Do Poverty Traps Exist
TL;DR: This paper reviewed the empirical evidence on the existence of poverty traps, understood as self-reinforcing mechanisms through which poor individuals or countries remain poor, and found that truly stagnant incomes of the sort predicted by standard models of poverty trap are in fact quite rare.
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Abstract: This paper reviews the empirical evidence on the existence of poverty traps, understood as self-reinforcing mechanisms through which poor individuals or countries remain poor. Poverty traps have captured the interest of many development policy makers, because poverty traps provide a theoretically coherent explanation for persistent poverty. They also suggest that temporary policy interventions may have long-term effects on poverty. However, a review of the reduced-form empirical evidence suggests that truly stagnant incomes of the sort predicted by standard models of poverty traps are in fact quite rare. Moreover, the empirical evidence regarding several canonical mechanisms underlying models of poverty traps is mixed.
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Reseña: Poor economics. A radical rethinking of the way to fight global poverty.
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TL;DR: Blattman, Fiala, and Martinez as discussed by the authors found that after nine years, these gains have dissipated and the investment leveled off, and controls eventually increased their incomes through business and casual labor, and both groups converged in employment, earnings, and consumption levels.
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