sequential labor decisions under uncertainty an estimable household model of west african farmers this paper reports estimates of the structural parameters of a stochastic control model that describcs the labor decisions of small farmers in burkina faso west africa the focus of the estimation is on measuring flexibility in production and intertemporal substitutability in consumption full information maximum likelihood estimates of the primitive parameters of the model are computed even though optimal labor decision rules cannot be derived analytically vuong s non nested model specification test shows that this method yields parameter estimates that are superior to those derived by assuming that farmers solve a deterministic control problem the low levels of agricultural labor effort commonly observed in the survey area are shown to be a consequence both of the low productivity of labor in archaic rainfed agriculture and of farmers awareness that in the absence of a labor market overly ambitious production plans lead to seasonal manpower constraints to meet rainfed farmers concerns agricultural research institutes and extension services should factor flexibility into their research agendas

defining chronic poverty comparing different approaches in this study we discuss two methods commonly used in the literature to measure chronic poverty the permanent income approach where the chronically poor are those whose mean income over time is below the poverty line and the spells approach where the chronically poor are those households who are below the poverty line half of the time or more we check the differences between these two methods considering also several household characteristics the index we use is that of foster greer and thorbecke fgt with and when each method identifies the chronically poor which could be different individuals by each method and shows the percentage of the chronically poor while when the methods also take into account the depth of poverty our main goal is to show the differences between the two methods so that policymakers would have different perspectives on the problem of chronic poverty and could make decisions on this basis the results show that in the data used the permanent method and the spells

occupational choice and the process of development this paper models economic development as a process of institutional transformation by focusing on the interplay between agents occupational decisions and the distribution of wealth because of capital market imperfections poor agents choose working for a wage over self employment and wealthy agents become entrepreneurs who monitor workers only with sufficient inequality however will there be employment contracts otherwise there is either subsistence or self employment thus in static equilibrium the occupational structure depends on distribution since the latter is itself endogenous we demonstrate the robustness of this result by extending the model dynamically and studying examples in which initial wealth distributions have long run effects in one case the economy develops either widespread cottage industry self employment or factory production employment contracts depending on the initial distribution in the other example it develops into prosperity or stagnation

expected inflation and the real rates of interest on taxable and tax exempt bonds this paper analyzes the impact of inflation on rates of return on taxable corporate bonds and tax exempt municipal bonds the paper considers a differential tax system where the tax rate depen ds on both the identity of the investor and the source of income it also consid ers the possibility that inflation may induce investors to switch from holding one asset to holding another it is demonstrated that while inflation should increase the pre personal tax real rate of interest on taxable bonds it should reduce the real rate of interest on tax exempt bonds copyright 1987 by ohio state university press

economic mobility and poverty dynamics in developing countries this study provides an introduction to this special issue of the journal of development studies on economic mobility and poverty dynamics in developing countries in addition to providing a conceptual framework it outlines how the contributions fit into the extant literature a series of regularities emerge across these studies the poor consist of those who are always poor poor at all dates and those who move in and out of poverty with the latter group tending to be strikingly large such movements in and out of poverty are apparent when looking at poverty in either absolute or relative terms changes in returns to endowments can be a potent source of increased incomes finally seemingly transitory shocks can have long term consequences the study concludes by drawing out the policy implications of these regularities

measuring lifetime poverty abstract this paper presents an axiomatic framework for measuring lifetime poverty over multiple periods for an individual we argue that lifetime poverty is influenced by both the snapshot poverty of each period and the poverty level of the permanent lifetime consumption it is also influenced by how poverty spells are distributed over the lifetime we axiomatically characterize classes of lifetime poverty indices and derive dominance conditions of poverty orderings for both individual and societal lifetime poverty measurements

effects of family background on earnings and returns to schooling evidence from brazil we investigate whether omitted family background variables are responsible for high returns to schooling estimated in brazil returns to schooling fall by about one third when parental schooling is added to wage equations surprisingly the schooling of fathers in law has larger effects on wages than the schooling of fathers on the basis of a model of assortative mating we interpret this as evidence that parental characteristics represent unobservable worker attributes rather than nepotism in the labor market we conclude that the family background bias in returns to schooling is modest and need not imply returns to family connections

persistent expected and innate poverty estimates for semi arid rural south india 1975 1984 this paper uses nine years of panel data on 170 rural households in southern india to calculate intertemporal measures of poverty these include measures of 1 expected poverty that identify households likely to remain poor on average during any year 2 innate poverty that identify households that are poor owning to deep rooted characteristics that cannot easily be changed in the short run and 3 persistent poverty that identify households whose incomes fall below a fixed poverty line over a number of years the poverty rates estimated for the sample with the three measures are 61 percent 48 percent and 22 percent respectively c 1993 academic press inc copyright 1993 by oxford university press

