Poverty Trap Research Articles

The Economics of Financial Stress

Abstract We study the psychological costs of financial constraints and their economic consequences. Using a representative survey of U.S. households, we document the prevalence of financial stress in U.S. households and a strong relationship between financial stress and measures of financial constraints. We incorporate financial stress into an otherwise standard dynamic model of consumption and labor supply. We emphasize two key results. First, both financial stress itself and naivete about financial stress are important components of a psychology-based theory of the poverty trap. Sophisticated households, instead, save extra to escape high-stress states because they understand that doing so alleviates the economic consequences of financial stress. Second, the financial stress channel dampens or reverses the counterfactual large negative wealth effect on labor earnings because relieving stress frees up cognitive resources for productive work. Financial stress also has macroeconomic implications for wealth inequality and fiscal multipliers.

Qualitative process evaluation of a disability-inclusive ultra-poor graduation programme in Uganda

Background: There is a paucity of evidence regarding what works to help persons with disabilities escape the trap of poverty. To address extreme poverty among the general population, poverty graduation approaches have gained popularity. These programmes combine direct livelihood assistance (e.g. provision of assets) with wider support given to individuals (e.g. skill development). However, these interventions have rarely been adapted to be disability-inclusive.Objectives: The present research is a qualitative process evaluation of a disability-inclusive poverty graduation intervention, implemented in Uganda from 2020 to 2022. The study focusses on contextual influences on the intervention and mechanisms of impact according to the perspectives of implementers and intervention recipients, with a complementary analysis of structures and resources used to deliver the intervention derived from a desk-based review of programme reports.Method: In all, 15 implementers and 23 persons with disabilities who received the intervention were interviewed using semi-structured interviews. Interview data underwent framework analysis.Results: National infection prevention measures and loss of intervention funding associated with coronavirus disease 2019 (COVID-19) were identified as contextual influences on the intervention. Respondents highlighted increases in social empowerment and positive changes in societal attitudes to disability as routes through which the intervention had a positive impact. However, instances of jealousy from community members not receiving the intervention were also an unintended consequence.Conclusion: Results are discussed in terms of practical implications for delivering similar interventions in other contexts.Contribution: This study contributes new knowledge about the key factors that influenced the effectiveness of a disability-inclusive poverty graduation intervention.

Shifted baselines: Using the adaptive cycle to assess the post-tsunami mangrove social-ecological system recovery in the Nicobar Islands.

The 2004 tsunami and coastal subsidence resulted in 97% mangrove loss in the Nicobar Islands (India), leading to major social-ecological change. We assessed how the Nicobar mangrove social-ecological system (SES) responded to the 2004 event using the adaptive cycle (AC) framework. We describe the changes across AC phases (collapse-Ω, reorganisation-α, growth-r, and conservation-K) concerning various capital types (natural, built, human, social), connectedness and resilience. The subsidence and tsunami triggered a rapid collapse (Ω) in the mangrove SES, particularly depleting natural and built capitals. Despite declines in social and human capital, some knowledge and skills were retained within Nicobari communities. We suggest that locally managed interventions involving mangrove restoration are critical to escape the poverty trap caused by resource insufficiency hindering growth. The AC model helps visualise and describe temporal changes, preparing for recovery challenges. This approach is relevant to SESs beyond Nicobar, offering insights for sites confronting similar social-ecological dynamics and challenges.

Employer Credit Checks: Poverty Traps Versus Matching Efficiency

Abstract We develop a framework to understand pre-employment credit screening as a signal from credit markets that alleviates adverse selection in labour markets. In our theory, people differ in both their propensity to default on debt and the profits they create for firms that employ them; in our calibrated economy, highly productive workers have a low default probability. This leads firms to create more jobs for those with good credit, which creates a poverty trap: an unemployed worker with poor credit has a low job finding rate, but cannot improve her credit without a job. This manifests as an endogenous loss in present-discounted wages that is typically taken as exogenous in quantitative models of consumer default. Banning employer credit checks eliminates the poverty trap, but pools job seekers and reduces matching efficiency: average unemployment duration rises by 2 days for high productivity workers and falls by 13 days for low-productivity workers.

