Measuring Vulnerability and Poverty: Estimates for Rural India

This paper measures the vulnerability of households in rural India, based upon the ICRISAT panel survey. We employ both ex ante and ex post measures of vulnerability. The latter are decomposed into aggregate and idiosyncratic risks and poverty components. Our decomposition shows that idiosyncratic risks account for the largest share, followed by poverty and aggregate risks. Despite some degree of risk-sharing, the landless or small farmers are vulnerable to idiosyncratic risks, forcing them to reduce consumption. Income augmenting policies therefore must be combined with those that not only reduce aggregate and idiosyncratic risks but also build resilience against them.aggregate risks, idiosyncratic risks, poverty, vulnerability, semi-arid conditions

Vulnerability, Shocks and Persistence of Poverty - Estimates for Semi-Arid Rural South India

This paper focuses on vulnerability of rural households to poverty when a negative crop shock occurs based on the ICRISAT panel data in India during 1975-84. Of particular concern is the possibility of some sections experiencing long spells of poverty as a consequence of such shocks. Using alternative specifications that take into account both direct and indirect effects of crop shocks, an assessment of vulnerability of different groups (e.g. caste affiliations) of households and policy simulations on land and non-land asset transfers are carried out. A reorientation of anti-poverty strategy is necessary to avoid welfare losses from the crop shocks.shocks, dynamics, vulnerability, transfers, poverty

Targeting versus Universalism: An Evaluation of Indirect Effects of the Employment Guarantee Scheme in India

Although a workfare scheme is potentially a cost-effective poverty alleviation scheme as it attracts only the poor who have an incentive to do unskilled manual works, an investigation of the ICRISAT data in India clarifies that the Employment Guarantee Scheme was mistargeted, i.e., a substantial share of the non-poor also participated. The comparison of the EGS and universalism through the villagelevel SAM (Social Accounting Matrix) model reveals that the former is neither efficient nor equitable than the latter unless the state government carefully designs the scheme so that the EGS assets, such as irrigation facilities, are made accessible to the poor without undermining their positive effects on agricultural productivity

The Effect of Uncertainty on UK Investment Authorisation: Pooled Estimators vs. Heterogeneous Estimators1

This paper compares pooled models of capital investment with non-pooled models using the UK's Confederation of British Industry's (CBI) Industrial Trends Survey for the U.K., particularly focusing on the effect of uncertainty on investment. The uncertainty measure is based on the cross sectional dispersion of expectations. The panel data estimation shows that uncertainty has negative effects, which are non negligible in terms of magnitude, on investment. However, if we look at the estimation results at the industry level, we find a great diversity in elasticity and t-statistics, providing valuable information not available from the pooled model. Finally, we compare forecast performances based on the above models. It is confirmed that pooled estimators are generally better than non-pooled estimators in terms of forecast performance, but the difference between the two is not very large.Investment, Uncertainty, Panel Data Estimation

Contrasts between classes of assets in fixed investment panel equations as a way of testing real option theory

This paper reports estimation of investment equations for two classes of fixed assets: plant & machinery and building for a large sample of UK manufacturing industries. It exploits the different degree of irreversibility that characterises these assets to test the power of real options theory to explain investment under uncertainty. Additionally, the paper uses a specially constructed industry-specific measure of irreversibility for plant and machinery investment to test for real options effects within that class of investment.Investment, Industry, Irreversibility, Real Options, Uncertainty

Pro-Poor Growth, Poverty and Inequality in Rural Vietnam

This study explores the effects of Vietnam's transition on the welfare of different ethnic groups in rural Vietnam. It draws on three rounds of household surveys, VHLSS 2002, 2004 and 2006. It is first observed that the pace of poverty reduction for minorities surpassed the majority over the period 2002 to 2006, although poor people were still concentrated in the minority groups. Secondly, the disparity of living standards has been widening. In particular, inequality in both the majority and minority increased over the periods. Thirdly, the study shows that the pure effect of economic growth on poverty is estimated to have been greater if inequality remained constant. It is noted that the impacts of economic growth vary depending on which ethnic group a household belongs to. Finally, it is also confirmed from regression decompositions of within inequality that the main driver of inequality is not identical among different ethnic groups. Given the diversity across ethnic groups, we can conclude that the governmental policy aiming at equal access to infrastructure and more equal distribution of assets, such as land, for ethnic minority groups would lead to more equal distribution of consumption and poverty reduction of those groups. Also, consideration of local needs of each ethnic minority group would be necessary in designing and implementing public policies given the heterogeneous socio-economic circumstances surrounding each ethnic minority group.Vietnam, Ethnic minority, Growth, Poverty, Inequality, Decomposition

