# **7. Conclusion**

**This paper explored the underlying economic mobility patterns behind the significant reduction in poverty, including moderate poverty, in Moldova during the 2000s and identified factors associated with upward economic mobility and thus transitions out of poverty** . The results revealed that a high share of poor and moderately poor households were able to improve their living standards and escape poverty, while few non-poor households fell into poverty; this trend continued post crisis, but decelerated. While Moldova remains one of the poorest countries in the region, it presents one of the highest levels of upward economic mobility across European and Central Asian countries over the past decade. However, despite progress, many households in Moldova remain vulnerable to shocks and thus to falling into poverty.

**In order to strengthen the capacity of the poor and moderate poor to escape poverty in a sustainable way, this paper sought to better understand the factors associated with income growth and upward movements.** In Moldova, the main differences between households that were able to escape poverty from those that were not are education and labor market status (more than being employed – as household employment rates are not too different across groups - the sector of employment mattered). Higher educational attainment among household members and employment in the services and manufacturing sectors—vis-à-vis agriculture—were strongly associated with upward mobility. Furthermore, whether or not households received remittances or pensions also played a role. Findings from this paper can provide guidance on policies areas which have the potential to further strengthen transitions out of poverty.

**Promoting upward economic mobility requires a policy agenda focused on skills and preparing workers for new jobs** . This includes providing individuals with strong generic skills through quality basic education, but also preparing workers with market-driven skills for today’s labor market, in particular, for the increasing share of new jobs outside the agricultural sector. This can enable larger groups of society, particularly the less well-off, to benefit from the ongoing sectoral transformation. Further, policies should remove barriers and disincentives to labor force participation and, in particular, to formal employment, as well as eliminate obstacles to internal labor mobility to allow workers to go where the jobs are.

**A successful policy agenda should also strengthen the role of public and private transfers in reducing the long-term vulnerability of households** . For remittances, this includes fostering a more productive use of these transfers to increase the long-term capacity of households to improve their living standards. In the case of social protection, it is key to ensure that they improve the ability of households to weather shocks and avoid downward economic mobility, but also that they do not give rise to disincentives to (formal) employment.

**Finally, findings and their policy implications can be very relevant to inform the agenda on the World Bank twin goals: reducing poverty and promoting shared prosperity** . Even though economic mobility analysis focuses on tracking households over time – in contrast, for example, to the shared prosperity indicator of boosting income growth of the bottom 40 percent – understanding the relevance of

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