**Compared to other countries in the ECA region, Moldova was a higher performer in upward economic mobility.** It was one of the countries with the highest movements upward in the region and, for countries with available data for the crisis period (circa 2008 and circa 2010) it had the highest share of households moving up.<sup>7</sup>

**However, it is important to note that the methodology used to estimate these transitions may be underestimating downward mobility in Moldova** . Results from the high mobility scenario suggest that up to 10 percent of individuals may have fallen down one category between 1999 and 2004, half of which moved down to poverty (Annex Table A5 and Table A6). Similarly, for the period 2006 to 2011, almost 17 percent of the population may have fallen downwards, the majority of which crossed down the $5/day threshold, while others moved down from the middle class. In sum, although the majority of movements were indeed upwards in Moldova during the 2000s, some households might have remained stuck in one socioeconomic class or might have actually moved down. As previously mentioned, true transitions during these periods lie between the lower and the upper bound results.

**6. Who Moved Up: The Role of Initial Household and Individual Characteristics**

**Given the high upward economic mobility experienced in Moldova coupled with a large share of “stayers”, it is key to better understand the factors and characteristics of households that are correlated with these patterns** . This study aims at doing this in two ways. First, we look at the initial characteristics of households that moved out of poverty. Second, we estimate three different linear probability model to better understand which factors are associated with an increased probability of escaping poverty, moderate poverty and of upward mobility more broadly. Differences between these two approaches highlight first and second order effects in the reduction of economic poverty. Of particular interest is the role of human capital (education) and labor market status.

# **Descriptive statistics**

**Descriptive statistics on selected indicators show that household demographics, location and education seem to matter for promoting upward economic mobility** (Table A2 for full descriptive statistics and Figure 16 for selected indicators). Individuals who moved out of poverty lived, in the initial year, in smaller households than those which stayed in poverty, and had lower child and elderly dependency rates. Further, they were less often located in rural areas. In the period 2006 to 2011, for example, of people staying stuck in poverty 74 percent lived in rural areas; conversely, only 48 percent of those escaping poverty in that period were located in rural areas, suggesting that living in rural areas is associated with fewer movements out of poverty. Higher human capital accumulation is also associated with upward mobility. In the most recent period under analysis, of people who were able to escape poverty 11 percent had higher education, compared to 2 percent among those who remained stuck as poor.

> 7 This refers to findings of the regional component of the economic mobility research that this paper is part of. See summary findings in the overview piece “Economic Mobility in Europe and Central Asia: Exploring Patterns and Uncovering Puzzles” (2014).

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