Skip to main content
Top
Published in: Social Indicators Research 1/2015

01-01-2015

Identifying Single or Multiple Poverty Trap: An Application to Indian Household Panel Data

Author: Swati Dutta

Published in: Social Indicators Research | Issue 1/2015

Log in

Activate our intelligent search to find suitable subject content or patents.

search-config
loading …

Abstract

The paper examines the household asset dynamics in India as well as Indian rural States. The paper contributes to the empirical analysis of poverty trap by investigating the presence of one potential poverty trap to simultaneous poverty trap. The paper uses the India Human Development Survey for the year 1993 and 2005. We use the local polynomial regression with Epanechnikov kernel weights to test the existence of multiple or single equilibrium in asset poverty dynamics. Moreover, we use the partial linear mixed model to test the impact of illiteracy trap and under-nutrition trap on asset dynamics process. Across all the States we find only single dynamic asset equilibrium for rural households. However the nature of the asset dynamics varies from one state to another. We find that, in most of the States, asset accumulation does not take place and welfare dynamics is very poor in rural areas. Further, we find under-nutrition trap uniformly affect the asset accumulation in most of the States. However an illiteracy trap affects the asset level heterogeneously over the income and regional distribution. We find the most deprived States (Bihar, Uttar Pradesh, Orissa and Madhya Pradesh) have the multiple poverty trap compared to richer States. Our result implies that asset dynamics of the household varies in the long term according to the types of traps. Government and policy makers should take pointed policy and programme based on whether the poor are trapped and in what ways.

Dont have a licence yet? Then find out more about our products and how to get one now:

Springer Professional "Wirtschaft+Technik"

Online-Abonnement

Mit Springer Professional "Wirtschaft+Technik" erhalten Sie Zugriff auf:

  • über 102.000 Bücher
  • über 537 Zeitschriften

aus folgenden Fachgebieten:

  • Automobil + Motoren
  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Elektrotechnik + Elektronik
  • Energie + Nachhaltigkeit
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Maschinenbau + Werkstoffe
  • Versicherung + Risiko

Jetzt Wissensvorsprung sichern!

Springer Professional "Wirtschaft"

Online-Abonnement

Mit Springer Professional "Wirtschaft" erhalten Sie Zugriff auf:

  • über 67.000 Bücher
  • über 340 Zeitschriften

aus folgenden Fachgebieten:

  • Bauwesen + Immobilien
  • Business IT + Informatik
  • Finance + Banking
  • Management + Führung
  • Marketing + Vertrieb
  • Versicherung + Risiko




Jetzt Wissensvorsprung sichern!

Appendix
Available only for authorised users
Footnotes
1
When households are always poor we referred as “chronic poor” and when households are sometimes poor we referred as “transient poor”.
 
2
They have considered Epanechnikov kernel with arbitrary bandwidth.
 
3
IHDS is conducted by National Council for Applied Economic Research (NCAER), a well-known applied economics research institution in “India”. It is a nationally representative, multi-topic survey across India. Survey included on health, education, employment, economic status, marriage, fertility, gender relations, and social capital. IHDS was jointly organized by researchers from the University of Maryland and the National Council of Applied Economic Research (NCAER), New Delhi. Various authors have used the same data for various purposes (Zimmermann 2012; Singh 2011; Pou and Goli 2013, etc.).
 
4
Barrett et al. (2006) mentioned three reasons why asset dynamics is better than income dynamics for poverty analyses. Firstly, Income components are stochastic in nature; hence household may be poor in one period and better off in the next period and vice versa because of stochastic factor such as good luck or receiving a lucky gift. Secondly, stochastic incomes are likely to exaggerate income inequality in cross sectional analysis and thirdly it generates spurious economic mobility in longitudinal analysis.
 
