poorest. These findings cast serious doubts on generalisations about poverty trends in Ethiopia. At the very least, national-level data need to be disaggregated: improving national trends may conceal pockets of entrenched poverty and a deepening livelihoods crisis in parts of rural Ethiopia.     

Noncomparable Poverty Comparisons

Poverty estimates based on enumeration from a single point in time form the basis for most country-level analysis of poverty. Cross-country comparisons of poverty, and global counts of the poor, implicitly assume that country-level poverty headcounts are comparable. This paper illustrates that the assumption of comparability is potentially invalid when households are interviewed multiple times throughout the year, as opposed to a single-visit interview. An example from Jordan illustrates how the internationally comparable approach of handling data from repeat visits yields a poverty rate that is 26 per cent greater than the rate that is currently reported as the official estimate.     

Contract Farming and Vulnerability to Poverty among Oil Palm Smallholders in Indonesia

This article addresses smallholder oil palm farming in Indonesia and the risk of falling into poverty by comparing contract and non-contract smallholders. We use an asset-based approach to define vulnerability and apply propensity score matching analysis to assess the impact of contract farming. Data were collected from a cross-sectional survey conducted in 2010 of 245 oil palm smallholder households, 126 of which were contract smallholders. The study finds that approximately 40 per cent of oil palm smallholders can be classified as stochastic-transient poor. We also show that while contract participation reduces the negative impact of oil palm price shocks, this is not the case for production shocks. The study concludes that despite positive income effects, contract smallholders also remain vulnerable to poverty.     

Mobile Phones and Economic Development in Rural Peru

We estimate the effects of mobile phone coverage on different measures of economic development. We exploit the timing of mobile coverage at the village level merging it with a village-level panel dataset for rural Peru. The main findings suggest that mobile phone expansion has increased household real consumption by 11 per cent, reduced poverty incidence by 8 percentage points and decreased extreme poverty by 5.4 percentage points. Moreover, those benefits appear to be shared by all covered households regardless of mobile ownership.     

Exploring Seasonal Poverty Traps: The ‘Six-Week Window’ in Southern Malawi

Conventional wisdom in Malawi holds that seasonal food deficits force smallholders to hire out their labour to buy food during the critical first six weeks after planting, thereby reducing maize yields on their own fields and reinforcing poverty. This model was tested empirically for the Blantyre Shire Highlands using evidence from a panel survey and household case studies. Results showed no significant relationship between the supply of hired labour (ganyu) and the timeliness of weeding for maize, and that timely weeding was not a significant determinant of household maize deficits. This puzzle is explained by the diversification of the rural economy that has allowed households to develop alternative livelihood strategies to cope with maize deficits. Livelihood diversity helped poor households avoid the seasonal poverty trap and also helps explain the paradox of why the poorest region in Malawi escaped the 2001–2002 famine.     

Sanitation and Religion in South Asia: What Accounts for Differences across Countries?

Exposure to open defecation has serious consequences for child mortality, health, and human capital development. South Asia has the highest rates of open defecation worldwide, and although the incidence declines as household income rises, differences across South Asian countries are not explained by differences in per capita income. The rate of open defecation in sub-national regions of Bangladesh, India and Nepal is highly correlated with the fraction of the population that identifies as Hindu, in part because certain rituals of purity and pollution discourage having latrines in close proximity to one’s home. Almost all open defecation occurs in rural areas, and this paper estimates how much the rate could be reduced if rural households in regions that have a higher fraction of Hindus, where open defecation is still common, altered their behaviour to reflect that of non-Hindu households in regions that are predominantly non-Hindu, where the rate of open defecation is much lower. Using nonparametric reweighting methods, this paper projects that rural open defecation in Bangladesh, India, and Nepal could be reduced to rates of between 6 and 8 per cent, compared to the prevailing level of 65 per cent.     

