Moderate Poverty Research Articles

The Consequences of Legal Minimum Wages in Honduras

Summary Minimum wage policies are implemented in most developing countries, so understanding their consequences is critical to determine their effectiveness. This paper quantifies the labor market and poverty effects of Honduran minimum wages from 2005 to 2012. Using 13 household surveys as repeated cross-sections, I estimate the net effects of minimum wage hikes using variation from annual reforms to multiple minimum wages, a 60% increase, and changes in the number of minimum wage categories. Evidence shows that employers are partially complying with minimum wage laws, and respond to hikes by increasing their level of non-compliance. Higher minimum wages reduce covered (formal) employment and increase uncovered (informal) employment. Formal sector wages increase but greater labor supply in the informal sector leads to a negative net effect on wages. This last result is often empirically ambiguous, although consistent with the dual-sector minimum wage model. I find no evidence that minimum wages reduce extreme or moderate poverty.

Are remittances helping lower poverty and inequality levels in Latin America?

Although the recent economic expansion and redistributive fiscal policies implemented in Latin America since the turn of the century have raised the wellbeing of the population, the private monetary transfers from immigrants to their relatives back home are proving to be one of the most stable drivers of this change. This paper uses a new dataset for 18 Latin American countries covering the 2000–2013 period to examine the effectiveness of international remittances in reducing poverty and inequality. Dynamic panel data results using a number of measures for remittances indicate that increases in remittances have a negative and statistically significant impact on overall poverty and inequality in the region, even if it exacerbates moderate poverty. Such effect is robust to alternative remittances measures used to control for endogeneity concerns. In particular, remittances seem to have a stronger effect in countries receiving smaller amounts and in countries with a larger share of its population working abroad. Regional differences also affect the impact that remittances have on the wellbeing of the population, but financial development is found to have a limited impact on the effectiveness of remittances on poverty and inequality.

A New Profile of the Global Poor

Summary This paper presents a new demographic profile of extreme and moderate poverty, defined as those living on less than $1.90 and between $1.90 and $3.10 per day in 2013, based on household survey data from 89 developing countries. The face of poverty is primarily rural and young; 80% of the extreme poor and 75% of the moderate poor live in rural areas. Over 45% of the extreme poor are children younger than 15 years old, and nearly 60% of the extreme poor live in households with three or more children. Gender differences in poverty rates are muted, and there is scant evidence of gender inequality in poor children’s educational attainment. A sizable share of the extreme and moderate poor, 40 and 50%, respectively, have completed primary school. Compared with the extreme poor, the moderate poor are significantly more likely to have completed primary school and are less likely to work in agriculture. After conditioning on other individual and household characteristics, having fewer than three children, having greater educational attainment, and living in an urban area are strongly and positively associated with welfare. The results reinforce the central importance of households in rural areas and those containing large numbers of children in efforts to reduce extreme poverty, and are consistent with increased educational attainment and urbanization hastening poverty reduction.

You are what (and where) you eat: Capturing food away from home in welfare measures

Consumption of food away from home is rapidly growing across the developing world, and will continue to do so as GDP per person grows and food systems evolve. Surprisingly, the majority of household surveys have not kept up with its pace and still collect limited information on it. The implications for poverty and inequality measurement are far from clear, and the direction of the impact cannot be established a priori. This paper exploits rich data on food away from home collected as part of the National Household Survey in Peru, to shed light on the extent to which welfare measures differ depending on whether food away from home is accounted for or not. Peru is a relevant context, with the average Peruvian household spending over a quarter of their food budget on food away from home since 2010. The analysis indicates that failure to account for this consumption has important implications for poverty and inequality measures as well as the understanding of who the poor are. First, accounting for food away from home results in extreme poverty rates that are 18 percent higher and moderate poverty rates that are 16 percent lower. These results are also consistent, in fact more pronounced, with poverty gap and severity measures. Second, consumption inequality measured by the Gini coefficient decreases by 1.3 points when food away from home is included – a significant reduction. Finally, the inclusion of food away from home results in a reclassification of households across poor/non-poor status – 20 percent of the poor are different, resulting in small but significant differences in the profile of the poor in dimensions such as demographics, education, and labor market characteristics. Taken together, the results indicate that a serious rethinking of how to deal with the consumption of food away from home in measuring well-being is urgently needed to properly estimate and understand poverty around the world.

