clear. Also not clear are the characteristics and attributes of households and individuals who realize these movements. We will attempt to shed some light on that in the subsequent sections.

# Methodology

The ideal data set to study economy mobility would be one in which the same household is observed at multiple points in time allowing us to directly observe the directional movements in well-being. These so-called panel data sets are hard to come by in many settings as they are more difficult and costly to implement. In Armenia, for example, such panel of data does not exist. In its absence, we use the “synthetic panel methodology” and apply it to the data from multiple rounds of the national Income and Living Conditions Survey (ILCS). The basic idea behind the synthetic panel methodology is to impute the welfare status of households in a period based on a structural model that predicts welfare status of household observed in the previous period. Annex 1 presents further details on the exact methodology and its use here. The synthetic panel methodology has been applied in a variety of settings and its robustness, stability and performance has been validated against actual panel data with results showing pretty close replication of actual transitions observed in the panel data.

Fortunately, for Georgia, we have actual panel data. The four rounds of Welfare Monitoring Survey (WMS) that have been implemented by the UNICEF since 2009 track the same households over time.<sup>9</sup> The four rounds were conducted in 2009, 2011, 2013 and 2015 and collected information on health, education, access to services in the country, together with a consumption module very similar to the Integrated Household Survey (IHS) used to measure and monitor poverty in Georgia.<sup>10</sup> Despite some differences between the survey instruments, the consumption growth captured by the WMS over the survey period is broadly similar to the IHS. Particularly, both surveys show positive growth across the entire welfare distribution with slightly higher growth at the lower ends. (See Figure 4 and Figure .)

> 9 The original sample of 4,808 households in 2009 had 2,816 surviving households in 2015. To this an additional booster sample of 1,717 was included in 2015. All the results on mobility is based on the surviving panel sample. Selective attrition could affect results if specific groups of the population disappear from the sample, but is mitigated by the re-calculation of sampling weights, which results in very similar distributions for the panel and initial samples for key variables (see Annex, Figures A1 and A2).

> 10 One key difference between the two surveys is the fact that the WMS uses a weekly recall to collect information on food expenditures while the IHS uses a 7-day diary. There are important advantages and disadvantages to both methods and recall methods are known to underestimate food consumption. We see this in Georgia as well: poverty estimated from WMS is higher (e.g. 50.8 percent in 2009) compared to the IHS survey (34 percent in 2009) for the same year. Still, for our purposes here, it will suffice to simply note this important source of difference between the two surveys.

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