Urban poverty dynamics in Peru and Madagascar 1997-1999: a panel data analysis.


The limits of the welfare-type anti-poverty policies promoted in the eighties in order to counter the effects of structural adjustments programs (SAP) have led to an awareness of the need to reflect on interactions among anti-poverty programs and, more importantly, to conceive and put in place anti-poverty policies adapted to the different existing types of poverty, as well as to draw attention to the factors associated to exits from poverty.

However, the small number of studies on poverty dynamics in developing countries and methodological differences among them have made it difficult to identify what the implications are for anti-poverty policies. Are the factors associated to chronic poverty and vulnerability the same from one country to the next? What are the features that characterize exits from poverty?

Based on a large sample of Peruvian and Madagascan urban households (1997-1999), the importance of poverty transitions was examined, as well as the characteristics of the temporarily and the chronically poor, with respect to those of non-poor households. Then, through a multinomial logit model, the specific contribution of household characteristics (demographics, human and physical capital), but also of shocks -related to both demographics and job market- experienced by these households, on chronic poverty and poverty entries and exits was highlighted. In this analysis, the impact of « geographic » variables linked to neighborhoods (provision of public goods, income levels, human capital and employment structure, among others) on poverty transitions was also considered. The two latter groups of variables are rarely considered in empirical research on developing countries (shocks are set aside in analyses because of the simultaneity biases that exist when no more than two years of observation are available). Result comparability was ensured by defining the variables and formulating the econometric model in a rigorously identical manner in both countries.

The factors associated to permanent poverty amply cover the characteristics generally identified in analyses on « static » poverty correlates. Nevertheless, these results do not confirm the idea that only shocks are relevant to temporary forms of poverty. The type and quality of entry on the job market, as well as the features of the residence neighborhood, turn out to be equally relevant in the analysis of poverty dynamics. These results suggest that the spatial « inequality » dimension should be added to analyses on income and poverty transition dynamics.


Urban poverty dynamics in Peru and Madagascar 1997-1999: a panel data analysis, presented at Staying Poor: Chronic Poverty and Development Policy, Institute for Development Policy and Management, University of Manchester, 7-9 April 2003. Chronic Poverty Research Centre (CPRC), Manchester, UK, 46 pp.

Urban poverty dynamics in Peru and Madagascar 1997-1999: a panel data analysis.

Published 1 January 2003