Family poverty and neighborhood poverty: Links with children's school readiness before and after the Great Recession

This paper examines how neighborhood and family poverty predict children's academic skills and classroom behavior at school entry, and whether associations have changed over a period of twelve years spanning the Great Recession. Utilizing the Early Childhood Longitudinal Study–Kindergarten 1998 and 2010 cohorts and combined with data from the U.S. Census and American Community Survey, we find that the proportion of kindergarten children living in moderate and high poverty neighborhoods increased from 1998 to 2010, and that these increases were most pronounced for non-poor and white children. Using OLS and fixed effects regression analyses and holding family poverty constant, we find that children in neighborhoods with higher levels of poverty start school less ready to learn than their peers. Specifically, children from the highest poverty neighborhoods start school almost a year behind children from the lowest poverty neighborhoods in terms of their academic skills. In addition, we find that the academic skills gap between poor- and non-poor children within neighborhood poverty categories grew from 1998 to 2010, particularly in high poverty neighborhoods. These findings appear to be explained both by changes in the composition of families within neighborhood poverty categories and income increases among non-poor families. The findings indicate that neighborhood poverty may be a useful proxy to identify children and families in need of additional support.

Risk of poor development in young children in low-income and middle-income countries: an estimation and analysis at the global, regional, and country level.

SummaryBackgroundA 2007 study published in The Lancet estimated that approximately 219 million children aged younger than 5 years were exposed to stunting or extreme poverty in 2004. We updated the 2004 estimates with the use of improved data and methods and generated estimates for 2010.MethodsWe used country-level prevalence of stunting in children younger than 5 years based on the 2006 Growth Standards proposed by WHO and poverty ratios from the World Bank to estimate children who were either stunted or lived in extreme poverty for 141 low-income and middle-income countries in 2004 and 2010. To avoid counting the same children twice, we excluded children jointly exposed to stunting and extreme poverty from children living in extreme poverty. To examine the robustness of estimates, we also used moderate poverty measures.FindingsThe 2007 study underestimated children at risk of poor development. The estimated number of children exposed to the two risk factors in low-income and middle-income countries decreased from 279·1 million (95% CI 250·4 million–307·4 million) in 2004 to 249·4 million (209·3 million–292·6 million) in 2010; prevalence of children at risk fell from 51% (95% CI 46–56) to 43% (36–51). The decline occurred in all income groups and regions with south Asia experiencing the largest drop. Sub-Saharan Africa had the highest prevalence in both years. These findings were robust to variations in poverty measures.InterpretationProgress has been made in reducing the number of children exposed to stunting or poverty between 2004 and 2010, but this is still not enough. Scaling up of effective interventions targeting the most vulnerable children is urgently needed.FundingNational Institutes of Health, Bill & Melinda Gates Foundation, Hilton Foundation, and WHO.

Poverty, vulnerability, and the middle class in Latin America

Between 2000 and 2013, Latin America has considerably reduced poverty (from 46.3 to 29.7 % of the population). In this paper, we use synthetic panels to show that, despite progress, the region remains characterized by substantial vulnerability that also affects the rising middle class. More specifically, we find that 65 % of those with daily income between $4 and 10, and 14 % of those in the middle class experience poverty at least once over a 10-year period. Furthermore, chronic poverty remains widespread (representing 91 and 50 % of extreme and moderate poverty, respectively). Differences between rural and urban areas are substantial. Urban areas, which are now home to most moderate poor and vulnerable, are characterized by higher income mobility, particularly upward mobility. These findings have important implications for the design of effective social safety nets. These need to mix long-term interventions for the chronic poor, especially in rural areas, with flexible short-term support to a large group of transient poor and vulnerable, particularly in urban areas.

The association between socioeconomic deprivation and secondary school students' health: findings from a latent class analysis of a national adolescent health survey.

BackgroundThe aims of this study were to examine indicators of socioeconomic deprivation among secondary school students and to determine associations between household poverty, neighbourhood deprivation and health indicators.MethodsData were from a nationally representative sample of 8500 secondary school students in New Zealand who participated in a health survey in 2012. Latent class analyses were used to group students by household poverty based on nine indicators of household socioeconomic deprivation: no car; no phone; no computer; their parent/s worry about not having enough money for food; more than two people sharing a bedroom; no holidays with their families; moving home more than twice that year; garages or living rooms used as bedrooms; and, no parent at home with employment. Multilevel generalized linear models were used to estimate the cross-level interaction between household poverty and neighbourhood deprivation with depressive symptoms, cigarette smoking and overweight/ obesity.ResultsThree groups of students were identified: 80 % of students had low levels of household poverty across all indicators; 15 % experienced moderate poverty; and 5 % experienced high levels of poverty. Depressive symptoms and cigarette smoking were 2–3 times higher in the poverty groups compared to student’s not experiencing poverty. There were also higher rates of overweight/ obesity among students in the poverty groups compared to students not experiencing poverty, but once covariates were accounted for the relationship was less clear. Of note, students experiencing poverty and living in affluent neighbourhoods reported higher levels of depressive symptoms and higher rates of cigarette smoking than students experiencing poverty and living in low socioeconomic neighbourhoods. This cross-level interaction was not seen for overweight/ obesity.ConclusionsMeasures of household socioeconomic deprivation among young people should not be combined with neighbourhood measures of socioeconomic deprivation due to non-linear relationships with health and behaviour indicators. Policies are needed that address household poverty alongside efforts to reduce socioeconomic inequalities in neighbourhoods.

