The Economics of Poverty Traps and Persistent Poverty: Policy and Empirical Implications

The Journal of Development Studies, Vol. 49, No. 7, 976–990, 2013

Posted: 21 Jul 2015

See all articles by Christopher B. Barrett

Christopher B. Barrett

Cornell University - Charles H. Dyson School of Applied Economics & Management

Michael R. Carter

University of Wisconsin - Madison - Department of Agricultural & Applied Economics

Date Written: July 2013

Abstract

The moral and economic imperatives to intervene in poverty traps motivate the identification of poverty traps and their structural causes so as to inform the design of appropriate policy responses. However, empirical identification remains challenging because of poverty traps’ complexity. After reviewing mechanisms that can generate poverty traps, we focus on one – multiple financial market failures – emphasising its heretofore underappreciated testable implications, including specific behaviours that are rational only in the presence of a poverty trap. We therefore recommend tests for these behaviours rather than more econometrically challenged efforts to directly test for poverty traps in estimated asset dynamics.

Suggested Citation

Barrett, Christopher B. and Carter, Michael R., The Economics of Poverty Traps and Persistent Poverty: Policy and Empirical Implications (July 2013). The Journal of Development Studies, Vol. 49, No. 7, 976–990, 2013, Available at SSRN: https://ssrn.com/abstract=2633603

Christopher B. Barrett (Contact Author)

Cornell University - Charles H. Dyson School of Applied Economics & Management ( email )

315 Warren Hall
Ithaca, NY 14853-7801
United States
607-255-4489 (Phone)
607-255-9984 (Fax)

HOME PAGE: http://aem.cornell.edu/faculty_sites/cbb2/

Michael R. Carter

University of Wisconsin - Madison - Department of Agricultural & Applied Economics ( email )

427 Lorch St.
Madison, WI 53706-1503
United States
608-263-2478 (Phone)

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