Degrees of vulnerability to poverty

A low-income dynamics approach for Chile

Bibliographic Data

ID12836735
AuthorsJoaquín Prieto (0000-0003-4145-9988, London School of Economics and Political Science, corresponding author)
Year2024
Volume22
Issue4
Pages1069-1107
Publication date2024-02-07
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Journal of Economic Inequality (JOURNAL)
Journal identifiersISSN: 1569-1721 • E-ISSN: 1573-8701
PublisherSpringer Science+Business Media (PUBLISHER • DE)
DOI10.1007/s10888-023-09611-8
OpenAlexW4391608121
LanguageEN
Citations received1
References cited53

I propose an empirical framework to identify different degrees of vulnerability to poverty using two vulnerability lines that classify currently non-poor people into risk groups: high, moderate and low risk of falling into poverty in the next period. The latter corresponds to the income secure middle class. My approach makes two contributions. First, it extends recent research that defines the middle class using a vulnerability threshold by introducing a new subdivision of the vulnerable group that would be useful in practice for public policy objectives. Second, it uses two models to predict both the probability of entering poverty and household income as part of the estimation procedures. The former controls for initial conditions effects and attrition bias, and the latter addresses the retransformation problem. I apply my approach to Chile using longitudinal data from the P-CASEN 2006–2009. The resulting vulnerability cut-offs (using the upper-middle-income country poverty line) are $20.0 per person per day for the low vulnerability line and $9.9 pppd for the high vulnerability line (both in 2011 PPP). My vulnerability lines differ significantly from those estimated in previous research on vulnerability and the middle class in Latin America. I argue that previous research has underestimated the size of the population at risk of falling into poverty and overestimated the growth of the middle class. Misclassifying the vulnerable as middle class limits their access to anti-poverty policies

Computer security · Demographic economics · Development economics · Economic growth · Economics · Geography · Middle class · Population · Poverty · Socioeconomics · Sociology · Vulnerability (computing · Agricultural risk and resilience · Computer Science · Demography · Income, Poverty, and Inequality · Poverty, Education, and Child Welfare