Poverty alleviation through micro-credit: Evidence of BRAC credit program

The paper presents the extent of poverty alleviation through micro-credit of Bangladesh Rural Advancement Committee (BRAC) women beneficiaries in upgrading their economic and social status. The study was conducted three villages in Birampur upazila under Dinajpur district. Out of 442 populations, 88 women beneficiaries were randomly selected which constituted the sample. Data were collected during 20th February to 20th March,2009 using interview schedule. Coefficient of correlation(r) was computed in order to explore relationship between the selected characteristics of the women beneficiaries and their poverty alleviation. Only 4.5% population had high poverty alleviation while the highest proportion (61.4%) of the women had moderate poverty alleviation in participating BRAC micro-credit activities. The findings showed that age, family size and duration of involvement with BRAC had no relation with their poverty alleviation. Education, farm size, family income, Cosmo politeness, availability of BRAC micro-credit and attitude towards BRAC had positive relationship with their poverty alleviation. New loan is not issued until final repayment of installment as identified by the beneficiaries as the main problem.J. Bangladesh Agril. Univ. 13(1): 87-92, June 2015

In search of income reference points for SLCA using a country level sustainability benchmark (part 2): fair minimum wage. A contribution to the Oiconomy project

This paper is part 2 of our twin articles on income reference points for social life cycle assessment (SLCA). The purpose of this article is to provide a well-founded fair minimum wage standard, which enables the determination of the preventative costs for the impact category of unfair prices for labour in preventative costs-based SLCA. A five-step procedure was followed, comprising of (1) definition of the impact category and characterization factor, (2) a literature survey on standards and practices on fixing of minimum and living wages, (3) our proposal of a fair minimum wage based on the principles set in ILO conventions, the $2 World Bank moderate poverty line and a country level benchmark, (4) a literature study on current sub-fair wages and (5) a proposal of how to use the findings. For justification of the results, the results were compared with other systems and tested the sensitivity of the results to changes in the composition of the benchmark group of countries. Because literature showed that an absolute minimum wage is only suited for the lowest-income countries and relative minimum wage only for higher income countries, this paper proposes a relative system, bottom cutoff by an adjusted absolute minimum wage. The mean proportion of the minimum wage of the gross national income (GNI) per capita in a benchmark group of the top 20 % performing countries in the Sustainable Society Index—Human Development, is used as the relative principle for a fair minimum wage. The proposed absolute minimum wage is based on the 2005 World Bank $2 (PPP) poverty line. The proposed relative system, based on 2011 data, is 44.4 % of a country’s GNI per capita and the proposed absolute minimum wage is $1547 (PPP) per year and $0.830 (PPP) per hour. A well-founded set of fair minimum wage targets is proposed for 183 countries to be used in SLCA and beyond. We also propose to use the difference between actual payment and a target determined according to the here presented methods as the measure in preventative costs-based LCA, such as the EcoCost system and the Oiconomy system.

Espacios de pobreza en la periferia urbana y suburbios interiores de la Ciudad de México: Las desventajas acumuladas

The socio-spatial differentiation in the urban space refers to the geographic concentration of poverty. In the literature there is an absence of studies about poverty spaces in cities, relating the socio-economic situation of the underprivileged to particular urban spaces. Poor neighbourhoods tend to group together in clusters dominated by situations of social exclusion. This study presents an analysis of the main features and disadvantages of families living in poor spaces in Mexico City through the results of 329 surveys applied in poor neighbourhoods of the urban periphery and the inner suburb. Special attention is given to the measure of poverty levels, identifying four categories: non-poverty, moderate poverty, extreme poverty and indigence. This measuring is based on access to basic needs, labour condition, and social cohesion according to peripheral and suburban location.

