This paper implements a machine learning approach to estimate intra-generational economic mobility using cross-sectional data. A Least Absolute Shrinkage and Selection Operator (Lasso) procedure is applied to explore poverty dynamics and household-level welfare growth in the absence of panel data sets that follow individuals over time.
... See More + The method is validated by sampling repeated cross-sections of actual panel data from Peru. In general, the approach performs well at estimating intra-generational poverty transitions; most of the mobility estimates fall within the 95 percent confidence intervals of poverty mobility from the actual panel data. The validation also confirms that the Lasso regularization procedure performs well at estimating household-level welfare growth between two years. Overall, the results are sufficiently encouraging to estimate economic mobility in settings where panel data are not available or, if they are, to improve panel data when they suffer from serious non-random attrition problems.
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Policy Research Working Paper WPS8545 AUG 08, 2018
This paper implements a machine learning approach to estimate intra-generational economic mobility using cross-sectional data. A Least Absolute Shrinkage and Selection Operator (Lasso) procedure is applied to explore poverty dynamics and household-level welfare growth in the absence of panel data sets that follow individuals over time.
... See More + The method is validated by sampling repeated cross-sections of actual panel data from Peru. In general, the approach performs well at estimating intra-generational poverty transitions; most of the mobility estimates fall within the 95 percent confidence intervals of poverty mobility from the actual panel data. The validation also confirms that the Lasso regularization procedure performs well at estimating household-level welfare growth between two years. Overall, the results are sufficiently encouraging to estimate economic mobility in settings where panel data are not available or, if they are, to improve panel data when they suffer from serious non-random attrition problems.
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Working Paper (Numbered Series) 129600 AUG 01, 2018
This paper proposes a non-parametric adaptation of a recently developed parametric technique to produce point estimates of intra-generational economic mobility in the absence of panel data sets that follow individuals over time.
... See More + The method predicts past individual income or consumption using time-invariant observable characteristics, which allows the estimation of mobility into and out of poverty, as well as household-level income or consumption growth, from cross-sectional data. The paper validates this method by sampling repeated cross-sections out of actual panel data sets from three countries in the Latin America region and comparing the technique with mobility from panels. Overall, the method performs well in the three settings; with few exceptions, all estimates fall within the 95 percent confidence intervals of the panel mobility. The quality of the estimates does not depend in general on the sophistication level of the underlying welfare model's specifications. The results are encouraging even for those specifications that include few time-invariant variables as regressors.
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Policy Research Working Paper WPS8220 OCT 16, 2017
This paper proposes a non-parametric adaptation of a recently developed parametric technique to produce point estimates of intra-generational economic mobility in the absence of panel data sets that follow individuals over time.
... See More + This paper proposes a non-parametric adaptation of a recently developed parametric technique to produce point estimates of intra-generational economic mobility in the absence of panel data sets that follow individuals over time. The method predicts past individual income or consumption using time-invariant observable characteristics, which allows the estimation of mobility into and out of poverty, as well as household-level income or consumption growth, from cross-sectional data. The paper validates this method by sampling repeated cross-sections out of actual panel data sets from three countries in the Latin America region and comparing the technique with mobility from panels. Overall, the method performs well in the three settings; with few exceptions, all estimates fall within the 95 percent confidence intervals of the panel mobility. The quality of the estimates does not depend in general on the sophistication level of the underlying welfare model's specifications. The results are encouraging even for those specifications that include few time-invariant variables as regressors.
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Working Paper (Numbered Series) 125571 OCT 01, 2017
Poverty estimates usually lag behind two years, which makes it difficult to provide real-time poverty analysis to assess the impact of economic crisis and shocks among the less well-off, and subsequently limits policy responses.
... See More + This paper takes advantage of up-to-date average economic welfare indicators like the gross domestic product per capita and comprehensive harmonized micro data of more than 180 household surveys in 15 Latin American countries. The paper tests three commonly used poverty nowcasting methods and ranks their performance by comparing country-specific and regional poverty nowcasts with actual poverty estimates for 2003–14 period. The validation results show that the two bottom-up approaches, which simulate the performance of each agent in the economy to nowcast overall poverty, perform relatively better than the top-down approach, which uses welfare estimates to explain the performance of poverty at an aggregate level over time. The results are robust to additional sensitivity and robustness tests.
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Policy Research Working Paper WPS8104 JUN 19, 2017
Castaneda, R. Andres; Caruso,German Daniel; Malasquez,Eduardo; Lucchetti,Leonardo Ramiro; Scot,ThiagoDisclosed
Poverty estimates usually lag behind two years, which makes it difficult to provide real-time poverty analysis to assess the impact of economic crisis and shocks among the less well-off, and subsequently limits policy responses.