Healthcare access and deprivation in low-income urban households

The financial situation of households is related to their access to healthcare and their level of deprivation. This study analysed the factors that influence access to healthcare among low-income households in Gauteng, South Africa. A quantitative cross-sectional design was adopted using the binary logistic regression technique, drawing on the Gauteng City-Region Observatory Quality of Life 2020/2021 data, consisting of 9700 observations randomly drawn from eight municipalities. Based on marginal effects, the study findings revealed that seven factors significantly influenced access to healthcare. That is, healthcare source, nonuse of public facilities, proximity to a healthcare facility, satisfaction with healthcare services, medical aid, health status, health work, social health activities, and chronic illness. More effort is needed to harness Gauteng’s economic progress towards alleviating poverty and increasing opportunities to lift low-income households out of the poverty trap. Investment in an advanced public health care system, public–private sector coordination, improved health budget allocation, and doctor-patient ratio will reduce the out-of-pocket costs of poor households.

Developing an open-source flood forecasting system adapted to data-scarce regions: A digital twin coupled with hydrologic-hydrodynamic simulations

Economic and human losses from flooding have had a significant global impact. Undeveloped nations often require extended periods to recover from flood-related damage, exacerbating the climate poverty trap, specifically in flood-prone regions. To address this issue, early warning systems (EWS) provide lead time for preparedness and measures to reduce vulnerability. However, EWS are mainly empirical at large scales and often do not incorporate hydrodynamic behaviors in flood forecasting, at least in developing regions with a lack of information. This study presents an open-source system integrating a hydrodynamic model with satellite rainfall data (PERSIANN PDIR-Now) and weather prediction data (GFS). It functions as a near real-time Digital Twin (DT) and Early Warning System for high-resolution flood forecasting. Simulated data can be compared with gauge stations in real-time through the model monitoring interface. A proof-of-concept was made by assessing the model capabilities in two case studies. First, the system simulated two consecutive extreme events (hurricanes ETA and IOTA) over the Sula Valley, Honduras, showing fidelity in streamflow responses. Second, the system worked as a DT and EWS to monitor the current and future hydrological states for two periods in 2022 and 2023. Results indicate that satellite data coupled with DT can provide up-to-date system conditions for flood forecasts for regions of lack of data for extreme rainfall events. This tool offered insights to enhance civil protection and societal engagement through warning dissemination against extreme events to build resilience to cope with the increasing magnitude and frequency of disasters in regions with data scarcity.

A qualitative dynamic analysis of the relationship between tourism and human development

This study analyzes the dynamic relationship between tourism and human development in a sample of 123 countries between 1995–2019 using a symbolic time series methodological analysis, with the number of international tourist arrivals per capita as the tourism measurement variable and the Human Development Index as the development measurement variable. The objective was to determine if a higher level of tourism specialization is related to a higher level of economic development. The definition of economic regime is used and the concept of the distance between the dynamic trajectories of the different countries analyzed is introduced to create a minimum spanning tree. In this way, groups of countries are identified that display similar behavior in terms of tourism specialization and levels of human development. The results suggest that countries with a high level of tourism specialization have a higher level of development as compared to those in which tourism has a lower specific weight. However, the largest group of countries identified is characterized by low levels of tourism specialization and economic development, which appears to translate into a poverty trap. Therefore, policies related to tourism activity expansion should be created since higher tourism levels have been linked to higher levels of human development. In the case of less developed countries, however, these projects should be financed by international organizations so that these countries can escape the poverty trap in which they are currently found.

EBPVis: Visual Analytics of Economic Behavior Patterns in a Virtual Experimental Environment

AbstractExperimental economics is an important branch of economics to study human behaviours in a controlled laboratory setting or out in the field. Scientific experiments are conducted in experimental economics to collect what decisions people make in specific circumstances and verify economic theories. As a significant couple of variables in the virtual experimental environment, decisions and outcomes change with the subjective factors of participants and objective circumstances, making it a difficult task to capture human behaviour patterns and establish correlations to verify economic theories. In this paper, we present a visual analytics system, EBPVis, which enables economists to visually explore human behaviour patterns and faithfully verify economic theories, e.g. the vicious cycle of poverty and poverty trap. We utilize a Doc2Vec model to transform the economic behaviours of participants into a vectorized space according to their sequential decisions, where frequent sequences can be easily perceived and extracted to represent human behaviour patterns. To explore the correlation between decisions and outcomes, an Outcome View is designed to display the outcome variables for behaviour patterns. We also provide a Comparison View to support an efficient comparison between multiple behaviour patterns by revealing their differences in terms of decision combinations and time‐varying profits. Moreover, an Individual View is designed to illustrate the outcome accumulation and behaviour patterns of subjects. Case studies, expert feedback and user studies based on a real‐world dataset have demonstrated the effectiveness and practicability of EBPVis in the representation of economic behaviour patterns and certification of economic theories.

