be classified as vulnerable. Notice, however, that the methodology proposed by Lopez-Calva and OrtizJuarez (2014) requires at least two waves of longitudinal information or panel data, which are not currently available in Colombia.

Colombia has two publicly available surveys designed to follow households across multiple periods: (i) the _Encuesta Longitudinal de Protección Social_ (ELPS)<sup>4</sup> prepared by the Colombian statistics office (DANE), and (ii) the _Encuesta Longitudinal Colombiana_ (ELCA)<sup>5</sup> elaborated by the _Universidad de los Andes_ . However, in practice there is only one publicly available wave of the ELPS (making it a crosssection for concrete purposes) and, while there are two waves available of the ELCA, the survey does not properly capture incomes (the official welfare measure used for estimating extreme and moderate monetary poverty), raising concerns on the comparability of poverty estimates obtained using the ELCA and the GEIH. Therefore, the use of alternative strategies, such as a the one proposed in this paper, is required to assess the dynamics of households living in poverty, vulnerability or the middle class.

Using cross-section information from multiple rounds of the _Gran Encuesta Integrada de Hogares_ (GEIH), this paper constructs a synthetic-panel for Colombia, and based on the methodology proposed by Dang et al. (2016), this paper estimates the vulnerability lines relevant for Colombia during the period 20082016, and calculates the transitions between poverty, vulnerability, and middle-class. Additionally, the paper shows several sensitivity analyses to better inform the crucial decision of choosing a vulnerability line. Results suggests a US$ 10 dollar-a-day in 2005 PPP (i.e. US$ 13.2 dollar-a-day in 2011 PPP) as the vulnerability threshold for Colombia. The “monetary welfare” dynamics suggest that roughly 56 percent of the Colombian population remain in the same income categories, 20 percent experience downward mobility and the remaining 24 percent experienced upward mobility. Furthermore, we observe that the rate of escaping poverty and vulnerability into the middle class, and the rate of escaping poverty into vulnerability increases with the levels of education, and it is lower for female household heads than their counterpart male household heads.

The rest of this study is organized as follows. The next section discusses the methodology proposed by Dang _et al_ . (2014) to construct synthetic panels based on cross-section surveys to analyze poverty dynamics<sup>6</sup> with an application for Colombia. The third section shows the main characteristics of the data available for Colombia during the 2008-2016 period and, more importantly, of the relevant sample used for this study as well as how the window width of the synthetic panel was defined. Section 4 presents a sensitivity analysis for the vulnerability lines in Colombia using different base years and alternative

> 4 <u>https://www.dane.gov.co/index.php/estadisticas-por-tema/pobreza-y-condiciones-de-vida/encuesta-longitudinal-deproteccion-social-elps</u>

> 5 <u>https://encuestalongitudinal.uniandes.edu.co/en/</u>

> 6 In this paper, the term poverty dynamics is associate to joint probabilities, and not to conditional probabilities. For example, the joint probability of being poor in t and being poor in t+1.

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