... See More + This paper takes advantage of up-to-date average economic welfare indicators like the gross domestic product per capita and comprehensive harmonized micro data of more than 180 household surveys in 15 Latin American countries. The paper tests three commonly used poverty nowcasting methods and ranks their performance by comparing country-specific and regional poverty nowcasts with actual poverty estimates for 2003-14 period. The validation results show that the two bottom-up approaches, which simulate the performance of each agent in the economy to nowcast overall poverty, perform relatively better than the top-down approach, which uses welfare estimates to explain the performance of poverty at an aggregate level over time. The results are robust to additional sensitivity and robustness tests.
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Working Paper (Numbered Series) 125699 JUN 01, 2017
Latin America and the Caribbean’s story in the 2000s was one of rapid progress for many. More than 70 million people moved out of poverty and started on the path to a better life for themselves and their families.
... See More + The middle class grew at an impressive rate, and despite recent slowdowns in growth, remains a large segment of Latin American society. Income inequalities shrank between those at the top and those at the bottom, albeit not nearly enough. Despite these improvements, still too many Latin Americans are trapped, unable to see the progress that their compatriots have experienced. One in four people is still living in poverty. And of the millions who have moved out of poverty, most are stuck between poverty and the middle class, making up a growing vulnerable class that remains at risk of losing their hard-won gains. One very concerning group is the focus of this book: the nearly 130 million chronic poor in Latin America and the Caribbean. These are the one in five people in the region who have never known anything but poverty. They have not benefitted from the rising tide driven by the growth over the past fifteen years, and thus have thus been left behind by policies and programs that have otherwise been effective in improving the lives of millions. These are the poorest of the poor, concentrated in communities that share the same issues, and for whom an escape from poverty seems unattainable. This book points to a few areas where policies and programs can have more and better impact. First, improving the enabling environment for the chronically poor to succeed, balancing direct support to poor families with critical improvements in their communities as a whole. It is not enough for people to have skills or education; they need to be able to find good jobs, have access to universal quality health care, and build their businesses in safe neighborhoods.
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Following steep declines in poverty rates over the past decade, the Latin America and Caribbean (LAC) region reduced childhood poverty by a third and childhood extreme poverty almost by half between 2004 and 2014.
... See More + Despite these gains, children in LAC have seen slower reductions in poverty than the overall population and continue to be more likely than adults to live in poverty. The incidence of childhood poverty in Central America and the Caribbean remains the highest in the region. Important socioeconomic and demographic factors are behind the slower gains in poverty reduction for children. The high levels of childhood poverty have significant consequences for the future of the LAC region. Today’s childhood poverty has significant implications for tomorrow’s labor force, limiting their potential to gain the skills necessary to exit poverty as adults. To prepare children for tomorrow’s jobs, policies need to prioritize access to good quality education and basic services, including nutrition, healthcare, and water.
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Following steep declines in poverty rates over the past decade, the Latin America and Caribbean (LAC) region reduced childhood poverty by a third and childhood extreme poverty almost by half between 2004 and 2014.
... See More + Despite these gains, children in LAC have seen slower reductions in poverty than the overall population and continue to be more likely than adults to live in poverty. The incidence of childhood poverty in Central America and the Caribbean remains the highest in the region. Important socioeconomic and demographic factors are behind the slower gains in poverty reduction for children. The high levels of childhood poverty have significant consequences for the future of the LAC region. Today’s childhood poverty has significant implications for tomorrow’s labor force, limiting their potential to gain the skills necessary to exit poverty as adults. To prepare children for tomorrow’s jobs, policies need to prioritize access to good quality education and basic services, including nutrition, healthcare, and water.
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This paper contributes to the methodological literature on the estimation of poverty lines for country poverty comparisons in Latin America and the Caribbean.
... See More + The paper exploits a unique, comprehensive data set of 86 up-to-date urban official extreme and moderate poverty lines across 18 countries in Latin America and the Caribbean, as well as the recent values of the national purchasing power parity conversion factors from the 2011 International Comparison Program and a set of harmonized household surveys that are part of the Socio-Economic Database for Latin America and the Caribbean project. Because of the dispersion of country-specific poverty lines, the paper concludes that the value of a regional poverty line largely depends on the selected aggregation method, which ends up having a direct impact on the estimation of regional extreme and moderate poverty headcounts.
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Policy Research Working Paper WPS7621 APR 04, 2016
This paper contributes to the methodological literature on the estimation of poverty lines for country poverty comparisons in Latin America and the Caribbean.