chronic poverty in the united states this paper proposes a method of measuring chronic and transitory poverty using an axiomatically sound additively decomposable index of aggregate poverty our approach is contrasted with alternative methods of measuring poverty persistence we use our method to measure chronic and transitory poverty in the united states during the 1980s and late 1970s and find that chronic poverty is a more serious problem than previously thought between the late 1970s and mid 1980s poverty not only increased it became more chronic and less transitory in nature this is true for the population as a whole and for some but not all of the subpopulations we considered the latter were defined according to race type of social unit and educational qualifications of the head of the social unit all empirical analyses are based on data from the panel study of income dynamics

the impact of inflation on the aggregate debt asset ratio this paper demonstrates that contrary to the results of previous studies the impact of inflation on the aggregate debt asset ratio cannot be determined theoretically however it is shown that inflation is likely to increase this ratio when personal income tax schedules are indexed to the price level and or when leverage related costs are relatively high and the personal tax rate on income from holding common stocks is relatively low studies concerning the effect of inflation on firms capital structure conclude that inflation enhances debt financing jaffe 9 modigliani and cohn 16 and modigliani 15 argue that nominal interest payments consist in part of true interest payments and in part of a compensation for the reduction in the real value of the principal the fact that firms are allowed to deduct their entire interest expense including the portion that is a return of principal reduces their cost of debt capital gordon 6 concludes that the equilibrium debt capital ratio rises when the inflation rate rises he argues that an increase in the nominal interest rate induced by inflation increases the tax advantage of debt financing thus debt financing becomes more attractive and a rise in leverage related costs is necessary to restore equilibrium gordon asserts that the increase in leveragerelated costs is brought about by an increase in the debt equity ratio all these studies however focus primarily on the tax benefits of debt financing to the corporation and implicitly assume that each firm has a unique optimal structure which may change with inflation in contrast miller 14 in a world without inflation concludes that firms are indifferent to their capital structure and that the aggregate debt equity ratio is determined by the ratio of the wealth of investors who for tax reasons choose to hold bonds to the wealth of those who choose to hold stocks this paper explicitly incorporates tax considerations of both investors and firms into the analysis of the effect of inflation on the aggregate corporate debtasset ratio it is demonstrated that the effect of inflation on the aggregate debtasset ratio cannot be determined theoretically however inflation is likely to increase this ratio when personal income tax schedules are indexed to the price level and or when leverage related costs are relatively high and the tax on income from holding common stocks is relatively low we consider an economy in which investors are subject to a progressive tax system income from corporate bonds

preferred habitat taxable tax exempt yield spreads and cycles in property liability insurance several theories seek to explain the spread between the yields on taxable and tax exempt bonds of comparable maturity this paper reconsiders the market segmentation theory by focusing on property and liability insurance companies plics plics can provide evidence on the market segmentation theory both because they are major participants in the market for longer term tax exempt bonds and because of their industry s pronounced profit cycle which causes wide variations in plics need fortax shields if investors have preferred habitats as per the market segmentation theory their preferences should cause plics purchases and sales of tax exempts to have different impacts on taxable tax exempts yield spreads at different maturities this paper finds strong evidence of market segmentation during the 1972 84 period when the industry experienced two extremely pronounced cycles and weaker evidence of market segmentation during the 1959 71 and 1985 89 periods copyright 1992 by ohio state university press

income inequality within and across counties in rural china 1988 and 1995 abstract using household data from samples covering 18 provinces in 1988 and 1995 income inequality within and between counties in rural china is assessed the approach enables us to aggregate average income and income inequality to the levels of provinces and the three regions comprising eastern central and western china most of income inequality in rural china in 1995 was found to be spatial and the uneven development of mean income across counties stood for most but not all of the rapid increase in income inequality mean income of the three regions diverged most forcefully

are some groups more vulnerable to macroeconomic shocks than others hypothesis tests based on panel data from peru abstract which socio economic groups are most vulnerable to welfare declines during a macroeconomic shock after clarifying the difference between poverty and vulnerability this paper presents an analytical framework and applies it to panel data from peru major findings are 1 households with better educated heads are less vulnerable 2 female headed households are no more vulnerable than male headed households 3 households with more children are more vulnerable 4 transfer networks that assist the poor in relatively stable periods do not protect them during a major shock unless they originate from outside peru and 5 peru s social security program is targeted neither to vulnerable nor to poor households but other transfer programs are better targeted

china s uneven progress against poverty while the incidence of extreme poverty in china fell dramatically over 1980 2001 progress was uneven over time and across provinces rural areas accounted for the bulk of the gains to the poor though migration to urban areas helped the pattern of growth mattered rural economic growth was far more important to national poverty reduction than urban economic growth agriculture played a far more important role than the secondary or tertiary sources of gross domestic product gdp rising inequality within the rural sector greatly slowed poverty reduction provinces starting with relatively high inequality saw slower progress against poverty due both to lower growth and a lower growth elasticity of poverty reduction taxation of farmers and inflation hurt the poor external trade had little short term impact