Adaptation of Chinese traditional villages from the perspective of locality preservation

Recently, traditional villages in China have received multiple policy protections and capital injections. While these external interventions protect the cultural heritage of traditional villages and provide opportunities for development, they have gradually eroded their intrinsic adaptive cycle system. This study focused on 6819 traditional villages, revealed the characteristics and transitions of the adaptive cycle stages in traditional villages and described the internal mechanisms of adaptability within these villages. The research findings are as follows: Regarding adaptability characterisation, the adaptability of traditional villages has developed a regionally significant imbalance. The highest proportion of adaptability cycle stages was found in the poverty trap, exploration (r) and gambling traps. Traditional villages are mostly in a rigid state, with a few adaptive processes shifting between the poverty trap and exploration (r), requiring a new impetus to guide positive cycles. In terms of adaptability mechanisms, there was a significant negative relationship between locality, mobility and resilience in traditional villages. Intrinsic adaptive mechanisms gradually disintegrate, and there is an increasing risk of falling into a lock-in trap. This study provides empirical evidence for analysing the issues in traditional villages and offers recommendations for long-term planning and policy formulation of locality protection in traditional villages.

Using adaptive cycles and panarchy to understand processes of touristification and gentrification in Valencia, Spain

This paper takes a multi-level approach to gain a better understanding of (tourism) gentrification and tourism excesses in three popular tourist neighbourhoods in Valencia, Spain. This city radically changed tourism policies in 2015, from a top-down approach that was focused on economic growth, towards one in which localhood and community development are stimulated. However, the change has done little to mitigate issues related to high levels of gentrification and touristification. This issue has been investigated using adaptive cycles and panarchy as a framework. Using these concepts has helped clarify how current policies mainly stimulate bottom-up innovations to overcome the lack of creative capacity at the local level (in other words, the ‘poverty trap’). Yet they insufficiently address processes that relate to the worldviews and higher governance levels that contribute to maintaining the current economic growth-oriented tourism ecosystem (the ‘rigidity trap’). The implications of our findings and ways forward conclude the paper.

Resilience of regional container port network: based on projection correlation and dynamic spatial Markov Chain

ABSTRACT Ports are interconnected by shipping routes within the global logistics network. Shocks and risks stemming from financial crises, epidemics, ecology, and so on have prompted shifts in cross-border labor division towards regional cooperation, reflecting an ‘anti-globalization’ trend. Despite these dynamics, few studies have analyzed the spatial structure and dynamic evolution of resilience within regional container port network. Addressing this gap, this study considers spatial and dynamic attributes to identify influential factors of resilience and introduces the concept of spatial lag-multidimensional resistance (SL-MR) to strengthen the understanding and cognition of regional container port network resilience (RCPNR). By ports in Tianjin and Hebei, China, it constructs a dynamic spatial Markov chain (DSMC) based on the projection correlation (PC index) to dissect transition trajectories amid financial crises and other conflicts. The findings indicate: (1) The regional container port network often experiences a low-level path dependence like ‘poverty trap.’ (2) Hierarchical spatial lags significantly influence the transition probability of container port network resilience degradation, with regional port relationships being unidirectional rather than cooperative. (3) The impact of the 2008 financial crisis and the COVID-19 pandemic on regional port resilience varies, serving as key determinants in shaping diverse resilience types.

Growth, poverty trap and escape

The well-known Solow growth model is the workhorse model of the theory of economic growth, which studies capital accumulation in a model economy as a function of time with capital stock, labour and technology-based production as the basic ingredients. The capital is assumed to be in the form of manufacturing equipment and materials. Two important parameters of the model are: the saving fraction s of the output of a production function and the technology efficiency parameter A , appearing in the production function. The saved fraction of the output is fully invested in the generation of new capital and the rest is consumed. The capital stock also depreciates as a function of time due to the wearing out of old capital and the increase in the size of the labour population. We propose a stochastic Solow growth model assuming the saving fraction to be a sigmoidal function of the per capita capital kp . We derive analytically the steady state probability distribution P(kp) and demonstrate the existence of a poverty trap, of central concern in development economics. In a parameter regime, P(kp) is bimodal with the twin peaks corresponding to states of poverty and well-being, respectively. The associated potential landscape has two valleys with fluctuation-driven transitions between them. The mean exit times from the valleys are computed and one finds that the escape from a poverty trap is more favourable at higher values of A. We identify a critical value of Ac below (above) which the state of poverty (well-being) dominates and propose two early signatures of the regime shift occurring at Ac . The economic model, with conceptual foundations in nonlinear dynamics and statistical mechanics, shares universal features with dynamical models from diverse disciplines like ecology and cell biology.

