Welfare dynamics in Colombia: results from synthetic panels. Policy Research Working Paper Series 8441, The World Bank. 2018.
with Hai-Anh Dang, Eduardo Malasquez, Sergio Olivieri and Julieth Pico.

Abstract

This study explores the short-run transitions between poverty, vulnerability, and middle class, using synthetic panels constructed from multiple rounds of Colombia’s Integrated Household Survey (in Spanish Gran Encuesta Integrada de Hogares). The paper reports results from two approaches to define a vulnerability line: the first one employs a nonparametric and parsimonious model, while the second utilizes a fully parametric regression model with covariates. The estimation results suggest a range of between $8 to$13 per day per person in 2005 purchasing power parity dollars as the vulnerability line. Using an average daily vulnerability line of \$10 per day per person, subsequent estimates on welfare dynamics suggest that, during the past decade, 20 percent of the Colombian population experienced downward mobility, and 24 percent experienced upward mobility. Furthermore, upward mobility increases with higher education levels and is lower for female-headed households.

Policy paper
Background working paper for Colombia’s Poverty Assessment.

Heterogeneity and Household Life Cycle in the Multidimensional Poverty Index. Knowledge Brief, Poverty and Equity Global Practice, The World Bank. 2018.
with Eduardo Malasquez, Sergio Olivieri and Julieth Pico.

Abstract

This note discusses the evolution of the MPI in Colombia since 2010 and describes some of the challenges associated with the spatial heterogeneity of multidimensional poverty across urban and rural areas, and the relationship between life cycle and the evolution of the MPI over time. Also, this note opens a discussion that has not been yet addressed by the literature on how to update the indicators in the MPI once these are no longer capturing significant deprivations.

Policy paper
Knowledge brief for Colombia’s Poverty Assessment.

Measuring Multidimensional Deprivation: A latent utility approach. Mimeo, Poverty and Equity Global Practice, The World Bank.. 2017.
with Silvia Redaelli

Abstract

We propose a latent utility model to measure multidimensional deprivation. We provide formal proof that if discrete ordinal data meets the ordering consistency conditions defined here, wealth rankings can be gleaned from the eigenvector corresponding to the largest eigenvalue in Multiple Correspondence Analysis (MCA). This approach outperforms Principal Component Analysis (PCA), a popular dimensionality reduction technique used to construct wealth indexes. We provide evidence using Monte Carlo experiments that MCA explains 1.7 times more variation than PCA and does a better job at predicting wealth-rankings. We define welfare consistent cut-off points for the deprivation index. Lastly, we provide an example to estimate housing deprivation headcounts using Afghanistan’s Living Conditions Survey.

Policy paper
Background working paper for Afghanistan’s Poverty Assessment.

Mobility and pathways to the middle class in Nepal. Policy Research Working Paper Series 7824, The World Bank. 2016.
with Sailesh Tiwari and Akhmad Shidiq

Abstract

This paper introduces a variety of concepts and methods to examine living standards improvements in Nepal in a dynamic perspective. Using data from three rounds of Nepal Living Standards Surveys conducted in the past two decades, together with data from a nationally representative survey that was implemented in 2014 specifically to collect information on social and economic mobility, the paper presents novel statistics on the extent of inter- and intra-generational mobility in Nepal. The findings suggest that there has been appreciable upward mobility in education; that is, Nepalis today are increasingly more likely to be better educated than their parents. However, inter-generational mobility of occupations has been much more muted, with 47 percent of Nepal today remaining in the same occupation as their parents. Upward mobility is higher for younger cohorts and for individuals who move from their rural areas of birth to an urban area. There are also significant differences in mobility by social groups, with Dalits and Terai caste groups having lower upward mobility odds. Examining mobility within generations using synthetic panel techniques, the paper finds that: (a) for every two people who escape poverty, one slides back, suggesting significant churning around the poverty line; (b) a large fraction of those who have escaped poverty remain vulnerable to falling back, with an overall vulnerable population of 45 percent; and (c) the share of the middle class—defined as those with sufficiently low likelihood of falling back into poverty—has increased steadily over the past two decades, reaching 22 percent in 2010–11. However, triangulating subjective well-being data from Gallup, it appears that a majority of even those who constitute the middle class are fundamentally insecure about their economic futures. The prevalence of a large vulnerable population and a nascent, growing but struggling middle class represents a key challenge to consolidating recent gains in moving people out of poverty.

Policy paper
Background working paper for Nepal’s Poverty Assessment.

Why did poverty decline in India? A nonparametric decomposition exercise. Forthcoming in “India’s Social and Economic Transformation in 21st Century,” Pallavi Choudhuri, Sonalde Desai, and Amaresh Dubey, Eds. Routledge. 2016.
with Sonalde Desai, Rinku Murgai and Ambar Narayan

Abstract

This paper uses panel data to analyze factors that contributed to the rapid decline in poverty in India between 2005 and 2012. The analysis employs a nonparametric decomposition method that measures the relative contributions of different components of household livelihoods to observed changes in poverty. The results show that poverty decline is associated with a significant increase in labor earnings, explained in turn by a steep rise in wages for unskilled labor, and diversification from farm to nonfarm sources of income in rural areas. Transfers, in the form of remittances and social programs, have contributed but are not the primary drivers of poverty decline over this period. The pattern of changes is consistent with processes associated with structural transformation, which add up to a highly pro-poor pattern of income growth over the initial distribution of income and consumption. However, certain social groups (Adivasis and Dalits) are found to be more likely to stay in or fall into poverty and less likely to move out of poverty. And even as poverty has reduced dramatically, the share of vulnerable population has not.

Policy paper
Background working paper for India’s Poverty Assessment.

Born with a silver spoon: inequality in educational achievement across the world. Policy Research Working Paper Series 7152, The World Bank. 2015.
with Ambar Narayan and Sailesh Tiwari

Abstract

This paper assesses inequality of opportunity in educational achievement using the Human Opportunity Index methodology on data from the Programme for International Student Assessment. The findings suggest that there are large inequalities in learning outcomes as measured by demonstrated proficiency in Programme for International Student Assessment test scores in math, reading, and science. Differences in wealth, parental education, and area of residence explain a bulk of this inequality in most of the countries in the sample. Consistent with what has been documented previously in the literature, the paper also finds a strong and stable correlation between inequality of opportunity and public spending on school education. An exploration of the changes in inequality of opportunity between the 2009 and 2012 rounds of the Programme for International Student Assessment, using parametric and nonparametric techniques, suggests that there has been little progress.

Policy paper
Background working paper for World Bank’s Visualize Inequality.