... See More + The paper exploits a unique, comprehensive data set of 86 up-to-date urban official extreme and moderate poverty lines across 18 countries in Latin America and the Caribbean, as well as the recent values of the national purchasing power parity conversion factors from the 2011 International Comparison Program and a set of harmonized household surveys that are part of the Socio-Economic Database for Latin America and the Caribbean project. Because of the dispersion of country-specific poverty lines, the paper concludes that the value of a regional poverty line largely depends on the selected aggregation method, which ends up having a direct impact on the estimation of regional extreme and moderate poverty headcounts.
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Working Paper (Numbered Series) 125658 APR 01, 2016
The Latin America and the Caribbean (LAC) region achieved laudable gains in the 2000s in the fight against poverty. This was a decade of solid economic growth; substantial reduction in poverty and income inequality; and progress toward being a middle-class society.
... See More + While changes in the distribution of household income played an important role, poverty reduction in LAC has been driven more by growth in income. To better understand these dynamics, it is useful to keep in mind the diversity of the region’s labor force by considering different skill groups, as defined by education levels. With the commodity boom fading, the region will do well to redouble internal efforts to promote more inclusive growth and to reduce poverty. This report highlights the need to ease the constraints that the poor face in labor market participation and to continue improving their access to high-quality education. While labor market policies like the minimum wage can be useful tools, care must be taken to apply them judiciously. Moreover, finding the best ways to stoke productivity, which will allow workers to make structural shifts to better jobs, will be an important challenge going forward for sustained inclusive growth and shared prosperity.
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97209 JUN 01, 2015
Castañeda, Andres; Del Carmen Hasbun,Giselle Eugenia; Lucchetti,Leonardo Ramiro; Moreno Herrera,Laura Liliana; De Gouvea Scot De Arruda,Thiago; Sousa,Liliana Do Couto; Valderrama Gonzalez,Daniel; Viveros Mendoza,Martha CelmiraDisclosed
In 2013 the World Bank set itself two ambitious goals: to end extreme poverty within a generation and to boost the prosperity of the bottom 40 percent of the population worldwide.
... See More + In Latin America, the significance of both goals cannot be overstated. Indigenous people account for about 8 percent of the population, but represent 14 percent of the poor and over 17 percent of all Latin Americans living on less than United States (U.S.) $2.50 a day. Though the World Bank has chosen two general indicators for measuring progress toward its twin goals - the proportion of people living on less than U.S. $1.25 a day (purchasing power parity, 2005) and the growth of real capital income among the bottom 40 percent of the population - this report acknowledges that these indicators offer only a partial view of the obstacles preventing many indigenous peoples from achieving their chosen paths of development. The report notes that in Bolivia, Quechua women are 28 percent less likely to complete secondary school than a nonindigenous Bolivian woman, while Quechua men are 14 percent less likely to complete secondary school than non-indigenous men. This report seeks to contribute to these discussions by offering a brief, preliminary glance at the state of indigenous peoples in Latin America at the end of the first decade of the millennium. The authors believe that this is the first, necessary step to start working on a concerted and evidence-based agenda for subsequent work in critical areas of development such as education, health, and land rights. The report makes a critical analysis of the many inconsistencies present in much of the data, which in many cases are intrinsic to the difficulties of approaching indigenous issues with tools and data sets not originally intended to account for or include indigenous peoples’ voices and special needs. The report is divided into six sections. The first part, how many and where they are provides a demographic overview of indigenous people in the region, including population, geographic distribution, number of ethnic groups, and indigenous languages. The second section, mobility, migration, and urbanization describes a growing tendency among indigenous people to migrate to Latin American cities, which are becoming critical, though largely ignored, areas for political participation, and market articulation. The third section, development with identity briefly discusses the concept of poverty and reflects on how the use of predominantly Western indicators of well-being might condition the understanding of indigenous peoples’ situations and needs. The fourth and fifth sections broaden this argument by focusing on two particular instances of exclusion - the market and education.
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In 2013 the World Bank set itself two ambitious goals: to end extreme poverty within a generation and to boost the prosperity of the bottom 40 percent of the population worldwide.