Poverty and Inequality in a Rapid Growth Economy: Chile 1990-96

Using parametric and non-parametric methods this article examines the evolution of poverty and inequality in Chile between 1990 and 1996. This period is interesting because of the rapid growth exhibited by the Chilean economy. Using the Datt-Ravallion decomposition economic growth accounts for over 85 per cent of poverty reduction. The evidence suggests that the sustained level of high inequality is not necessarily associated with a lower welfare level. By comparing the evolution of poverty and inequality over time, we observe a continuous decrease in poverty, while inequality remains stable. This pattern has left everyone (both poor and rich individuals) better off.     

Chronic poverty and entitlement theory

This paper examines chronic poverty in the developing country context within the entitlement theory approach. The dialogue on entitlement theory originally introduced by Sen is extended here to explore poverty and its persistence, or chronic poverty. A conceptual framework is presented, in which poverty and its persistence are explained within the context of the individual's economic and non-economic situation and development incentives. These attributes are influenced by the individual's entitlements. It is shown that poor endowments and resource base are important causes of persistent poverty. Policies aimed at reducing poverty therefore must address problems associated with improving the entitlements of individuals and households. The definition of ‘entitlements’ in the paper is not restricted to material possessions—the economic entitlements of the individual or the household—but is extended to incorporate the individual's skills, education and productive ability—the non-economic entitlements. The discussion is rooted in the increasing awareness of multidimensional poverty. The paper focuses on rural poverty in certain parts of India, where most of India's chronic poverty is situated. Over a million people can be classified as chronically poor in terms of duration, severity and deprivation. This is despite the government's commitment to the eradication of poverty since the early 1950s, with a total expenditure of nearly $7 billion in the past 50 years.     

How Accurate is Food-for-Work Self-Targeting in the Presence of Imperfect Factor Markets? Evidence from Ethiopia

Effective targeting of transfers is a key issue in public policy to combat poverty. Much faith is presently placed in self-targeting mechanisms such as public employment schemes supported by food-for-work transfers. Where targeting errors have been observed, these are usually attributed to mismanagement of key operational details, such as the project's wage rate. Using a unique data set from rural Ethiopia, we demonstrate that targeting errors may also have structural causes in some low-income countries. We hypothesise that imperfect factor markets generate a predictable dispersion across households in reservation wage rates that breaks down the unconditionally positive relation between income and shadow wages on which the theory of self-targeting public employment programmes rests. Our results confirm that the inaccuracy of FFW targeting stems from the fact that, in rural Ethiopia, higher income households are endowed with more labour per unit of land or animal. Due to poor factor markets in land and livestock these labour-abundant households have lower marginal labour productivity on farm, thereby depressing the reservation wage rates they find acceptable for FFW participation.     

Do Social Protection Transfers Reduce Poverty and Vulnerability to Poverty in Pakistan? Household Level Evidence from Punjab

Empirical studies in different developing countries have investigated the impact of social protection (SP) on ex-post poverty; however, few studies analysed the impact of SP on ex-ante vulnerability to poverty (VtP). This paper contributes to the literature by evaluating the impact of SP on vulnerability to poverty (VtP) and poverty rates among households in the Punjab province of Pakistan. A hierarchical modelling approach is used to analyse the Multiple Indicator Cluster Survey (MICS-2011) data of about 90,000 households. Matching methods and simultaneous endogenous switching regression are used to control for potential selection bias and estimate average treatment effects. Our results show that SP has a positive impact in reducing household poverty and VtP, but this impact is mainly driven by a short-term flood relief cash transfer programme, pension of government employees and households’ regular purchase from utility store network.     

Livestock and Private Tree Holdings in Rural Ethiopia: The Effects of Collective Action Institutions,Tenure Security and Market Access

This article uses househld panel data spanning the period 2000–2007 to test hypotheses from the literature that secure land tenure, market access and collective action promote accumulation of private capital assets in rural highland Ethiopia. The three natural capital assets analysed in the article, livestock, eucalyptus trees and non-eucalyptus trees on households’ farm plots, make up virtually 100 per cent of privately held disposable assets. Incomes and capital stocks are extremely low and constant and tree assets are at least as important as livestock. We find that collective action and secure land tenure have strong positive effects on accumulation of livestock and other trees, but not eucalyptus. We also find evidence that market access promotes eucalyptus holdings and that other types of wealth tend to be positively associated with private natural capital stocks.