The role of assets is key to the study of changes in welfare outcomes. Assets can play an important role in reducing vulnerability, which is a key dimension of both chronic and transient poverty. Assets are also important in influencing what households are able to achieve, in terms of income and many other outcomes. Those with more assets are often better able to improve their income levels and so to participate in economic growth. Accumulation of assets is a means by which people can move out of poverty and improve their livelihoods. On the other hand, those losing assets may be pushed into poverty. And those lacking assets to begin with risk being caught in a poverty trap. This paper begins by discussing the relationship between assets (or their absence) and vulnerability, given the central role of vulnerability in understanding both chronic and transient poverty. It then discusses the role of changes in asset holdings in poverty transitions. This leads into a discussion of asset-based poverty traps and of the potential role of discrimination. It concludes by setting out some areas for further research.
CPRC Working Paper No. 100, Chronic Poverty Research Centre, London, UK, ISBN: 1-904049-99-0
Assets and chronic poverty: background paper. CPRC Working Paper No. 100.