On poverty and the persistence of poverty in Benin

Abstract

Purpose The purpose of this paper is to examine the determinants of poverty and the persistence of poverty in Benin using a longitudinal data for the years 2006-2011. The paper also seeks to understand the dynamic of poverty and what factors explain households’ mobility across poverty status over time. Design/methodology/approach To answer the research questions, the paper develops and estimates logit and probit models of poverty. In addition to households’ characteristics as explanatory variables, the models control for the previous years’ poverty status to test for the hypothesis of persistence in poverty. Next, the paper extends the analysis to compute poverty transition matrix and estimates a multinomial models of the determinants of these transitions. Findings The paper finds that households’ demographic and socio-economic characteristics are strongly correlated with their poverty status. It also finds a strong evidence of persistence of poverty: being poor in a year increases the likelihood of remaining poor in the following years. The analysis of the dynamic of poverty reveals that there is a large and rapid change in poverty with households moving in and out of poverty. Across all models, it appears that human capital accumulation through education and labor skills are the strongest forces lifting households out of poverty and persistence of poverty. Practical implications Taken together, the results suggest that public policies should not only seek to lift households out of poverty, but also seek to reduce re-entries into poverty by investing in education and improving employment skills. Originality/value A key contribution of the study is the characterization of the profile of poor and persistently poor households in Benin, and the analysis of the factors explaining the dynamic of poverty. It updates and complements previous studies on poverty in Benin using the most recent nationally representative longitudinal data. The findings stress the crucial importance of human capital as a key force to lift households out of poverty.