slipping into and out of poverty the dynamics of spells this paper examines the dynamics of poverty previous analyses have examined either fluctuations in the male heads earnings or the frequency of poverty periods over a fixed time frame our approach depends on a definition of spells of poverty using this methodology we find that the majority of poor persons at any time are in the midst of a rather long spell of poverty the methodology also allows us to estimate that less than 40 percent of poverty spells begin because of a drop in the heads earnings while 60 percent of the spells end when the heads earnings increase thus researchers must focus on household formation decisions and on the behavior of secondary family members there has been a dramatic resurgence recently of discussion of the underclass the discussion is reminiscent of debates about poverty during the 1960s when the notions of a culture of poverty particularly as popularized by michael harrington s other america 1962 dominated both intellectual and policy thinking the idea of an underclass seems inconsistent however with much of the research on the dynamics of poverty during the 1970s that research using new longitudinal data seemed to show that the bulk of the poor were poor for only a few years the research also showed that the poor were a very heterogeneous group including a small minority of persistently poor the persistence of poverty is of interest both for understanding the phenomenon and for developing policy claims about dependency and separate life styles among the poor rest on assumptions about the long term nature of poverty questions

ethically flexible measures of poverty this paper introduces new measures of both relative and absolute poverty using the notion of representative income of a community corresponding to the censored income distribution these new measures satisfy the monotonicity and transfer axioms proposed by sen 1976 in all cases

precautionary behavior migrant networks and household consumption decisions an empirical analysis using household panel data from rural china abstract we develop a test of precautionary behavior in the consumption decisions of rural agricultural households among surveyed households facing a median level of consumption risk 10 of savings can be attributed to a precautionary motive and this increases to 15 for households with consumption per capita below the poverty line we next use distant lags of local rainfall shocks uncorrelated with current consumption growth to identify the size of migrant networks outside the village and then present evidence that both poor and nonpoor households engage in less precautionary saving as the size of the village migrant network increases

capital market integration over the past decade the case of the us dollar abstract this study investigates changing capital market integration over the decade 1973 83 as measured by the relationship between eurodollar and domestic us dollar yields the findings reveal that capital market integration has increased appreciably since the end of 1981

estimation of poverty transition matrices with noisy data summary this paper investigates measurement error biases in estimated poverty transition matrices we compare transition matrices based on survey expenditure data to transition matrices based on measurement error free simulated expenditure the simulation model uses estimates that correct for measurement error in expenditure we find that time varying measurement error in expenditure data magnifies economic mobility roughly 45 of households initially in poverty at time t 1 are found to be out of poverty at time t using data from the korean labor and income panel study when measurement error is removed this drops to between 26 and 31 of households initially in poverty copyright 2016 john wiley sons ltd

poverty in palanpur the meaning and identification of poverty are examined using three indicators of standard of living in the north indian village of palanpur the first is intended as a measure of apparent prosperity based on the personal assessments of investigators after intensive field work in the village over the full agricultural year 1983 84 the other two are income in 1983 84 and a measure of permanent income obtained by averaging incomes from four surveys conducted over a twenty six year interval a comparison of these three indicators shows that income measured in any one year may give a misleading impression of the incidence of poverty the risk of poverty for households is calculated vulnerability is high among low caste households and those which are involved in agricultural labor categories however are not homogeneous for example whereas the landless and widows are more likely to be poor some of such households are quite well off it is argued that poverty in a good agricultural year is a better indicator of sustained poverty than poverty in a bad year occupational mobility out of agricultural labor is low and changes in the distribution of land are largely accounted for by demographic processes such as household splits

the evolution of income inequality in rural china abstract in this article we analyze trends in income inequality and the distribution of income in rural china from 1987 to 1999 we find an uneven but long run increase in inequality in rural china and show that nearly half of the rural population was not much better off in 1999 than at the start of the period we rule out geography as the most important factor for explaining income differences and the increases that occurred over time much more important were growing differences between households living in the same village province or region we also find that access to nonagricultural incomes from local wage employment and family businesses contributes to inequality but that employment outside the county in which a household lives and accessed through temporary migration is relatively equalizing finally we document important strengths and weaknesses of the primary data set used for our analyses relative to other data sources available for study of inequality and poverty in rural china

data watch the panel study of income dynamics by collecting annual economic and demographic information from a large and representative sample of u s households for over a quarter century the panel study of income dynamics has compiled a remarkably useful set of microdata this article describes the psid and how its unique longitudinal and in some cases intergenerational features have been used for studies of intertemporal models of labor supply wages employment and job tenure consumption poverty dynamics extended family behavior and the intergenerational transmission of economic status

