Publication Details

How strong is the evidence for the exitence of poverty traps?

a multi-country assessment

Andrew McKay
Emilie Perge
2010

Abstract

The chronic poor are characterized as being poor over an extended period of time. This situation of remaining poor over time can result from facing more risks and being more vulnerable than the transitory poor, but it can also reflect insufficient level of assets which leads the chronic poor to live in a poverty trap without any possibility to escape (Carter and Barrett, 2006). Carter and Barrett specify a model of poverty trap based on analysing the asset accumulation and showing that nonlinearities in asset accumulation create a threshold below which households are trapped in poverty. But the empirical evidence does not provide strong support for this; some studies do identify poverty traps, but many others, even on very poor households, do not lead to the same conclusion. We argue that for homogeneous populations with diversified livelihood strategies the poverty trap model does not seem to fit well.

From our own empirical tests in several countries, as well as those of other researchers, we identify different reasons explaining how the Carter and Barrett’s model can or cannot fit. A first reason refers to the nature of the asset accumulation process. When analysing the asset accumulation of a single asset it leads to a poverty trap while when analysing the accumulation of a larger number of assets, it does not. We found that when some households are excluded but some are not, we are more likely to find a poverty trap than when households are all facing the same barriers, and are homogeneous in terms of livelihood diversification and asset holdings. A third reason relates to the length of the survey, with longer time periods making it more likely to identify a poverty trap compared to a shorter survey.

Publication Type(s)

Conference Paper

Background Paper to the Chronic Poverty Report 2008-09

Conference: Ten Years of War Against Poverty

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