The impact of spell recurrence on poverty dynamics in less developed contexts: The case of Chile during the period 2006-2009

Presenter: Jose Prieto, Boston College, Boston, USA

Author: Jose Prieto

Co-author(s): Luis Maldonado

This paper analyses whether poverty persistence and spell recurrence over time can affect poverty exit and entry rates in a less socially and economically developed context. To do so, the study uses novel data from the Chilean Socio-economic Household Panel Survey 2006-2009, which involves personal interviews conducted each year with all adult members of sampled households. The analysis is carried out on a balanced subsample of 18065 persons covered in four waves with multivariate hazard models taking into account multiple-poverty and non-poverty spells. Preliminary results show that, similarly to many developing countries, the Chilean panel data provide information about poverty that generally remains hidden in cross-sectional data analysis: i) there is much poverty turnover, even though there is a small percentage of individuals persistently poor, and ii) being poor in one year decreases the likelihood of escaping poverty the next year. Most importantly for the current study, the findings show that the risk of entering poverty increases when an individual has moved in and out of poverty previously. The results justify designing different antipoverty programmes. Long-term policy programmes that improve individuals’ characteristics such as education and training should be accompanied by short-term programmes with the capacity to rapidly bring people out of poverty by cash transfers. This study represents the first effort to demonstrate the relevance of duration dependence and recurrence of poverty spells in income dynamics in a Latin American country.