prices credit markets and child growth in low income rural areas in this paper it is argued that fluctuations in child growth in rural areas of bangladesh during and after severe floods in i988 can provide insight into the structure of credit markets a model of intertemporal resource allocation is developed and euler equations relating growth patterns of children to the cost of borrowing by household are then derived from the model the evidence indicates that although some of the variation in growth patterns over the relevant period may be attributed to variation in illness and the price of rice growth patterns for children in landless households were influenced by credit market imperfections this paper links two prominent strands of research in economic development the first strand examines the extent to which households in poor rural economies are able to protect themselves from the adverse weather and other shocks that importantly influence earnings in underdeveloped areas while it has long been thought that credit market imperfections and other forms of market failure make it difficult for poor individuals in these economies to smooth consumption both within and across years there remains some question about the magnitude and pervasiveness of these imperfections while there is evidence that fluctuations in economic conditions result in inefficient allocation of resources e g morduch 1990 rosenzweig and wolpin i993 some recent papers have emphasised the fact that consumption patterns of households in the same village comove in a manner consistent with the idea that a substantial fraction of idiosyncratic variation in income is effectively

the international transmission of eurodollar and us interest rates a cointegration analysis abstract the relationship between us and eurodollar certificate of deposit cd rates for the period 1981 1988 is examined using an error correction model results indicate that there is a structural change in the cd rates in the earlier sub period 1981 1983 there exists unidirectional causality leading from the domestic to the external markets in the more recent sub period 1984 1988 however significant reverse causality is observed these results are likely due to expansion in the size of the eurodollar market and an increase in the volume of eurodollar futures trading

revisiting the sen poverty index a modification of the official sen poverty index yields an index which is not only continous in individual incomes and consistent with the transfer axiom but also admits a geometric interpretation in terms of the area beneath a graph called the inverse generalized lorenz curve for normalized poverty gaps by jenkins and lambert 1993 or the poverty gap profile by shorrocks 1994

a class of poverty indices a review of a number of well known poverty indices shows that two axiomatic requirements to a pover ty index are never satisfied simultaneously the choice between these two axioms depends on the nature of the poverty line a class of pov erty indices is developed as an application of the dalton and atkinso n inequality to poverty measurement almost all other poverty indices are seen to be a member of the class the formulation of this class clarifies the basic problems involved in poverty measurement copyright 1987 by economics department of the university of pennsylvania and the osaka university institute of social and economic research association

poverty and the distribution of material hardship public concern with poverty derives in large part from the assumption that low income families cannot afford necessities yet official poverty statistics focus on measuring income not on measuring material hardship two surveys of chicago residents measure whether families could afford food housing and medical care a family s official income to needs ratio explained 24 percent of the variance in the amount of material hardship it reported adjustments for family size age health noncash benefits home ownership and access to credit explain another 15 percent variations in permanent income explain almost none of the remaining variance in hardship among families with the same official income toneeds ratio material hardship varies by age family size and composition

how much income mobility is there in britain using the first four waves of the british household panel survey 1991 4 and a variety of methods we show that there is much mobility in household net income from one year to the next in britain however most income changes from one year to the next are not very large and when incomes are longitudinally averaged so that transitory variations are smoothed out substantial permanent income differences are revealed there is some evidence of greater mobility for those in the tails of the income distribution relative to the middle and for elderly persons compared to non elderly persons

income mobility in rural india this paper offers a detailed analysis of income mobility in rural india during 1968 1969 to 1970 1971 it focuses on 1 the pattern of upward income mobility among a section of the cultivating poor and 2 some of the key factors that enabled them to overcome poverty the analysis is based on a panel survey of 4118 rural households from the additional rural income survey the author assumes that 16 rupees per person per month at 1960 1961 prices constitutes an upper limit for a minimum daily calorie requirement in rural areas the analysis shows that out of those poor in 1968 over 1 2 ceased to be poor over 12 became poorer and about 36 remained poor without becoming poorer in 1970 out of the not poor in 1968 over 3 4 remained not poor while the remaining became poor in 1970 with the exception of the cultivating not poor who remained not poor all other categories reported substantial income changes in their average incomes during the period in question while the absolutely impoverished earned much lower incomes there were others particularly the poor ceased to be poor who registered impressive income gains comparison of the base year income levels of the 3 subsets of the cultivating poor suggested that on average the poorest of the poor fared better than the moderately poor this conclusion was further supported by an analysis of income mobility within a subset comprising the cultivating poor who ceased to be poor the bulk of these were relatively low income households that earned substantially higher incomes

data gaps data incomparability and data imputation a review of poverty measurement methods for data scarce environments this paper reviews methods that have been employed to estimate poverty in contexts where household consumption data are unavailable or missing these contexts range from completely missing and partially missing consumption data in cross sectional household surveys to missing panel household data the paper focuses on methods that aim to compare trends and dynamic patterns of poverty outcomes over time it presents the various methods under a common framework with pedagogical discussion on the intuition empirical illustrations are provided using several rounds of household survey data from vietnam furthermore the paper provides a practical guide with detailed instructions on computer programs that can be used to implement the reviewed techniques

