Non-parametric analysis of poverty duration using repeated cross section: an application for Peru

ABSTRACT

Using repeated cross-section annual data for Peru spanning 2002–2011 and non-parametric duration analysis, our estimates support the hypothesis that both stay in and exit from poverty (non-poverty) depends on the duration and sequence of poverty (non-poverty) spells. We find that longer periods in poverty reduce the probability of leaving poverty and, conversely, longer periods spent out of poverty reduce the chance of falling back into poverty. Also, we show that, at least in the last decade (of high economic growth), the probability of staying in poverty was lower than staying in non-poverty and the probability of re-entering in poverty was higher than re-entering in non-poverty, being both differences growing with the number of accumulated spells. Past experiences of poverty and non-poverty seem to be essential to predict the future status of poverty.

KEYWORDS:

• Poverty
• pseudo-panels
• duration analysis
• Peru

JEL CLASSIFICATION:

• C14
• C41
• D12
• J64
• I32

Disclosure statement

No potential conflict of interest was reported by the authors.

Supplemental data

Supplemental data for this article can be accessed here.

Notes

¹ For our 2002–2011 rounds, we chose to predict the household consumption surveyed in 2002 for the period 2003–2011. However, it also could have opted for predicting the household consumption surveyed in 2011 for the period 2002–2010.

² Formulas for the standard errors of both functions can also be seen in Chapter 8 of this reference.