Racial/Ethnic Disparities in Depressive Symptoms Among Pregnant Women Vary by Income and Neighborhood Poverty.

We examined racial/ethnic disparities in depressive symptoms during pregnancy among a population-based sample of childbearing women in California (N = 24,587). We hypothesized that these racial/ethnic disparities would be eliminated when comparing women with similar incomes and neighborhood poverty environments. Neighborhood poverty trajectory descriptions were linked with survey data measuring age, parity, race/ethnicity, marital status, education, income, and depressive symptoms. We constructed logistic regression models among the overall sample to examine both crude and adjusted racial/ethnic disparities in feeling depressed. Next, stratified adjusted logistic regression models were constructed to examine racial/ethnic disparities in feeling depressed among women of similar income levels living in similar neighborhood poverty environments. We found that racial/ethnic disparities in feeling depressed remained only among women who were not poor themselves and who lived in long-term moderate or low poverty neighborhoods.

Examination of Poverty Gender Gap among Households in Ukwuani Local Government area of Delta State, Nigeria

This study was carried out to estimate poverty gap among female and male headed farm families in Ukwani local government area (LGA) of Delta State, Nigeria. Simple random sampling technique was used to select seven out of the 10 communities that make up the LGA. From each of these selected communities 10 respondents were selected from a list of farm families drawn with assistance of extension officers covering the area. This gave a total sample size of 70 respondents. The study was conducted in 2012. Various methods were employed in analyzing the data, including descriptive statistical tools and inferential statistics such as t-test and ordinary least square regression analysis. Results of the study indicate that the farmers were characteristically smallholders with about 50% of males and 83% of female household heads having not more than 1.50 hectares of farm. On the poverty levels of the households, it was found that the core poverty and moderate poverty lines for male, female and all households were N4078, N2217 and N3376 and N8146, N5435 and N6752 respectively. This implies that poverty was wide spread among the farm households especially the female headed ones. A test analysis to determine the effect of selected socioeconomic characteristics of the household heads on their levels of poverty indicates that four variables were significantly related to the household poverty levels, namely level of formal education, family size, farm size and household monthly income (P ≤ 0.05). A number of recommendations were made including the need for family planning among the rural households so that they produce only the number of children they can take care of to guarantee them minimum acceptable standard of living.Key words: gender gap, poverty, households, Delta State, male headed households, female headed households

Inequality and Poverty in Uruguay by Race: The Impact of Fiscal Policies

In Uruguay the tax structure and social spending reduce inequality and poverty for the whole society (Bucheli et al. 2013). In this study we analyze the effect of fiscal policy by race considering whites, afros and indigenous. The main question of our paper is whether the reduction of inequality and poverty benefit a racial group over the others or affect racial ethnic groups equally. The three racial groups are equally likely to be taken off extreme poverty by the direct transfer system. However, the hazard of leaving moderate poverty is lower for indigenous than for the other two groups. So the direct transfer system reduces poverty of the three groups but does not achieve to put racial groups on an equal footing. When analyzing the average income, the qualitative conclusions are on the same direction. Racial gap narrows slightly – led by in-kind transfers – and does not disappear.

Food price surges and poverty in urban Colombia: New evidence from household survey data

The present study simulates the impacts of price surges in 2006–2008 on poverty in the main Colombian cities drawing upon household survey data. It is found that the price surges increased both extreme and moderate poverty in urban areas, but the magnitude of poverty rise was not homogeneous across geographical locations or in terms of household characteristics, such as, education or gender of the household head. As a policy option we suggest “geographical targeting” or “demographic targeting” that will select and support poor households by locations or socio-demographic characteristics guided by the degree of household vulnerability to food price shocks.

Poverty, Politics and Aid: is a reframing of global poverty approaching?

This paper argues that a significant reframing of global poverty is likely to emerge in the next decade as world poverty becomes less about the transfer of aid and more about domestic distribution and thus domestic politics. This proposition is based on a discussion of the shift of much of global poverty towards middle-income countries. There are questions arising related to how countries are classified and to administrative capacities, as well as to domestic political economy, but it is argued that many of the world’s extreme poor already live in countries where the total cost of ending extreme and even moderate poverty is not prohibitively high as a percentage of gdp. By 2020, even on fairly conservative estimates, most of world poverty may be in countries that do have the domestic financial resources to end at least extreme poverty; this could imply a reframing of global poverty.