transient poverty poverty dynamics and vulnerability to poverty an empirical analysis using a balanced panel from rural china china s economic reforms starting in the late 1970s have resulted in rapid economic growth with annual growth in gross domestic product averaging greater than 10 percent per year for more than thirty years accompanying this rapid growth in national accounts have been rapid and widespread reductions in poverty with these reductions in poverty however there has often been observed an increase in income inequality both between as well as within rural and urban sectors this rising income gap challenges the notion that economic reforms in china have been as successful as the poverty statistics would suggest in this paper we suggest that an alternative view would be to consider the effects of these reforms on changing the chronic nature of poverty and reducing household vulnerability to poverty using a balanced panel from rural china from 1991 through 2006 we find that most poverty among our sample has shifted from being chronic in nature to being transient with households either shifting into a state of being non poor moving in and out of poverty among our sample vulnerability to poverty has been declining over time but the declines are not uniform over time or space we decompose household vulnerability status into two proximate causes low expected income and high income variability finding vulnerability increasingly due to income variability additionally we demonstrate that vulnerable households have very different characteristics than non vulnerable households

inflation taxation and interest rates this paper demonstrates that the response of nominal interest rates to changes in inflationary expectations should lie between that predicted by the fisher and darby effects the exact nature of the response will depend on the relative size of the income and capital gains tax rates and the relative size of the derivatives of investment and savings to their respective after tax real rates the other major conclusion of this paper is that capital gains taxation offsets the negative effect on investment produced by treating depreciation on a historic rather than a replacement cost basis in the 1960s and early 1970s the economics profession and the financial community increasingly accepted irving fisher s analysis of the effect of changes in anticipated inflation on the rate of interest in the last several years darby 4 and feldstein 5 have elaborated fisher s theory and have arrived at the conclusion that in a world with taxes an increase in inflationary expectations should result in a more than proportional increase in the nominal rate of interest since investors base their investing and saving decisions on the after tax and not the pretax expected consequences of their actions darby 4 has argued that if income taxes are proportional at rate t and interest receipts are taxable and interest payments are tax deductible the real after tax interest rate is

capital market integration in the pacific basin region an impulse response analysis abstract we examine the extent of capital market integration in a group of pacific basin countries following the deregulation of their markets and explore whether the financial influence of japan in the region has overtaken that of the us looking at long run comovements of real interest rates through the use of cointegration and using impulse response analysis to examine the speed of adjustment of real interest rates to long run equilibrium following a shock in one of the markets which is another indicator of the degree of capital market integration we find that these countries are closely linked with world financial markets and more so with japan than with us

income smoothing and consumption smoothing one way that risk averse households protect consumption levels is to borrow and use insurance mechanisms another way common in low income economies is to diversify economic activities and make conservative production and employment choices households thus tend toward limiting exposure only to shocks that can be handled with available credit and insurance typically both types of mechanisms are studied independently but much more can be learned by studying them together first we obtain a more complete picture of risks costs and insurance possibilities second it opens the way to considering biases in standard tests of credit and insurance

enduring poverty and the conditions of childhood lifecourse and intergenerational poverty transmissions abstract in this paper we explore the conditions of childhood that can lead to poverty throughout the lifecourse and affect transfers of poverty to the next generation the largely inconclusive evidence base surrounding lifecourse and intergenerational poverty transmission is reviewed before a discussion of the key social processes and contexts that impact on childhood lifecourse and intergenerational poverty prioritized issues nutrition childcare and guidance education child work and aspirations and attitudes are explored within the context of unicef s basic framework of survival protection development and participation the paper concludes with an analysis of elements of the wider environment critical to enabling action in childhood to break poverty cycles

consumption insurance an evaluation of risk bearing systems in low income economies the hypothesis of full risk sharing can be taken to data from low income countries and evaluate formal and informal financial systems in many contexts idiosyncratic risks are high so credit insurance arrangements could be beneficial statistical tests reveal that households in southern india take advantage of these possibilities villages in cote d ivoire and countries in thailand do not do as well the paper includes an empirical description of the devices used to smooth consumption and a theoretical discussion of private information and incentives on ideal operating systems the full information and mechanism design frameworks provide benchmarks for policy analysis

inflation and taxation nominal and real rates of return abstract the impact on rates of return of an expected change in the rate of inflation is examined in a general equilbrium framework explicit expressions are derived for the marginal relationships between the rate of inflation and nominal and real interest rates one of the conclusions is that with taxation included the nominal rate of interest will tend to increase more than corresponding to the pure fisher effect but less than required to keep consumers after tax real rate of return and the consumption equilibrium unchanged finally some of the implications of the model for the pricing of indexed bonds are examined in a partial equilibrium framework

has children s poverty become more persistent iffood stamp benefits are counted as income there is little change in estimates ofpersistent povertyfor children between the late 1960s and early 1980s however the absence of change in persistent poverty masks a number of important changes in the demographic and statistical structure ofpersistent poverty these changes include increasing inequality in the distribution of permanent socioeconomic position greater dependence on social assistance and the more familiar demographic changes such as increased numbers of single parent families higher educational attainments of parents and decline in family size

