Left Behind: Chronic Poverty in Latin America and the Caribbean (Latin American Development Forum)

Chronic poverty raises perhaps the most complex and difficult challenge for governments around the world. Chronic poverty refers to those people that persistently live in low levels of welfare over long periods, as opposed to vulnerable populations that may get in and out of poverty due to shocks. Within generations, this manifests itself by the weak link between economic growth and the income generation capabilities that hinder individuals ability to integrate productively in society. Left Behind: Chronic Poverty in Latin America and the Caribbean is motivated by three questions: How many people live in chronic poverty in Latin America and the Caribbean? Who are they and how effective has been the policy toolkit in the region to address chronic poverty? This publication reviews the evolution of chronic poverty between 2004 and 2012 in Latin America and the Caribbean. From an inter-generational perspective, chronic poverty is associated with the long-term structural constraints that persist from one generation to the other, and can be framed as a problem of fairness or equality of opportunity. In addition to its links to the fairness of the social system and the capacity to move out of poverty, the chronicity or persistence of poverty also results from the lack of voice of some population groups and the lack of responsiveness of the political system to their needs. The nature and extent of chronic poverty are therefore multidimensional. Addressing chronic poverty thus requires a multi-layer, cross-sectoral policy approach that is tailored to specific manifestations of chronic poverty in a given context. Cover 1 Half Title 2 Title Page 4 Copyright Page 5 Contents 12 Foreword 18 Acknowledgments 20 About the Authors 22 Abbreviations 24 Overview 26 A Successful Decade with Challenges Ahead 26 A Framework for Studying Chronic Poverty 28 Measuring Chronic Poverty in the Absence of Longitudinal Data 30 Five Stylized Facts about Chronic Poverty in Latin America and the Caribbean 30 From Diagnosis to Policies: Design Elements Supporting the Chronically Poor 43 Notes 49 References 49 Chapter 1: The Roaring 2000s and the Left Behind 52 Notes 56 References 56 Chapter 2: What Is Chronic Poverty and How Is It Measured? 58 Conceptual Underpinnings 58 The Empirical Challenges of Measuring Chronic Poverty 65 Notes 73 References 74 Chapter 3: Five Facts about Chronic Poverty in Latin America and the Caribbean 78 Stylized Fact 1: One of Five People in Latin America and the Caribbean Lives in Chronic Poverty 78 Stylized Fact 2: Chronic Poverty Tends to Be Geographically Concentrated 82 Stylized Fact 3: Chronic Poverty Is As Big a Problem in Urban Areas as in Rural Areas 85 Stylized Fact 4: Economic Growth Was Not Sufficient to Lift the Chronically Poor out of Poverty 87 Stylized Fact 5: The Chronically Poor Have Limited Income Opportunities 91 Notes 95 References 95 Chapter 4: Unraveling the Complexities of Chronic Poverty 96 Endowments, the Context, and Chronic Poverty 97 State of Mind and the Process of Emerging from Poverty 112 Notes 119 References 119 Chapter 5: From Diagnosis to Policies: Crafting Coordinated Policies That Reduce Chronic Poverty 124 Improving Endowments and the Enabling Context 124 Coordinating Poverty-Reduction Efforts 126 Recognizing the State of Mind of the Poor in Crafting Policy 136 Developing Coordinated Solutions that Address Behavioral Constraints: Social Intermediation Services 142 Note 144 References 144 Appendix 146 Index 150 A 150 B 150 C 151 D 151 E 152 F 152 G 152 H 153 I 153 J 153 K 153 L 153 M 154 N 154 O 154 P 154 R 155 S 155 T 156 U 156 V 157 W 157 Y 157 Z 157 Boxes 64 2.1 The framework in practice 64 3.1 Monetary versus nonmonetary measures of chronic poverty 80 4.1 Ethnicity and chronic poverty in rural Guatemala 99 4.2 Connectivity pays off: Reducing poverty in rural Peru 103 4.3 Improving institutions, reducing poverty in Colombia 106 4.4 Does increased public expenditures reduce crime and chronic poverty? Evidence from Mexico 110 4.5 Does poverty cause stress? 