Moving forward from escaping the poverty trap in China's greenest regions: Examining four decades of socioecological evolution to re-orient sustainable development policies

Afforestation is an important aspect of ecosystem restoration (ER) and poverty alleviation (PA) through direct and indirect social, economic, and environmental effects. However, the existing afforestation projects worldwide have mainly viewed economic benefits through the narrow lens of subsistence and livelihood, thereby underestimating both indirect PA and the associated negative effects on agricultural production when formulating long-term solutions to global poverty. This study aimed to systematically examine the ecological, agricultural, and economic effects of ecosystem restoration in southeastern China over four decades based on biophysical models and statistical records, and further proposed an upgraded strategy for sustainable PA through ER that addresses conservation objectives and resource needs. We found that ER promoted vegetation growth and enhanced carbon sequestration and soil retention. Meanwhile, industrial transformation improved the economic scale and livelihood diversity (i.e., disposable income), which alleviated poverty and improved social services and infrastructure conditions. Nevertheless, the secondary and tertiary industries gradually replaced the primary industry in terms of output, and increased animal husbandry and forestry development weakened crop planting. Planting structure adjustments further threatened the stability of the grain supply, particularly after 1999, which could potentially lead to a grain crisis. Therefore, we propose upgraded forest management and coordinated development policies to avoid a grain crisis, improve livelihood diversity, balance multidimensional benefits, and facilitate sustainable development. Study results serve as a valuable reference for policy formulation and ER measures for more inclusive, resilient, and sustainable PA.

Looking for a way out: The dynamics of slum life, poverty, and everyday resistance in Katherine Boo’s Behind the Beautiful Forevers

This article looks into the implications of urban informality in Katherine Boo’s Behind the Beautiful Forevers: Life, Death and Hope in a Mumbai Slum (2012) as represented in slum life and urban poverty. It aims to investigate the impact of urban poverty on the everyday practices of slum dwellers and their endeavors to escape the trap of poverty in an attempt to highlight the human dimension of the slum. The article seeks to unravel multi-layers of the interaction between people and poverty and the differing models of resistance to poverty and social exclusion depicted in the nonfiction narrative. The article examines slum life from a descriptive sociological perspective with a detailed description of how people survive in poverty. The study of the culture of slums entails an analysis of the survival techniques and everyday practices of slum dwellers, the relations and patterns of behavior among the different categories of people inhabiting a slum, and the outcomes of the interplay between place, culture, and power relations in such communities. This is implemented through an eclectic sociological approach that comprises theories of space, culture, and resistance as proposed by James Scott, Theodore W. Schultz, and Henri Lefebvre.

Temporal and Spatial Distribution Characteristics of Inbound Tourism Flow in Guangxi, China

The D-Q model was used to analyze the temporal and spatial distribution characteristics of inbound tourism flow in Guangxi by collecting index data from 2011 to 2019. The results showed that the temporal and spatial distribution of inbound tourism flow presented obvious single-core agglomeration characteristics. The polarization was serious, and the phenomenon of "poverty trap" became more and more obvious. The regional imbalance was prominent. The quantity and quality coordination of inbound tourism flow was poor. The spatial dislocation phenomenon appeared. The overall distribution pattern of inbound tourism flow might remain stable, and the number of cities maintaining a stable state presented a relatively large proportion. Finally, some countermeasures were put forward to promote the development of inbound tourism in Guangxi.

Child Labor, Corruption, and Development

Abstract Employing an overlapping generations model with endogenous education choice and corruption, we investigate how child labor and corruption influence human capital accumulation and development. We show that multiple steady states exist in the economy. One steady state has a high level of human capital, while the other has a low level of human capital. In the steady state with a low level of human capital, child labor and corruption exist, fertility and child mortality rates are high, and the welfare level is low. Conversely, in the steady state with a high level of human capital, child labor and corruption are diminished, fertility and child mortality rates are low, and welfare is high. In addition, we show that it is difficult to steer an economy away from a poverty trap with child labor and corruption because bureaucrats of the current generation are opposed to policy changes, such as the reinforcement of monitoring and penal regulations. However, we highlight the possibility for the government to develop the economy in the poverty trap by implementing an education policy, which is Pareto improving.