... See More + In Latin America, the significance of both goals cannot be overstated. Indigenous people account for about 8 percent of the population, but represent 14 percent of the poor and over 17 percent of all Latin Americans living on less than United States (U.S.) $2.50 a day. Though the World Bank has chosen two general indicators for measuring progress toward its twin goals - the proportion of people living on less than U.S. $1.25 a day (purchasing power parity, 2005) and the growth of real capital income among the bottom 40 percent of the population - this report acknowledges that these indicators offer only a partial view of the obstacles preventing many indigenous peoples from achieving their chosen paths of development. The report notes that in Bolivia, Quechua women are 28 percent less likely to complete secondary school than a nonindigenous Bolivian woman, while Quechua men are 14 percent less likely to complete secondary school than non-indigenous men. This report seeks to contribute to these discussions by offering a brief, preliminary glance at the state of indigenous peoples in Latin America at the end of the first decade of the millennium. The authors believe that this is the first, necessary step to start working on a concerted and evidence-based agenda for subsequent work in critical areas of development such as education, health, and land rights. The report makes a critical analysis of the many inconsistencies present in much of the data, which in many cases are intrinsic to the difficulties of approaching indigenous issues with tools and data sets not originally intended to account for or include indigenous peoples’ voices and special needs. The report is divided into six sections. The first part, how many and where they are provides a demographic overview of indigenous people in the region, including population, geographic distribution, number of ethnic groups, and indigenous languages. The second section, mobility, migration, and urbanization describes a growing tendency among indigenous people to migrate to Latin American cities, which are becoming critical, though largely ignored, areas for political participation, and market articulation. The third section, development with identity briefly discusses the concept of poverty and reflects on how the use of predominantly Western indicators of well-being might condition the understanding of indigenous peoples’ situations and needs. The fourth and fifth sections broaden this argument by focusing on two particular instances of exclusion - the market and education.
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In 2013 the World Bank set itself two ambitious goals: to end extreme poverty within a generation and to boost the prosperity of the bottom 40 percent of the population worldwide.
... See More + In Latin America, the significance of both goals cannot be overstated. Indigenous people account for about 8 percent of the population, but represent 14 percent of the poor and over 17 percent of all Latin Americans living on less than United States (U.S.) $2.50 a day. Though the World Bank has chosen two general indicators for measuring progress toward its twin goals - the proportion of people living on less than U.S. $1.25 a day (purchasing power parity, 2005) and the growth of real capital income among the bottom 40 percent of the population - this report acknowledges that these indicators offer only a partial view of the obstacles preventing many indigenous peoples from achieving their chosen paths of development. The report notes that in Bolivia, Quechua women are 28 percent less likely to complete secondary school than a nonindigenous Bolivian woman, while Quechua men are 14 percent less likely to complete secondary school than non-indigenous men. This report seeks to contribute to these discussions by offering a brief, preliminary glance at the state of indigenous peoples in Latin America at the end of the first decade of the millennium. The authors believe that this is the first, necessary step to start working on a concerted and evidence-based agenda for subsequent work in critical areas of development such as education, health, and land rights. The report makes a critical analysis of the many inconsistencies present in much of the data, which in many cases are intrinsic to the difficulties of approaching indigenous issues with tools and data sets not originally intended to account for or include indigenous peoples’ voices and special needs. The report is divided into six sections. The first part, how many and where they are provides a demographic overview of indigenous people in the region, including population, geographic distribution, number of ethnic groups, and indigenous languages. The second section, mobility, migration, and urbanization describes a growing tendency among indigenous people to migrate to Latin American cities, which are becoming critical, though largely ignored, areas for political participation, and market articulation. The third section, development with identity briefly discusses the concept of poverty and reflects on how the use of predominantly Western indicators of well-being might condition the understanding of indigenous peoples’ situations and needs. The fourth and fifth sections broaden this argument by focusing on two particular instances of exclusion - the market and education.
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This paper investigates the causal consequences of Tropical Storm Agatha (2010) -- the strongest tropical storm ever to strike Guatemala since rainfall records have been kept -- on household welfare.
... See More + The analysis reveals substantial negative effects, particularly among urban households. Per capita consumption fell by 12.6 percent, raising poverty by 5.5 percentage points (an increase of 18 percent). The negative effects of the shock span other areas of human welfare. Households cut back on food consumption (10 percent or 43 to 108 fewer calories per person per day) and reduced expenditures on basic durables. These effects are related to a drop in income per capita (10 percent), mostly among salaried workers. Adults coped with the shock by increasing their labor supply (on the intensive margin) and simultaneously relying on the labor supply of their children and withdrawing them from school. Impact heterogeneity is associated with the intensity of the shock, food price inflation, and the timing of Agatha with respect to the harvest cycle of the main crops. The results are robust to placebo treatments, household migration, issues of measurement error, and different samples. The negative effects of the storm partly explain the increase in poverty seen in urban Guatemala between 2006 and 2011, which national authorities and analysts previously attributed solely to the collateral effects of the global financial crisis.