5
It is a common cut-off to identify abnormal anthropometry (WHO 1995).
 
6
By Chi square test we get, χ 1 2  = 20.01 and p = 0.00.
 
Literature
go back to reference Adato, M., Carter, M. R., & May, J. (2006). Exploring poverty traps and social exclusion in South Africa using qualitative and quantitative data. Journal of Development Studies, 42(2), 226–247.CrossRef Adato, M., Carter, M. R., & May, J. (2006). Exploring poverty traps and social exclusion in South Africa using qualitative and quantitative data. Journal of Development Studies, 42(2), 226–247.CrossRef
go back to reference Alkire, S., & Foster, J. E. (2009). Counting and multidimensional poverty measurement. OPHI Working Papers 32, Queen Elizabeth House, University of Oxford. Alkire, S., & Foster, J. E. (2009). Counting and multidimensional poverty measurement. OPHI Working Papers 32, Queen Elizabeth House, University of Oxford.
go back to reference Anand, A., & Sen, A. (1997). Concepts of human development and poverty: A multidimensional perspective. Human Development Papers (pp. 1–19). Anand, A., & Sen, A. (1997). Concepts of human development and poverty: A multidimensional perspective. Human Development Papers (pp. 1–19).
go back to reference Atkinson, A. (2003). Multidimensional deprivation: Contrasting social welfare and counting approaches. Journal of Economic Inequality, 1(1), 51–65.CrossRef Atkinson, A. (2003). Multidimensional deprivation: Contrasting social welfare and counting approaches. Journal of Economic Inequality, 1(1), 51–65.CrossRef
go back to reference Atkinson, A. B., Rainwater, L and Smeeding, T. M. (1995). Income Distribution in OECD Countries, OECD Social Policy Studies, No. 18, Paris. Atkinson, A. B., Rainwater, L and Smeeding, T. M. (1995). Income Distribution in OECD Countries, OECD Social Policy Studies, No. 18, Paris.
go back to reference Barrett, C. B., Marenya, P. P., McPeak, J. G., Minten, B., Murithi, F., Oluoch-Kosura, W., et al. (2006). Welfare dynamics in rural Kenya and Madagascar. Journal of Development Studies, 42(2), 248–277.CrossRef Barrett, C. B., Marenya, P. P., McPeak, J. G., Minten, B., Murithi, F., Oluoch-Kosura, W., et al. (2006). Welfare dynamics in rural Kenya and Madagascar. Journal of Development Studies, 42(2), 248–277.CrossRef
go back to reference Campenhout, B. V., & Dercon, S. (2009). Non-linearities in the dynamics of livestock assets: Evidence from Ethiopia. Working paper, Insitute of Development Policy and Management (IDPM), The University of Antwerp. Campenhout, B. V., & Dercon, S. (2009). Non-linearities in the dynamics of livestock assets: Evidence from Ethiopia. Working paper, Insitute of Development Policy and Management (IDPM), The University of Antwerp.
go back to reference Carter, M. R., & Barrett, C. (2006). The economics of poverty traps and persistent poverty: An asset based approach. Journal of Development Studies, 42(1), 178–199.CrossRef Carter, M. R., & Barrett, C. (2006). The economics of poverty traps and persistent poverty: An asset based approach. Journal of Development Studies, 42(1), 178–199.CrossRef
go back to reference Carter, M. R., & May, J. (1999). Poverty, livelihood and class in rural South Africa. World Development, 27(1), 1–20.CrossRef Carter, M. R., & May, J. (1999). Poverty, livelihood and class in rural South Africa. World Development, 27(1), 1–20.CrossRef
go back to reference Carter, M. R., & May, J. (2001). One kind of freedom: The dynamics of poverty in post-apartheid South Africa. World Development, 29(12), 1987–2006.CrossRef Carter, M. R., & May, J. (2001). One kind of freedom: The dynamics of poverty in post-apartheid South Africa. World Development, 29(12), 1987–2006.CrossRef
go back to reference Dercon, S. (2004). Growth and shocks: Evidence from rural Ethiopia. Journal of Development Economics, 74(2), 309–329.CrossRef Dercon, S. (2004). Growth and shocks: Evidence from rural Ethiopia. Journal of Development Economics, 74(2), 309–329.CrossRef
