Conventional poverty analysis is ill-equipped to answer questions
concerning the future persistence of observed poverty. Are those
observed to be poor at a particular point in time chronically poor, or
are they simply in a transitory state? While a number of analysts have
struggled with this question, this paper employs economic theory of
asset accumulation and poverty traps to derive estimable chronic poverty
measures. These measures in turn provide a conceptual foundation for
understanding and measuring vulnerability. The analysis identifies two
sorts of chronic poverty. The first type (intrinsic chronic poverty) is
experienced by those who are intrinsically disadvantaged by lack of
skill or unfavourable economic environment. The second (multiple
equilibrium chronic poverty) is experienced by those who have the
potential to be non-poor given their skills and circumstances, but who
lack sufficient assets to craft a pathway out of poverty. The policies
needed to address these two types of chronic poverty are distinct.
Moreover, the analysis shows that the second group of chronically poor
are especially vulnerable to shocks. Social protection policies are
likely to be an especially effective means for addressing this multiple
equilibrium chronic poverty. After illustrating these concepts with
simulated data, the paper closes with an empirical application to South
Looking forward: theory-based measures of chronic poverty and vulnerability. Working Paper 94. Manchester: IDPM/Chronic Poverty Research Centre (CPRC), UK, ISBN 1-904049-93-1, iv + 22 pp.
Looking forward: theory-based measures of chronic poverty and vulnerability. Working Paper 94.