On the Definition and Measurement of Chronic Poverty

23 Pages Posted: 13 Mar 2007

See all articles by Rolf Aaberge

Rolf Aaberge

Statistics Norway; Institute for the Study of Labor (IZA); Deaprtment of Economics

Magne Mogstad

University of Chicago

Date Written: March 2007


As an alternative to the conventional methods for measuring chronic poverty, this paper proposes an interpersonal comparable measure of permanent income as a basis for defining and measuring chronic poverty. This approach accounts for the fact that individuals regularly undertake inter-period income transfers. Moreover, the approach allows for individual-specific interest rates on borrowing and saving as well as for the presence of liquidity constraints. Due to the general nature the proposed method proves useful for evaluating the theoretical basis of the standard methods for measuring chronic poverty.

Keywords: intertemporal choice, liquidity constraints, permanent income, chronic poverty

JEL Classification: D71, D91, I32

Suggested Citation

Aaberge, Rolf and Mogstad, Magne, On the Definition and Measurement of Chronic Poverty (March 2007). IZA Discussion Paper No. 2659, Available at SSRN: https://ssrn.com/abstract=970514

Rolf Aaberge (Contact Author)

Statistics Norway ( email )

N-0033 Oslo

Institute for the Study of Labor (IZA) ( email )

P.O. Box 7240
Bonn, D-53072

Deaprtment of Economics ( email )


Magne Mogstad

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

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