Income Mobility in the Developing World

This chapter examines income mobility in developing countries. We start by synthesizing findings from the available evidence on relative mobility and poverty dynamics. We then describe evidence on economic mobility obtained via synthetic panels constructed from cross-section data. We echo earlier literature in pointing to substantial movement across income classes by households over time—poverty is not inevitably a chronic condition. However, less clear are the factors driving the observed ‘churning’. In an attempt to make headway, we consider the story of economic mobility in one village in northern India over seven decades. We describe patterns of poverty dynamics and economic mobility in the village, and we highlight some of the processes that have been important in driving these patterns. While this in-depth study does not permit inferences to broader populations, it may provide a reference point against which findings from studies elsewhere can be compared.

Estimating poverty transitions in Mozambique using synthetic panels: A validation exercise and an application to cross-sectional survey data

In this paper we first validate the use of the synthetic panels technique in the context of the 2014/15 intra-year panel survey data for Mozambique, and then apply the same technique to the 1996/97, 2002/03, 2008/09, and 2014/15 cross-sectional household budget surveys for the same country. We find that in most analyses poverty rates and poverty transitions estimated using synthetic panels provide results that are close to the true values obtained using the 2014/15 panel data. With respect to intra-year poverty dynamics, we find that Mozambique has a high intra-year variability in consumption and poverty, and a very high degree of intra-year poverty immobility, with a big portion of the population remaining either in poverty or out of poverty over the whole year, with smaller percentages of individuals moving upward or downward. With respect to the 1996/97, 2002/03, 2008/09, and 2014/15 cross-sectional surveys, our results suggest that in most year-to-year comparisons there is a greater proportion of people getting out of poverty than falling into poverty, consistent with the poverty-reduction process observed, but the percentage of people staying in poverty over time appears to be substantially higher, involving about one-third of the population in most years. Further analyses on the 2008/09 and 2014/15 surveys estimate that for an individual who was in the vulnerable group in 2008/09, there is a 60 per cent probability of remaining in the same group, whereas the probability of becoming non-vulnerable is lower than the probability of entering poverty. This constitutes the first attempt to provide an insight into poverty dynamics in Mozambique using all the available survey data.

Youth Unemployment in Uruguay

Uruguay enjoys favorable social outcomes, and its labor indicators are comparable to other Latin American countries, but its youth unemployment is one of the highest in the world. To help understand this duality, we employ synthetic panels from repeated household surveys for LA6 countries from 1990-2018 to investigate the determinants of the youth-to-adult unemployment gap. We find that a large part of the Uruguayan gap cannot be explained by standard variables, which opens the possibility that other uncontrolled factors, including labor market institutions, might be at play.