go back to reference Francisca, A., & David, M. (2007). Poverty traps and nonlinear income dynamics with measurement error and individual heterogeneity. Journal of Development Studies, 43(6), 1057–1083.CrossRef Francisca, A., & David, M. (2007). Poverty traps and nonlinear income dynamics with measurement error and individual heterogeneity. Journal of Development Studies, 43(6), 1057–1083.CrossRef
go back to reference Giesbert, L., & Schindler, K. (2012). Assets, shocks and poverty traps in rural Mozambique. World Development, 40(8), 1594–1609.CrossRef Giesbert, L., & Schindler, K. (2012). Assets, shocks and poverty traps in rural Mozambique. World Development, 40(8), 1594–1609.CrossRef
go back to reference Hansen, B. E. (1999). Threshold effects in non-dynamic panels: Estimation, testing and inference. Journal of Econometrics, 93(2), 345–368.CrossRef Hansen, B. E. (1999). Threshold effects in non-dynamic panels: Estimation, testing and inference. Journal of Econometrics, 93(2), 345–368.CrossRef
go back to reference Hansen, B. E. (2000). Sample splitting and threshold estimation. Econometrica, 68(3), 575–603.CrossRef Hansen, B. E. (2000). Sample splitting and threshold estimation. Econometrica, 68(3), 575–603.CrossRef
go back to reference Jalan, J., & Ravallion, M. (2002). Geographic poverty traps? A micro model of consumption growth in rural China. Journal of Applied Econometrics, 17(4), 329–346.CrossRef Jalan, J., & Ravallion, M. (2002). Geographic poverty traps? A micro model of consumption growth in rural China. Journal of Applied Econometrics, 17(4), 329–346.CrossRef
go back to reference Lipton, M. (1994). Growing points in poverty research: Labour issues. International Institute for Labour Studies Discussion Paper, 66. Lipton, M. (1994). Growing points in poverty research: Labour issues. International Institute for Labour Studies Discussion Paper, 66.
go back to reference Liverpool, L., & Nelson, A. W. (2010). Asset versus consumption poverty and poverty dynamics in the presence of multiple equilibria in rural Ethiopia. IFPRI Discussion Paper 00971. Liverpool, L., & Nelson, A. W. (2010). Asset versus consumption poverty and poverty dynamics in the presence of multiple equilibria in rural Ethiopia. IFPRI Discussion Paper 00971.
go back to reference Lokshin, M., & Ravallion, M. (2004). Household income dynamics in two transition economies. Studies in Nonlinear Dynamics & Econometrics, 8(3), 1–31.CrossRef Lokshin, M., & Ravallion, M. (2004). Household income dynamics in two transition economies. Studies in Nonlinear Dynamics & Econometrics, 8(3), 1–31.CrossRef
go back to reference Lybbert, T. J., Barrett, C. B., Desta, S., & Coppock, D. L. (2004). Stochastic wealth dynamics and risk management among a poor population. The Economic Journal, 114(498), 750–777.CrossRef Lybbert, T. J., Barrett, C. B., Desta, S., & Coppock, D. L. (2004). Stochastic wealth dynamics and risk management among a poor population. The Economic Journal, 114(498), 750–777.CrossRef
go back to reference Meenakshi, J. V., Ray, R., & Gupta, S. (2000). Estimates of poverty for SC, ST and female-headed households. Economic and Political Weekly, 35(31), 2748–2754. Meenakshi, J. V., Ray, R., & Gupta, S. (2000). Estimates of poverty for SC, ST and female-headed households. Economic and Political Weekly, 35(31), 2748–2754.
go back to reference Naschold, F. (2012). The Poor stay poor: Household asset poverty traps in rural semi-arid India. World Development, 40(10):2033–2043. Naschold, F. (2012). The Poor stay poor: Household asset poverty traps in rural semi-arid India. World Development, 40(10):2033–2043.
go back to reference Nurkse, R. (1953). Problems of capital-formation in underdeveloped countries (1962nd ed.). New York: Oxford University Press. Nurkse, R. (1953). Problems of capital-formation in underdeveloped countries (1962nd ed.). New York: Oxford University Press.