expected poverty under risk induced welfare variability two of the most widely accepted stylised facts about agriculture in south asia sub saharan africa and elsewhere are that income is highly uncertain from one year to another and that deep and widespread poverty exists and yet there has been very little analysis of the joint problems of poverty and risk this paper offers a methodological approach to the issue of how risk affects poverty and applies it to household level data for dry areas of rural india the following questions are addressed under what conditions can one expect an increase in the riskiness of an income or consumption stream to increase poverty how should one measure the contribution of risk to poverty and what long term benefits in terms of reduced poverty can be expected from policies aimed at stabilising incomes of the poor such policies have been widely discussed in the indian subcontinent of late and their effect on rural

chronic and transient poverty measurement and estimation with evidence from china abstract the paper contributes to the measurement of poverty and vulnerability in three ways first it proposes a new approach to separating poverty into chronic and transient components second it provides corrections for the statistical biases introduced when using a small number of periods to estimate the importance of vulnerability and transient poverty third it applies these tools to the measurement of chronic and transient poverty in china using a rich panel data set that extends over 17 years alternative measurement techniques are found to yield significantly different estimates of the relative importance of chronic and transient poverty the precision of the estimates is also considerably enhanced by simple statistical corrections

a note on euroyen and domestic yen interest rates abstract this study examines interest rate transmission between the london euroyen market and the japanese domestic cd market the results which span 1984 through the beginning of 1993 indicate that these two interest rate series are cointegrated in the earlier part of the sample period causality is strongest from the euroyen market to domestic yen interest rates however strong feedback effects are observed in both directions in more recent years the use of both vector autoregressive modeling and cointegration analysis for forecasting is supported over random walk models

poverty in america 1970 1990 who did gain ground an application of stochastic dominance criteria employing simultaneous inequality tests in a partial panel atkinson 1987 proposed stochastic dominance criteria for analysing poverty which under certain conditions establish orderings of states for any poverty line and any poverty measure within given class refocusing debate on the nature of the income distribution of the poor employing new empirical techniques these criteria are implemented for the united states from 1970 to 1990 using the panel study of income dynamics results highlight the pivotal role of family size scale economies in consumption indicate different experiences for white versus non white groups and suggest that optimism over the progress of the poor is not warranted copyright 2003 john wiley sons ltd

poverty measurement an index related to a theil measure of inequality a major problem that arises in measuring poverty is the adequate expression in a poverty index of the information from the incomes of individuals below the poverty line this article evaluates several poverty indexes on the basis of their ability to satisfy five properties desirable for a poverty index the only index that satisfies all five properties is one related to a theil measure of inequality simulations show that this index and an index related to the coefficient of variation provide appropriate ranks for the desirability of various algorithms for transferring income to the poor

smoothing consumption by smoothing income hours of work responses to idiosyncratic agricultural shocks in rural india while research has demonstrated that farm households in developing economies are able to protect consumption from idiosyncratic crop shocks little evidence shows how this is achieved this paper examines the extent to which labor markets allow households to shift labor from farm to off farm employment and the extent to which such a shift explains the observed lack of correlation between consumption and idiosyncratic crop shocks the empirical analysis uses a novel measure of the idiosyncratic crop income shock which utilizes information on start of season cropping choices to more accurately estimate household expectations of weather

taxation portfolio choice and debt equity ratios a general equilibrium model this paper explores the portfolio behavior of investors differing with respect to both tax rates and risk aversion emphasizing the role of constraints on individual and firm behavior in ensuring the existence of and characterizing portfolio equilibrium under certain conditions on the securities available in the market which also are necessary for shareholders to be unanimous in supporting firm value maximization investors will be segmented by tax rate into two groups one specialized in equity and the other in debt though the relative wealths of the two groups determine the aggregate debt equity ratio each firm will be indifferent to its financial policy

the lucky few amidst economic decline distributional change in cote d ivoire as seen through panel data sets 1985 88 this article is an exploratory exercise in using panel data sets to investigate distributional change in cote d ivoire during the second half of the 1980s the panels made it possible to highlight and quantify mobility of the same households across poverty classes over time we found that there were a lucky few who improved their standard of living amid general decline detailed investigations revealed that the lucky few were fairly numerous and the probability of escaping poverty was quite high even for the very poorest these lucky few were widespread regionally although in some socio economic groupings the poor had higher chances of escaping poverty

livelihood strategies and dynamics in rural cambodia summary this paper addresses one of the major challenges in rural livelihood analysis to quantitatively examine the dynamics of household livelihood strategies it investigates the interactions between livelihood assets activities and outcomes and captures the dynamics of long term changes and their underlying factors the study aims to identify the classification of rural livelihood strategies their transitions and factors influencing these processes and changes we employ the dynamic livelihood strategy framework and use panel data for 2008 and 2012 covering 464 households in 15 villages in cambodia for latent class cluster analysis and regression estimation in this paper livelihood strategies are quantified based on allocation of available resources which overcomes the limitations of income based analysis our study identifies five household livelihood strategies pursued in the study areas and the results show that over 70 of households change livelihood strategies over time in response to evolving pressures incentives and opportunities the study identifies covariates that shape the choices of livelihood strategies and affects the households access to more remunerative strategies such as education ownership of physical assets and access to infrastructure these findings suggest policy implications for improving the range of livelihood choices available to lower income groups to move out of poverty trap

