Dynamics of poverty, labor market and public policies in Latin America

BECCARIA, LUIS; MAURIZIO, ROXANA; FERNANDEZ, ANA LAURA; MONSALVO, PAULA; ALVAREZ, MARIANA

Poverty and Economic Policy (PEP) Research Network

Año: 2011 p. 140

From 2003 and up to the 2008-2009 international crisis, Latin America experienced six years of high and sustained economic growth which had a positive impact on social and labor market indicators through the creation of jobs, the reduction of unemployment and a slight recovery of average wages. All of this resulted in both lower poverty and extreme poverty rates: in that period, the region experienced a drop of 11 percentage points (p.p.) in poverty and 6 p.p. in extreme poverty. In this context, it is highly relevant to study the flows into and out of poverty behind this significant reduction in poverty. The main objective of this research is to study poverty dynamics in five Latin American countries, emphasizing a comparative point of view. The study specifically aims to analyze the extent to which countries with different levels of poverty incidences differ in terms of the intensity of poverty exits and entries, to identify the relative importance of events associated with poverty transitions (such as factors related to the labour market, demographic changes and public policy), and to examine the ways in which these events affect households with different characteristics. To attain these objectives, we perform a dynamic analysis of panel data from regular household surveys. The countries under study are Argentina and Costa Rica with a relatively low poverty incidence; Brazil as an intermediate case; and Ecuador and Peru with relatively high poverty rates. This selection of countries allows having a quite complete outlook on social deprivation in the region. This dynamic analysis is useful for policy recommendations to overcome high poverty levels in the region, both by reducing the probability of falling into poverty and increasing the chances of moving out of poverty.