113 5.1 Does increased public spending help reduce poverty? Evidence from Peru 128 5.2 Coordinating poverty-reduction efforts in Brazil, Mexico, and Peru 131 Figures 27 O.1 Poverty, vulnerability, and the middle class in Latin America and the Caribbean, 2000–12 27 O.2 From chronic poverty to upward mobility: Inputs and the process of emerging from poverty 28 O.3 Chronic poverty and downward mobility in selected countries in Latin America and the Caribbean, 2004–12 31 O.4 Subnational chronic poverty rates in Latin America and the Caribbean, 2012 32 O.5 Concentration of chronic poverty in Latin America and the Caribbean, 2012 33 O.6 Chronic poverty in rural and urban areas in selected countries in Latin America and the Caribbean, 2012 34 O.7 Median income in selected countries in Latin America and the Caribbean, 2012 35 O.8 Number of labor income earners in household in selected countries in Latin America and the Caribbean, by poverty group, 2012 36 O.9 Correlation between chronic poverty and access to services at subnational level in Latin America and the Caribbean, 2012 39 O.10 Role of endowments in explaining income differences between the chronically poor and people who escaped poverty in Latin America and the Caribbean, 2012 40 O.11 Correlation between chronic poverty and expectations in Latin America and the Caribbean, 2010 41 O.12 Level of optimism about the next 12 months by the chronically poor, people who escaped poverty, and people who were never poor in Latin America and the Caribbean, 2010 42 O.13 Correlation between educational aspirations of children ages 12–15 and their peers in Latin America and the Caribbean, 2011 43 O.14 Intergenerational transmission of chronic poverty in selected countries in Latin America and the Caribbean, 2012 44 O.15 Number of new social assistance programs in selected countries in Latin America and the Caribbean, 1990–99 and 2000–11 47 1.1 GDP per capita and income inequality in Latin America and the Caribbean, 2000–12 53 1.2 Poverty, vulnerability, and the middle class in Latin America and the Caribbean, 2000–12 54 1.3 Decomposition of changes in poverty in Latin America and the Caribbean by sources of income, 2003–12 55 2.1 From chronic poverty to upward mobility: Inputs and the process of emerging from poverty 64 3.1 Chronic poverty and downward mobility in selected countries in Latin America and the Caribbean, 2004–12 79 B3.1.1 Correlation between estimates of chronic poverty and multidimensional poverty in selected countries in Latin America and the Caribbean 81 3.2 Subnational chronic poverty rates in Latin America and the Caribbean, 2012 82 3.3 Concentration of chronic poverty in Latin America and the Caribbean, 2012 84 3.4 Chronic poverty in rural and urban areas in selected countries in Latin America and the Caribbean, 2012 86 3.5 Correlation between per capita GDP growth and chronic poverty in selected countries in Latin America and the Caribbean, 2012 88 3.6 Initial (2004) income distribution of chronically poor and people who escaped poverty by 2012 in Peru 89 3.7 Median income in selected countries in Latin America and the Caribbean, 2012 89 3.8 Number of labor income earners in household in selected countries in Latin America and the Caribbean, by poverty group, 2012 91 3.9 Female labor force participation and chronicity of poverty in selected countries in Latin America and the Caribbean, 2012 92 3.10 Correlation between chronic poverty and sector of employment in selected countries in Latin America and the Caribbean, 2012 93 3.11 Correlation between chronic poverty and rate of growth of formal sector in Latin America and the Caribbean, 2012 94 3.12 Correlation between chronic poverty and dependence on nonlabor income in Latin America and the Caribbean, 2012 94 B4.1.1 Chronic poverty and ethnicity in rural Guatemala, 2011 99 4.1 Mean standardized test scores of richest and poorest children in urban and rural areas of five countries in Latin America 100 4.2 Intergenerational transmission of chronic poverty in selected countries in Latin America and the Caribbean, 2012 101 4.3 Correlation between chronic poverty and access to services at subnational level in Latin America and the Caribbean, 2012 102 B4.2.1 Effect of mobile phone coverage on poverty in rural Peru 103 4.4 Access to services in rural Guatemala, 2011 104 4.5 Correlation between chronic poverty and incidence of weather shocks in Latin America and the Caribbean, 2012 108 4.6 Location of and food shortages from weather shocks in rural Guatemala, 2011 109 4.7 Role of endowments in explaining income differences between the chronically poor and people who escaped poverty in Latin America and the Caribbean, 2012 111 4.8 Correlation between chronic poverty and expectations in Latin America and the Caribbean, 2010 115 4.9 Level of optimism about next 12 months by the chronically poor, people who escaped poverty, and people who were never poor in Latin America and the Caribbean, 2010 116 4.10 Expectations about next 12 months by the chronically poor in selected countries in Latin America and the Caribbean, 2010 117 4.11 Educational aspirations of Peruvian children and their parents 118 4.12 Correlation between educational aspirations of children ages 12–15 and their peers in Latin America and the Caribbean, 