poverty transition and persistence in ethiopia 1994 2004 summary this study analyzes the persistence of poverty in both rural and urban areas in ethiopia during 1994 2004 the key finding is that households move frequently in and out of poverty but the difficulty of exiting from poverty like the chance of avoiding slipping back increases with the time spent in that state and varies considerably between male and female headed households our results imply that it is important to design anti poverty policies both to hinder households from slipping into extreme poverty and to minimize the length of the poverty spell for households once they have fallen into it

risk financial markets and human capital in a developing country this paper explores the link between financial market incompleteness and human capital accumulation we examine how child school attendance responds to seasonal fluctuations in the income of agrarian households using panel data from rural india to pinpoint market imperfections we study responses to aggregate and idiosyncratic as well as to anticipated and unanticipated income shocks our main finding is that seasonal fluctuations in school attendance are a form of self insurance but one which does not result in a substantial loss of human capital on average

one kind of freedom poverty dynamics in post apartheid south africa abstract a 1993 south african living standards survey documented the legacy of apartheid in the form high levels of inequality and human insecurity drawing on a 1998 re survey of households in the 1993 study this paper explores whether this legacy has been superseded or whether apartheid s end has been only one kind of freedom that has left households in a poverty trap from which they cannot escape after proposing a theoretically grounded dynamic poverty typology that distinguishes stochastic from structural poverty transitions the paper goes on to estimate that significant numbers of the south african poor are potentially trapped in a structural poverty trap and lack the means to escape poverty over time

ex ante actions and ex post public responses to drought shocks evidence and simulations from zimbabwe abstract the study examines the consequences of alternative public responses to drought shocks it does so by drawing on household data from resettlement areas of rural zimbabwe from 1992 93 to 1995 96 and the estimation of four behavioral relations the determinants of crop income the determinants of investment in livestock the determinants of investment in agricultural capital stock and the determinants of private transfers this information is used to construct a series of simulations in which drought relief received in the aftermath of the 1994 95 the ex post response is made available to households in the form of agricultural capital stock and extension advice an ex ante action doing so is found to raise household welfare in nondrought years but provides only limited protection in the aftermath of drought

causal linkages between us and eurodollar interest rates further evidence this study examines causal linkages between us and eurodollar interest rates during 1983 2002 recursive cointegration analysis shows that a stable cointegration relationship between the two interest rates emerges only since the early 1990s when the fed used federal funds rate targeting and eliminated the reserve requirement on eurocurrency deposits the study further reveals that bidirectional causality exists between the two rates over the period of 1993 to 2002 while unidirectional causality from eurodollar rate to the us rate is found to exist over the period of 1983 to 1991 these findings consistently support increased interest rate linkages especially since the early 1990s

asset based poverty transition and persistence in rural china this article tests empirically for transition and persistence of poverty in rural china based on the theory of asset based poverty traps it proposes an analytical framework mitigating the problem of endogenous switching between accumulation regimes and disentangling the true state dependence of poverty specifically a dynamic asset threshold separating households into downward and upward mobility regimes is identified after taking households unobserved characteristics and observed regime differentiated accumulation strategies into account the static analysis identifies causality running from settling into a downward mobility regime to the probability of poverty measured by consumption furthermore allowing for endogenous initial poverty status the dynamic analysis finds strong true state dependence in poverty households with the same characteristics are nearly twice as likely to be poor as if they had not previously switched to the accumulation regime assets below the dynamic threshold serve as a conduit through which poverty propagates itself factors that help to break this vicious circle are identified

identifying vulnerability to poverty a critical survey in the economic literature on poverty various methods have been proposed for measuring a phenomenon known as vulnerability however after more than a quarter century of research no consensus has been reached on how to identify such vulnerable individuals within a given population some misunderstandings have also arisen from the overlapping of other closely related concepts such as the expectation of being poor expected poverty multi period poverty and risk exposure this paper offers a detailed conceptual discussion on vulnerability to poverty and its related elements reviewing a wide range of identifying criteria provided in the literature it is found that according to the state of the art in this field of research two key elements stand out in identifying vulnerable individuals an expected well being below the poverty line and a relevant risk of falling into poverty due to downside deviation from a reference level of well being the traditional classification of vulnerability approaches has been updated into four groups i those that stress the element of exposure to risk ii those that emphasize the element of expected poverty iii those that define vulnerability through a utility gap and iv those that are supported by a mean risk dominance criterion

measuring the intensity of poverty among subpopulations applications to the united states this paper proposes an approach to measuring the intensity of poverty within a group relative to that of the population to which the group belongs a poverty intensity index is presented which is easy to interpret and satisfies a number of desirable properties the intensity of poverty among racial and residential groups in various geographical locations is measured using 1980 united states census data

