Publication Details

Vulnerability to poverty in Latin America

evidence from cross-sectional and panel data

Guillermo Cruces
Leonardo Gasparini
Marcelo Bergolo
Andres Ham
2010

Abstract

Households identified as poor by standard cross-sectional methods aremore heterogeneous they might appear. In particular, households face different levelsof vulnerability – defined as the risk of being poor in the future – which are related toa series of observable and unobservable characteristics. This report presents adiscussion of vulnerability estimates in Latin American countries from both aconceptual and an empirical perspective, based on recent developments in thedistributive literature. The report develops three main contributions. First, it presentscross-sectional vulnerability estimates (and their evolution over time) for 18 countriesin the region. Second, based on a subset of countries for which household longitudinaldata is available, the document carries out a validation exercise to assess how vulnerability fares as a predictor of poverty at the aggregate and the micro levels.Finally, the main results are also contrasted with alternative estimates based on timeseries cross-sectional data. The main findings indicate substantial cross-countrydifferences in vulnerability levels. Moreover, vulnerability measures provide goodestimates of aggregate poverty trends. However, the validation exercise indicates thatat the micro level there are sizeable misclassifications of households in terms ofexpected poverty. These results imply that vulnerability estimates should becomplemented with information on shocks and aggregate trends for guiding focalizedpolicy interventions.

Publication Type(s)

Conference Paper

Ten Years of War Against Poverty Conference Papers

Conference: Ten Years of War Against Poverty

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