2011 118 5.1 Number of new social assistance programs in selected countries in Latin America and the Caribbean, 1990–99 and 2000–11 127 5.2 Spending on social assistance in selected countries in Latin America and the Caribbean, 2000–10 127 B5.1.1 Median public spending per capita in “improved” and chronically poor districts of Peru 128 5.3 Adherence to treatment for tuberculosis among depressed and nondepressed patients in Peru 138 5.4 Effect of socioeconomic intervention on vaccination against tuberculosis of children in Peru 139 5.5 Effect on income of social interaction with local leaders in Nicaragua 141 Map 83 3.1 Chronic poverty in Peru, by district, 2012 83 Tables 30 O.1 Movement in and out of poverty in Latin America and the Caribbean between 2004 and 2012 30 O.2 Characteristics of people in Latin America and the Caribbean who were chronically poor, who escaped poverty, and who were never poor, 2004 38 2.1 Poverty estimates for Peru based on actual and synthetic panel data, 2004–05 71 3.1 Movement in and out of poverty in Latin America and the Caribbean between 2004 and 2012 79 3.2 Characteristics of the chronically poor in urban and rural areas of Latin America and the Caribbean, 2012 87 4.1 Characteristics of people in Latin America and the Caribbean who were chronically poor, who escaped poverty, and who were never poor, 2004 98 4.2 Population size and remoteness between districts that were never poor, escaped poverty, and were chronically poor in Peru 105 5.1 Social development and institutional arrangements in Latin America and the Caribbean 130 A.1 Household surveys used in the analysis 146 A.2 Movement into and out of poverty in Latin America and the Caribbean, by country, 2004–12 148 One out of every five Latin Americans or around 130 million people have never known anything but poverty, subsisting on less than US$4-a-day throughout their lives. These are the region ́s chronically poor, who have remained so despite unprecedented inroads against poverty in Latin America and the Caribbean since the turn of the century. Left Behind: Chronic Poverty in Latin America and the Caribbean takes a closer look at the region's entrenched poor, who and where they are, and how existing policies need to change in order to effectively assist them. The book shows significant variations of rates of chronic poverty both across and within countries. Within a single country, some regions show incidence rates up to eight times higher than the lowest. Despite the higher rates of chronic poverty in rural areas, chronic poverty is as much an urban as a rural issue. In fact, considering absolute numbers, urban areas in many countries, including Chile, Brazil, Mexico, Colombia and the Dominican Republic, have more chronic poor than rural areas. Undoubtedly the region has come a long way during the decade in terms of poverty reduction, guided by a mix of sustained growth and increased levels in amounts and quality of public spending and programs targeted directly or indirectly to the chronic poor. While improving endowments and the context where the chronic poor live is a necessary condition going forward, the decade's experience suggests that it may not be enough to reach the chronic poor. The book posits that refinements to the existing policy toolkit †“ as opposed to more programs †“ may come a long way in helping the remaining poor. These refinements include intensifying efforts to improve coordination between different social and economic programs, which can boost the income generation process and deal with the intergenerational transmission of chronic poverty by investing in early childhood development. Equally important though, there is an urgent need to adapt programs to directly address the psychological toll of chronic poverty on people's mindset and aspirations, which currently undermines the effectiveness of the existing policy efforts. One out of every five Latin Americans-about 130 million people-have never known anything but poverty, subsisting on less than US$4 a day throughout their lives. These are the region's chronically poor, who have remained so despite unprecedented inroads against poverty in Latin America and the Caribbean since the turn of the century. Left Behind: Chronic Poverty in Latin America and the Caribbean takes a closer look at the region's entrenched poor, who and where they are, and how existing policies need to change to effectively assist the poor. The book shows significant variations of rates of chronic poverty across and within countries. Within a single country, some regions show incidence rates up to eight times higher than the lowest. Despite the higher rates of chronic poverty in rural areas, chronic poverty