Capabilities of Entrepreneurs in the Execution of Strategies in SSIs in two States of India: A Comparative Study

Purpose: Gujarat and Odisha are two different provinces in the Indian sub-continent under the South-Asiatic region. Gujarat, with less mineral resources, tribal population and moderate poverty prospered economically due to the setting up of new industries, particularly in the Small Scale Sector (SSI). On the other hand, Odisha, inspite of its vast natural resources like minerals, forests, rivers, population, long coast line, natural harbours and surplus electricity has all characteristics of poverty. This phenomenon led to an approach. Approach: Both the states are similar in many ways, yet the people of Odisha live under abject poverty. Small Scale Industries (SSIs) flourish in Gujarat but become sick in Odisha. Causes to these aspects draw serious attention of the people of Odisha. A study was initiated in this context to find out the drawbacks of poor performance of the state in the SSIs sector. The prosperity of Gujarat SSIs have been described through the management of seven major social & financial factors. Strategy-activities of SSIs of Gujarat and Odisha have been compared and the differences are brought out for the entrepreneurs of Odisha to consider and follow for the high growth of the SSEs in the state. Findings: The study reveals that a careful execution of strategy with a prudent use of the state's natural, social and financial resources made Gujarat Small Scale Enterprises (SSEs) more advantageous for high economic growth, which was not observed in the case of Odisha SSEs.

Capabilities of Entrepreneurs in the Execution of Strategies in SSIs in two States of India: A Comparative Study

Purpose: Gujarat and Odisha are two different provinces in the Indian sub-continent under the South-Asiatic region. Gujarat, with less mineral resources, tribal population and moderate poverty prospered economically due to the setting up of new industries, particularly in the Small Scale Sector (SSI). On the other hand, Odisha, inspite of its vast natural resources like minerals, forests, rivers, population, long coast line, natural harbours and surplus electricity has all characteristics of poverty. This phenomenon led to an approach. Approach: Both the states are similar in many ways, yet the people of Odisha live under abject poverty. Small Scale Industries (SSIs) flourish in Gujarat but become sick in Odisha. Causes to these aspects draw serious attention of the people of Odisha. A study was initiated in this context to find out the drawbacks of poor performance of the state in the SSIs sector. The prosperity of Gujarat SSIs have been described through the management of seven major social & financial factors. Strategy-activities of SSIs of Gujarat and Odisha have been compared and the differences are brought out for the entrepreneurs of Odisha to consider and follow for the high growth of the SSEs in the state. Findings: The study reveals that a careful execution of strategy with a prudent use of the state's natural, social and financial resources made Gujarat Small Scale Enterprises (SSEs) more advantageous for high economic growth, which was not observed in the case of Odisha SSEs.

The Effects of Global Interaction on Poverty in Developing Countries, 1991-2005

While previous studies have examined the impact of globalization on a myriad of welfare outcomes in developing countries, the effect of cross-national exchanges on extreme poverty remains unexplored. Poverty has declined substantially during this most recent wave of globalization, suggesting that cross-border relations may be partially responsible. We test this proposition by estimating the impact of foreign direct investment (FDI), trade openness, and the presence of international non-governmental organizations (INGOs) on poverty, measured at both the $1.25-a-day (extreme poverty) level, and the $2.50-a-day (moderate poverty) level, net of domestic conditions. Using a sample of 114 developing countries over five waves of data collected from 1991 to 2005, results from random effects models show that FDI exhibits a positive relationship with poverty at the $1.25 and $2.50 levels, while trade openness demonstrates a negative relationship with both extreme and moderate poverty. Once domestic conditions are controlled, INGO participation fails to demonstrate a significant effect on poverty at either level. Among domestic variables, economic growth and fertility rate affect poverty at the $1.25 level, while growth and domestic investment demonstrate an effect at the $2.50 level. These findings confirm that global interaction by poor countries influences poverty reduction within these countries, but in different directions.

From Deprivation to Distribution: Is Global Poverty Becoming A Matter of National Inequality?

SummaryThis paper asks the following question: does the shift in global poverty towards middle‐income countries (MICs) mean that global poverty is becoming a matter of national inequality? This paper argues that many of the world's extreme poor already live in countries where the total cost of ending extreme poverty is not prohibitively high as a percentage of GDP. And in the not‐too‐distant future, most of the world's poor will live in countries that do have the domestic financial scope to end at least extreme poverty and, in time, moderate poverty. This will likely pave the way for addressing poverty reduction as primarily a domestic issue rather than primarily an aid and international issue; and thus a (re)framing of poverty as a matter of national distribution and national social contracts and political settlements between elites, middle classes and the poor.