Income Poverty Persistence and Multidimensional Poverty Persistence in Chile

Presenter: Joaquin Prieto, Department of Social Policy at the London School of Economics and Political Science, UK

Despite the increased knowledge about poverty persistence and its mechanisms (heterogeneity and true state dependence), most of these studies are not only primarily focused on developed countries but also do not consider other definitions of poverty, different from the monetary definition, that emphasize its multidimensional condition. The main purpose of this paper is to study the mechanisms behind poverty persistence in a less socially and economically developed context as it is Chile, using two definitions: income poverty and multidimensional poverty. To do so, the study analyses a novel data set from the Chilean Socioeconomic Household Panel Survey 2006-2009. The analysis is carried out on an unbalanced sample of 30,104 individuals covered in 4 waves with two Markovian poverty transition models (Endogenous Switching Probit model and Random Effect Dynamic Probit model) taking into account that past poverty can have a slope or intercept effect on the current poverty risk. And also considers poverty transitions models controlling for biases due to initial conditions and attrition. Preliminary results show that, similarly to many developed countries, both heterogeneity and true state dependence are related to the probability of experience income poverty and multidimensional poverty. Distinguishing between the two processes is crucial, as it will relate to different antipoverty policies. Regarding how poverty persistence analysis and outputs differ depending on the poverty definition used, I’ve found different characterizations of poverty persistence risk for various population subgroups. This study represents the first effort to demonstrate the relevance of understanding poverty persistence in a Latin American country.