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Policy Research Working Paper WPS7177 JAN 01, 2015
Baez, Javier E.; Lucchetti, Leonardo; Genoni, Maria E.; Salazar, MateoDisclosed
By most measures, the 2000s were one of the most impressive decades for economic development in Latin America and the Caribbean (LAC). With the exception of 2009, the regions gross domestic product per capita grew consistently at an average rate of 2.5 percent between 2000 and 2012.
... See More + During the same period, and despite being one of the most unequal regions in the world, inequalities reduced substantially. The regional Gini coefficient for per capita income, for instance, decreased by an unprecedented five percentage points, from 0.57 in 2000 to 0.52 in 2012. Sustained economic growth, joint with substantial reductions in income inequality, led to remarkable increases in the incomes of those at the bottom of the income distribution. Accordingly, poverty in LAC decreased by more than 16 percentage points within a single decade, from 41.6 percent in 2003 to 25.3 percent in 2012. Furthermore, extreme poverty was cut in half, from 24.5 percent to 12.3 percent (Figure 1).1 Overall, a remarkable 70 million people moved out of poverty: the strongest poverty reduction performance of the region in decades. In spite of these dramatic advances, one in four Latin Americans today remains poor. Those who experience shocks that cause them to fall temporarily into poverty are considered to be the transitory poor. However, many people are born into poverty and never escape their poverty status: these are the chronic poor. The chronic poor have not benefitted much from the impressive growth rates of the 2000s and may have fallen into the cracks of the social assistance system; they have been left behind. Furthermore, the prospects of them escaping poverty in the near future are weak. GDP growth has slowed significantly, from about six percent in 2010 to an estimated 0.8 percent in 2014. As a result, improved labor market prospects may not prove to be sufficient for the chronic poor to escape poverty.
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By most measures, the 2000s were one of the most impressive decades for economic development in Latin America and the Caribbean (LAC). With the exception of 2009, the regions gross domestic product per capita grew consistently at an average rate of 2.5 percent between 2000 and 2012.
... See More + During the same period, and despite being one of the most unequal regions in the world, inequalities reduced substantially. The regional Gini coefficient for per capita income, for instance, decreased by an unprecedented five percentage points, from 0.57 in 2000 to 0.52 in 2012. Sustained economic growth, joint with substantial reductions in income inequality, led to remarkable increases in the incomes of those at the bottom of the income distribution. Accordingly, poverty in LAC decreased by more than 16 percentage points within a single decade, from 41.6 percent in 2003 to 25.3 percent in 2012. Furthermore, extreme poverty was cut in half, from 24.5 percent to 12.3 percent (Figure 1).1 Overall, a remarkable 70 million people moved out of poverty: the strongest poverty reduction performance of the region in decades. In spite of these dramatic advances, one in four Latin Americans today remains poor. Those who experience shocks that cause them to fall temporarily into poverty are considered to be the transitory poor. However, many people are born into poverty and never escape their poverty status: these are the chronic poor. The chronic poor have not benefitted much from the impressive growth rates of the 2000s and may have fallen into the cracks of the social assistance system; they have been left behind. Furthermore, the prospects of them escaping poverty in the near future are weak. GDP growth has slowed significantly, from about six percent in 2010 to an estimated 0.8 percent in 2014. As a result, improved labor market prospects may not prove to be sufficient for the chronic poor to escape poverty.
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This paper investigates the causal consequences of Tropical Storm Agatha (2010) the strongest tropical storm ever to strike Guatemala since rainfall records have been kept on household welfare.
... See More + The analysis reveals substantial negative effects, particularly among urban households. Per capita consumption fell by 12.6 percent, raising poverty by 5.5 percentage points (an increase of 18 percent). The negative effects of the shock span other areas of human welfare. Households cut back on food consumption (10 percent or 43 to 108 fewer calories per person per day) and reduced expenditures on basic durables. These effects are related to a drop in income per capita (10 percent), mostly among salaried workers. Adults coped with the shock by increasing their labor supply (on the intensive margin) and simultaneously relying on the labor supply of their children and withdrawing them from school. Impact heterogeneity is associated with the intensity of the shock, food price inflation, and the timing of Agatha with respect to the harvest cycle of the main crops. The results are robust to placebo treatments, household migration, issues of measurement error, and different samples. The negative effects of the storm partly explain the increase in poverty seen in urban Guatemala between 2006 and 2011, which national authorities and analysts previously attributed solely to the collateral effects of the global financial crisis.
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Working Paper (Numbered Series) 125533 JAN 01, 2015
