The Economics of Poverty Traps and Persistent Poverty: Empirical and Policy Implications

This article explores the income growth and poverty of rural Indian households, 1994–2005. The estimation strategy consists, first, of a convergence analysis to examine whether poor households are catching up in terms of income, which is then followed by a transition analysis to examine whether poor households are more likely to exit poverty than to remain poor—that is, to essentially test for whether poverty traps are escapable. The identification strategy explicitly addresses issues pertaining to the potential endogeneity and measurement error of initial income and poverty. We find evidence of both income convergence and poverty persistence, but with a higher probability of exiting poverty than of the remaining poor. This suggests that poverty traps, though existent, are not entrapping in rural India. The key variables driving these results are education, occupation and asset ownership. Finally, we discuss the policy implications and provide directions for future research in this area. JEL Codes: I32, J15, O15, O18, O47, Z12, Z13

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

The Journal of Development Studies ◽

10.1080/00220380500405261 ◽

2006 ◽

Vol 42 (2) ◽

pp. 178-199 ◽

Cited By ~ 638

Author(s):

Michael R. Carter ◽

Christopher B. Barrett

Keyword(s):

Poverty Traps ◽

Persistent Poverty

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Poverty traps across levels of aggregation

Journal of Economic Interaction and Coordination ◽

10.1007/s11403-021-00333-6 ◽

2021 ◽

Author(s):

Dylan Fitz ◽

Shyam Gouri Suresh

Keyword(s):

Market Access ◽

Institutional Factors ◽

Poverty Traps ◽

Poverty Trap ◽

National Context ◽

Poverty Dynamics ◽

Markets And Institutions ◽

Simulation Results ◽

Persistent Poverty ◽

Parsimonious Model

AbstractPoverty trap studies help explain the simultaneous escape from poverty by some households and regions alongside deep and persistent poverty elsewhere. However, researchers remain divided about how important poverty traps are in explaining the range of poverty dynamics observed in various contexts. We build a theoretical model that integrates micro-, meso-, and macro-level poverty traps, allowing us to analyze the ways in which multiple layers of poverty traps interact and reinforce each other. Through this simulation model, markets and institutions arise endogenously and help certain individuals escape poverty, while others remain persistently poor. In addition to one’s own productivity and initial capital levels, we explore how individual opportunity and income can be heavily determined by market access and institutional factors beyond one’s control. Using simulation results from controlled experiments, we can identify the role played by meso- and macro-conditions (that correspond to local markets and country-wide institutions, respectively) in helping individuals escape poverty. Our results suggest that even in a parsimonious model—with optimizing, forward-looking agents operating in a world with only one trap at each level—local and national context matters immensely and combines to determine individual opportunity in complex ways.

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Poverty Dynamics, Parenting, and Child Mental Health in Canada

Society and Mental Health ◽

10.1177/2156869317731603 ◽

2017 ◽

Vol 8 (3) ◽

pp. 231-247 ◽

Cited By ~ 5

Author(s):

Lisa Strohschein ◽

Anne H. Gauthier

Keyword(s):

Mental Health ◽

Antisocial Behavior ◽

Child Mental Health ◽

Parenting Practices ◽

Child Anxiety ◽

Policy Implications ◽

Poverty Dynamics ◽

Biological Parents ◽

Persistent Poverty ◽

Anxiety Depression

Although the detrimental effects of poverty on child mental health are well established, questions remain as to which aspects of poverty matter most and which mechanisms account for the association. This study tested the relative influence of depth of current poverty and poverty duration on child anxiety/depression and antisocial behavior, then evaluated whether parenting practices mediated observed associations. Data come from four waves of the Canadian National Longitudinal Survey of Children and Youth (1994–2000), with analysis restricted to children who were aged 2 to 5 at initial interview and lived with both biological parents throughout (n = 1,901). Depth of current poverty was associated with child anxiety/depression, whereas persistent poverty was associated with child antisocial behavior. Parenting behaviors were significant predictors but did not mediate the association between poverty dynamics and child mental health. The research and policy implications of these findings are discussed.

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