Methodological Note: Using Micro Data to Understand Better the Intergenerational Transmission of Poverty in Low Income Developing Countries

Abstract

Good empirical analysis of the intergenerational transmission (IGT) of poverty is challenging. This note clarifies this challenge and possible contributions by considering: (1) what estimated relations would be informative for improving understanding within an intergenerational life-cycle behavioural framework with important unobserved variables (e.g. genetics); (2) possible resolutions to estimation problems; and (3) different types of data. The greatest progress can be made by focusing on: Links between parental background and adult child resource access for which effects are thought to be particularly large and relatively uncertain. High quality data regarding (a) representativeness, (b) power, (c) coverage of important concepts for such studies and (d) limited measurement error. Data that permit better estimates, including their robustness to different assumptions - e.g. with complete information on key variables for two or three generations, on intergenerational transfers, linked to time series records on contextual changes, sibling information, experiments, and/or longitudinal data. Through careful examination of existing data, keeping in mind considerations in this note, much can be learned about the IGT of poverty. But it is also important to be alert to opportunities for improving data and for encouraging collection of new and better data.