forward-looking anti-poverty interventions, including the implementation of preventive measures to avoid or reduce risks. Second, a clear understanding of the concept could also improve our knowledge of how to provide more security to people so that they can accumulate and retain assets and avoid irreversible damage when they are faced with risks, while simultaneously protecting their incomes against sudden drops. Finally, it seems desirable, necessary indeed, to embrace the concept of vulnerability to poverty without ignoring the subjective sense of insecurity that vulnerability also implies (de la Fuente, 2009).

Vulnerability to poverty is a particularly relevant issue in Latin America and the Caribbean (LAC). Since 2003, the region has achieved steady and dramatic declines in poverty, cutting extreme poverty (living with less than $2.5 a day) by half to 12.3 percent in 2012. Over the same period, moderate poverty (defined as life with less than $4 a day) in LAC fell from about 42 percent to 25.3 percent in 2012 (World Bank, 2014). Despite these impressive gains, about two out of five Latin Americans remain vulnerable to falling back into poverty, making it the largest economic class in the region in 2012.<sup>3</sup> As in the case of the LAC region and most of its peers, Mexico has also made laudable progress on the poverty reduction front since the early 2000s. Moderate poverty has declined by 18 percentage points (from 40.1 to 22.2 percent) during 2000-12, and since 2006 the number of people in the middle class has been higher than the number of people in poverty. Despite these gains, about 43 percent of Mexicans remained vulnerable to falling into poverty in 2012, becoming the biggest economic group in Mexico.

In Mexico, the study and analysis of vulnerability to poverty has been partially taken in social-policy public and academic circles through exploring the nexus between poverty and risk. The major social and economic crisis of the mid-1990s (and then again the 2009 crisis) intensified the need to address issues of risk, which had perhaps been underrated in the past, as well as to put in place mechanisms to help the poor cope with adverse shocks, including macroeconomic crises. Social-security and social assistance programs in combination with insurance and appropriate risk management instruments were conceived as key components in a new agenda for combating poverty and fostering shared prosperity to promote and enhance social inclusion. However, this interest has not been followed by an identification of the vulnerable households, or any robust analysis assessing fluctuations in the living standards of these groups of households over time, and simultaneously tracking both the consequences of risk events on these groups and public responses to them. The main contribution of this paper to the existing literature is therefore to identify those households vulnerable to poverty at a national scale and provide a deeper understanding of this group, including their profile and risk exposure. With the identification of vulnerable households at a national scale it is also possible to explore the incidence of various social protection programs on the vulnerable and

> 3 World Bank (2013, 2014). Calculations using SEDLAC data (CEDLAS and the World Bank). Estimates of poverty, vulnerability and the middle class at the regional level are population-weighted averages of country estimates. The poor are those living on less than $4 a day, the vulnerable are those living on $4 to $10 a day, and the middle class are those living on $10 to $50 a day (all in 2005 purchasing power parity). In order to analyze the same set of countries every year, interpolation was applied when country data was not available for a given year. Unless otherwise stated, all per capita figures are expressed in dollars per day based on purchasing power parity.

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