go back to reference Oliver, Melvin. L., & Shapiro, T. M. (1990). Wealth of a nation: A reassessment of asset inequality in America shows at least one-third of households are asset poor. American Journal of Economics and Sociology, 49, 129–151.CrossRef Oliver, Melvin. L., & Shapiro, T. M. (1990). Wealth of a nation: A reassessment of asset inequality in America shows at least one-third of households are asset poor. American Journal of Economics and Sociology, 49, 129–151.CrossRef
go back to reference Planning Commission. (2009). Report of the expert group to review the methodology for estimation of poverty. New Delhi: Planning Commission. Planning Commission. (2009). Report of the expert group to review the methodology for estimation of poverty. New Delhi: Planning Commission.
go back to reference Pou, L. M. A., & Goli, S. (2013). Burden of multiple disabilities among the older population in India: An assessment of socioeconomic differentials. International Journal of Sociology and Social policy, 33(1/2), 63–76.CrossRef Pou, L. M. A., & Goli, S. (2013). Burden of multiple disabilities among the older population in India: An assessment of socioeconomic differentials. International Journal of Sociology and Social policy, 33(1/2), 63–76.CrossRef
go back to reference Rosenstein-Rodan, P. (1943). The problem of industrialization of eastern and south-eastern Europe. Economics Journal, 53, 202–211.CrossRef Rosenstein-Rodan, P. (1943). The problem of industrialization of eastern and south-eastern Europe. Economics Journal, 53, 202–211.CrossRef
go back to reference Sherraden, M. (1991). Assets and the poor. A new American welfare policy. Armonk, NY: M.E. Sharpe. Sherraden, M. (1991). Assets and the poor. A new American welfare policy. Armonk, NY: M.E. Sharpe.
go back to reference Singh, A. (2011). Family background, academic ability and associated inequality of opportunity in India. Economics Bulletin, 31(2), 1463–1473. Singh, A. (2011). Family background, academic ability and associated inequality of opportunity in India. Economics Bulletin, 31(2), 1463–1473.
go back to reference Smith, S. C. (2005). Ending global poverty: A guide to what works. Oxford: Palgrave Macmillan. Smith, S. C. (2005). Ending global poverty: A guide to what works. Oxford: Palgrave Macmillan.
go back to reference Sundaram, K., & Tendulkar, S. D. (2003). Poverty among social and economic groups in India in the nineteen nineties. Working Paper No. 118, Centre for Development Economics, Delhi School of Economics. Sundaram, K., & Tendulkar, S. D. (2003). Poverty among social and economic groups in India in the nineteen nineties. Working Paper No. 118, Centre for Development Economics, Delhi School of Economics.
go back to reference World Health Organization (1995). Physical status: The use and interpretation of anthropometry (Vol. 854, pp. 1–452). Report of a WHO Expert Committee. World Health Organization Technical Report Series. World Health Organization (1995). Physical status: The use and interpretation of anthropometry (Vol. 854, pp. 1–452). Report of a WHO Expert Committee. World Health Organization Technical Report Series.
go back to reference Zimmermann, L. (2012). Reconsidering gender bias in intra-household Allocation in India. Journal of Development Studies, 48(1), 151–163.CrossRef Zimmermann, L. (2012). Reconsidering gender bias in intra-household Allocation in India. Journal of Development Studies, 48(1), 151–163.CrossRef
Metadata
Title
Identifying Single or Multiple Poverty Trap: An Application to Indian Household Panel Data
Author
Swati Dutta
Publication date
01-01-2015
Publisher
Springer Netherlands
Published in
Social Indicators Research / Issue 1/2015
Print ISSN: 0303-8300
Electronic ISSN: 1573-0921
DOI
https://doi.org/10.1007/s11205-014-0586-x

Other articles of this Issue 1/2015

Social Indicators Research 1/2015 Go to the issue