the dynamics of welfare gains and losses an african case study this article uses panel survey data for cote d ivoire to investigate the determinants of welfare gains and losses of households over time a first difference model is estimated which takes account of initial conditions for urban areas it was found that human capital is not only a key explanatory factor for levels of welfare but also the most important endowment to explain welfare changes over time in rural areas physical capital especially land and farm equipment mattered most household size and composition and socioeconomic characteristics of the household also affected welfare changes policy implications are discussed

risk and household grain management in developing countries a dynamic model is presented of a household s joint production storage and trade decisions when facing transaction costs and risk in prices and yields grain management decisions balance the goals of maximising profits and reducing consumption price risk model solutions calibrated to chinese data show that grain s consumption role makes it an attractive form of precautionary saving even when households have access to credit the joint nature of production and savings decisions limits the income loss associated with risk coping and the desire to store grain can explain why subsistence households are frequently net purchasers but rarely net sellers of grain

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

geographic poverty traps a micro model of consumption growth in rural china how important are neighbourhood endowments of physical and human capital in explaining diverging fortunes over time for otherwise identical households in a developing rural economy to answer this question we develop an estimable micro model of consumption growth allowing for constraints on factor mobility and externalities whereby geographic capital can influence the productivity of a household s own capital our statistical test has considerable power in detecting geographic effects given that we control for latent heterogeneity in measured consumption growth rates at the micro level we find robust evidence of geographic poverty traps in farm household panel data from post reform rural china our results strengthen the equity and efficiency case for public investment in lagging poor areas in this setting copyright 2002 john wiley sons ltd

saving in developing countries theory and review in the literature on economic development much of the interest in saving has been focused on the relation between saving and growth but saving is not only about accumulation it is about smoothing consumption in the face of volatile and unpredictable income and helping to ensure the living standards of poor people whose lives are difficult and uncertain this paper develops a model of households which cannot borrow but which accumulate assets as a buffer stock to protect consumption when incomes are low such households dissave as often as they save do not accumulate assets over the long term and have on average very small asset holdings but their consumption is markedly smoother than their income much of the evidence is as consistent with this view of saving as it is incosistent with standard views of smoothing over the life cycle and with explanations of the link between saving and growth in terms of life cycle saving behavior consumption smoothing is also a useful way of thinking about government policy where volatility in the world prices of taxed commodities can generate sharp fluctuations in government revenues as well as reallocations of revenue between the private and public sectors many important policy issues in developing countries hinge on issues of consumption and smoothing and research on these issues is currently likely to be more productive than work on the relation between saving and growth

chronic and transient poverty in rural china abstract this paper rectifies the poverty decomposition framework of rodgers and rodgers 1993 which violates the focus axiom of sen 1976 an empirical application of the rectified technique reveals that poverty in rural china was dominated by the chronic component

gaining ground poverty in the postwar united states official measures of poverty in the united states are compiled by the bureau of the census by comparing a household s income level to a prespecified threshold from a theoretical perspective it is more appropriate to evaluate the level of poverty using a consumption based measure of household welfare in this paper i evaluate the level of poverty using expenditure data from the consumer expenditure survey i find that consumption based poverty rates are much lower than those based on income the trend in the poverty rate in the united states is sensitive to the price index and equivalence scales used to adjust the poverty thresholds

on the measurement of poverty official statistics in the united states and the united kingdom show a rise in poverty between the 1970 s and the 1980 s but scepticism has been expressed with regard to these findings in particular the methods employed in the measurement of poverty have been the subject of criticism this paper re examines three basic issues in measuring poverty the choice of the poverty line the index of poverty and the relation between poverty and inequality one general theme running through the paper is that there is a diversity of judgments which enter the measurement of poverty and that it is necessary to recognize these explicitly in the procedures adopted there is likely to be disagreement about the choice of poverty line affecting both its level and its structure in this situation we may only be able to make comparisons and not to measure differences and the comparisons may lead only to a partial rather than a complete ordering the first section of the paper discusses the stochastic dominance conditions which allow such comparisons illustrating their application by reference to data for the united states the choice of poverty measure has been the subject of an extensive literature and a variety of measures have been proposed in the second section of the paper a different approach is suggested considering a class of measures satisfying certain general properties and seeking conditions under which all members of the class which includes many of those proposed give the same ranking those sceptical about measures of poverty often assert that poverty and inequality are being confounded the third section of the paper distinguishes four different viewpoints and relates them to theories of justice and views of social welfare

household strategies and rural livelihood diversification this article reviews the recent literature on diversification as a livelihood strategy of rural households in developing countries with particular reference to sub saharan africa livelihood diversification is defined as the process by which rural families construct a diverse portfolio of activities and social support capabilities in order to survive and to improve their standards of living the determinants and effects of diversification in the areas of poverty income distribution farm output and gender are examined some policy inferences are summarised the conclusion is reached that removal of constraints to and expansion of opportunities for diversification are desirable policy objectives because they give individuals and households more capabilities to improve livelihood security and to raise living standards