Cooperation in a non-ergodic world on a network - insurance and beyond.

Cooperation between individuals is emergent in all parts of society; yet, mechanistic reasons for this emergence are ill understood in the literature. A specific example of this is insurance. Recent work has, though, shown that assuming the risk individuals face is proportional to their wealth and optimizing the time average growth rate rather than the ensemble average results in a non-zero-sum game, where both parties benefit from cooperation through insurance contracts. In a recent paper, Peters and Skjold present a simple agent-based model and show how, over time, agents that enter into such cooperatives outperform agents that do not. Here, we extend this work by restricting the possible connections between agents via a lattice network. Under these restrictions, we still find that all agents profit from cooperating through insurance. We, though, further find that clusters of poor and rich agents emerge endogenously on the two-dimensional map and that wealth inequalities persist for a long duration, consistent with the phenomenon known as the poverty trap. By tuning the parameters that control the risk levels, we simulate both highly advantageous and extremely risky gambles and show that despite the qualitative shift in the type of risk, the findings are consistent.

The impact of Malta's Tapering of Benefits scheme on employment outcomes

AbstractThis article analyses the Tapering of Benefits scheme introduced in Malta in 2014, aimed at unlocking the poverty trap stalemate. Survival analysis and Cox proportional hazard models are employed to analyse the impact that the scheme has had on the job‐finding rate and the chances of retaining employment once individuals who were previously on benefits find a job. The analyses are based on high‐quality national data on the whole population of beneficiaries and their employment histories. The results show that the scheme doubles the job‐finding probability, whilst the chance of job termination drops by 11.8 percentage points for eligible individuals. Furthermore, the scheme's impact once it finally tapers out is not different from the first 36 months, showing that its impact is robust in the medium term.

Poverty Traps and Mortality From Liver Diseases in the United States.

Poverty traps, locations with multigenerational poverty, result from structural and economic factors that can affect health of residents within these locations. The aim of this study was to define poverty traps within the contiguous United States and their impact on outcomes from liver diseases or cancers. A systematic census-tract level analysis was used to spatially define regions that encompassed poverty traps. Clusters of prevalent poverty and mortality from chronic liver diseases or liver cancers were identified. Temporal trends and the relationship between race and ethnicity, type of space and escape from poverty traps on disease mortality within hot spots were determined. The proportion of census tracts enduring multigenerational poverty within counties was strongly associated with mortality from liver disease or cancer. There was a highly significant clustering of persistent poverty and increased mortality. Hot spots of high-mortality areas correlated with factors related to income, ethnicity, and access to health care. Location or noneconomic individual factors such as race and ethnicity were important determinants of disparities within hot spots. Distinct groups of poverty traps were defined. The highly characteristic demographics and disease outcomes within each of these groups underscored the need for location-specific interventions. Poverty traps are a major and important spatially determined risk factor for mortality from liver diseases and cancers. Targeted location-specific interventions and economic development aimed at addressing the underlying causes of poverty and enhancing prosperity will be required to reduce mortality from liver diseases within poverty traps.

The poverty trap: a grounded theory on the price of survival for the urban poor in Mexico

People living in poverty inhabit the outskirts of Mexican cities. They struggle and survive but cannot overcome poverty. The present article seeks to understand how the survival tactics of the urban poor keep them in poverty and, with this understanding, inform future interventions. A study based on qualitative grounded theory was conducted in 10 impoverished neighbourhoods in three main regions and cities in Mexico. Observational accounts and in-depth individual and group interviews were conducted with diverse social actors for 115 participants (75 women and 40 men) aged between 12 and 76 years. The data were analysed using an interpretative thematic analysis. Research findings revealed that the urban poor tackle adversities, such as a lack of basic services, health, education, environment, and nutrition. The strength, patience, and hard work employed by these individuals to survive were evident, but their actions to tackle these threats were costly. Ultimately, the urban poor remain in a cycle of poverty, or poverty traps. Interventions to fight poverty, improve life conditions, and general development must include integrated and participatory plans that consider the knowledge and strengths of the urban poor.