Decentralization, Democracy and Allocation of Poverty Alleviation Programs in Rural India

This paper investigates the effect of the devolution of power to the village level government on the household-level allocation of poverty alleviation programs drawing upon National Sample Survey data and the Election Commission's election data. First, greater inequality in land-holdings and less competition between the two major political parties generally lead to less provision of the poverty alleviation programs. Second, the disadvantaged groups were not necessarily likely to be the primary beneficiaries of the poverty alleviation programs. Third, our results based on the natural experiment approach suggest that decentralisation did not lead to wider household access to poverty alleviation programmes during the 1990s. Our results imply the possibility that the power and resources were captured by the local elite after decentralisation, that is, decentralization did not necessarily contribute to the improvement of the welfare of the socially disadvantaged groups.Decentralization, Democracy, Poverty Alleviation Programs, Poverty, IRDP (Integrated Rural Development Programme), RPW (Rural Public Works), India

Poverty Dynamics of Households in Rural China: Identifying Multiple Pathways for Poverty Transition

The objective of our study is to identify pattern and causes of households' transitions in and out of poverty using the long household panel data on rural China in the period 1989-2009. We propose a discrete-time multi-spell duration model that not only corrects for correlated unobserved heterogeneity across transitions and various destinations within the transition, but also addresses the endogeneity due to dynamic selection associated with household's livelihood strategies. Duration dependence is generally found to be negative for both poverty exit and re-entry. The household who chose either farming or out-migration as a main livelihood strategy was more likely to escape from this persistent poverty than those who took local non-agricultural employment, while the role of social protection, such as health insurance, was not universally good for alleviating chronic poverty. Overall, the present study emphasises the central role of agriculture in helping the chronically poor escape from poverty.Poverty transition, Discrete-time duration model, Correlated unobserved heterogeneity, Dynamic selection, Rural China

Fertility, Parental Education and Development in India: New Evidence from National Household Survey Data

This paper empirically investigates the determinants of fertility drawing upon large household data sets in India, namely NSS and NFHS over the period 1992-2006. Broadly similar and consistent results are found for the two surveys for different years. We have found a negative and significant association between the number of children and mother' s education. Both direct and indirect effects are observed for mother's education which not just directly reduces fertility but also increases mother's potential wages or opportunity costs which would deter her from having a baby. Father's education became increasingly important in reducing fertility in the last two rounds.Fertility, Parental Education, NSS (National Sample Survey), NFHS (National Family Health Survey), India, Asia

Microfinance and Household Poverty Reduction: New evidence from India

The objective of the present study is to examine whether household access to microfinance reduces poverty. Using national household data from India, treatment effects model is employed to estimate the poverty-reducing effects of MFIs loans for productive purposes, such as investment in agriculture or non-farm businesses on household poverty levels. These models take into account the endogenous binary treatment effects and sample selection bias associated with access to MFIs. Despite some limitations, such as those arising from potential unobservable important determinants of access to MFIs, significant positive effect of MFI productive loans on multidimensional welfare indicator has been confirmed. The significance of treatment "effects" coefficients have been verified by both Tobit and Propensity Score Matching models. In addition, we found that loans for productive purposes were more important for poverty reduction in rural than in urban areas. However in urban areas, simple access to MFIs has larger average poverty-reducing effects than the access to loans from MFIs for productive purposes. This leads to exploring service delivery opportunities that provide an additional avenue to monitor the usage of loans to enhance the outreach.Microfinance, Poverty, Evaluation, India, Propensity Score Matching