Who Escaped Poverty and Who Was Left Behind? A Non-Parametric Approach to Explore Welfare Dynamics Using Cross-Sections

33 Pages Posted: 17 Oct 2017 Last revised: 6 Apr 2018

Date Written: October 16, 2017

Abstract

This paper proposes a non-parametric adaptation of a recently developed parametric technique to produce point estimates of intra-generational economic mobility in the absence of panel data sets that follow individuals over time. The method predicts past individual income or consumption using time-invariant observable characteristics, which allows the estimation of mobility into and out of poverty, as well as household-level income or consumption growth, from cross-sectional data. The paper validates this method by sampling repeated cross-sections out of actual panel data sets from three countries in the Latin America region and comparing the technique with mobility from panels. Overall, the method performs well in the three settings; with few exceptions, all estimates fall within the 95 percent confidence intervals of the panel mobility. The quality of the estimates does not depend in general on the sophistication level of the underlying welfare model's specifications. The results are encouraging even for those specifications that include few time-invariant variables as regressors.

Keywords: Inequality, Adaptation to Climate Change, Educational Sciences, Poverty Diagnostics, Poverty Lines, Small Area Estimation Poverty Mapping, Poverty Impact Evaluation, Poverty Monitoring & Analysis, Poverty Assessment

Suggested Citation

Lucchetti, Leonardo and Lucchetti, Leonardo Ramiro, Who Escaped Poverty and Who Was Left Behind? A Non-Parametric Approach to Explore Welfare Dynamics Using Cross-Sections (October 16, 2017). World Bank Policy Research Working Paper No. 8220, Available at SSRN: https://ssrn.com/abstract=3054309

Leonardo Lucchetti (Contact Author)

World Bank ( email )

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Washington, DC 20433
United States

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