Poverty dynamics for Ghana during 2005/06–2016/17: An investigation using synthetic panels

Abstract

Ghana has consistently kept its poverty rate lower than the regional average over the past 25 years, but this positive trend has slowed down recently. Without actual panel data, it would be next to impossible to probe into the dynamic patterns beneath this trend. We offer the first study that examines the dynamics of overall, moderate, and extreme poverty in Ghana during 2005/06–2016/17, addressing the lack of actual panel data by constructing synthetic panel data from three nationally representative cross-sectional rounds of the Ghana Living Standards Surveys (GLSSs).We present a well-defined decomposition framework, which allows us to examine a rich profile of the dynamics among different population groups. Beyond poverty analysis, we further investigate the dynamics of the full consumption expenditure distribution. Although we find considerable conditional chronic (extreme) poverty rates hovering around 50–60%, there was more upward mobility than downward mobility during this period. Poor households were also more likely to have stronger consumption expenditure growth. The findings suggest that factors such as educational attainment, female household headship, urban residence, and nonagricultural work are positively correlated with poverty reduction. Compared to all other correlates, educational attainment appears to be the most effective in pushing households out of poverty and keeping them from falling into poverty. These results contribute to the growing literature on poverty dynamics in developing countries in general and provide new and relevant inputs for policy advice in Ghana in particular, especially since policies that address chronic poverty typically differ from those that tackle transient poverty.