is as much an urban as a rural issue. In fact, considering absolute numbers, urban areas in many countries, including Brazil, Chile, Colombia, the Dominican Republic, and Mexico, have more chronic poor than do rural areas. The region has come a long way during the decade in terms of poverty reduction, guided by a mix of sustained growth and increased levels in amounts and quality of public spending and programs targeted directly or indirectly to the chronic poor. While improving endowments and the context where the chronic poor live is a necessary condition going forward, the decade's experience suggests that it may not be enough to reach the chronic poor. The book posits that refinements to the existing policy toolkit-as opposed to more programs-may come a long way in helping the remaining poor. These refinements include intensifying efforts to improve coordination between different social and economic programs, which can boost the income-generation process and deal with the intergenerational transmission of chronic poverty by investing in early childhood development. In addition, there is an urgent need to adapt programs to directly address the psychological toll of chronic poverty on people's mindsets and aspirations, which currently undermines the effectiveness of existing policy efforts One out of every five Latin Americans about 130 million people have never known anything but poverty, subsisting on less than US$4 a day throughout their lives. These are the region's chronically poor, who have remained so despite unprecedented inroads against poverty in Latin America and the Caribbean since the turn of the century. Left Chronic Poverty in Latin America and the Caribbean takes a closer look at the region s entrenched poor, who and where they are, and how existing policies need to change to effectively assist the poor. The book shows significant variations of rates of chronic poverty across and within countries. Within a single country, some regions show incidence rates up to eight times higher than the lowest. Despite the higher rates of chronic poverty in rural areas, chronic poverty is as much an urban as a rural issue. In fact, considering absolute numbers, urban areas in many countries, including Brazil, Chile, Colombia, the Dominican Republic, and Mexico, have more chronic poor than do rural areas. The region has come a long way during the decade in terms of poverty reduction, guided by a mix of sustained growth and increased levels in amounts and quality of public spending and programs targeted directly or indirectly to the chronic poor. While improving endowments and the context where the chronic poor live is a necessary condition going forward, the decade s experience suggests that it may not be enough to reach the chronic poor. The book posits that refinements to the existing policy toolkit as opposed to more programs may come a long way in helping the remaining poor. These refinements include intensifying efforts to improve coordination between different social and economic programs, which can boost the income-generation process and deal with the intergenerational transmission of chronic poverty by investing in early childhood development. In addition, there is an urgent need to adapt programs to directly address the psychological toll of chronic poverty on people s mindsets and aspirations, which currently undermines the effectiveness of existing policy efforts. "One out of every five Latin Americans--about 130 million people--have never known anything but poverty, subsisting on less than US$4 a day throughout their lives. These are the region's chronically poor, who have remained so despite unprecedented inroads against poverty in Latin America and the Caribbean since the turn of the century. This book takes a closer look at the region/s entrenched poor, who and where they are, and how existing policies need to change to effectively assist the poor. The book shows significant variations of rates of chronic poverty across and within countries. The book posits that refinements to the existing policy toolkit --as opposed to more programs--may come a long way in helping the remaining poor. These refinements include intensifying efforts to improve coordination between different social and economic programs, which can boost the income-generation process and deal with the intergenerational transmission of chronic poverty by investing in early childhood development. In addition, there is an urgent need to adapt programs to directly address the psychological toll of chronic poverty on people's mindsets and aspirations, which currently undermines the effectiveness of existing policy efforts."--Publisher's description "One out of every five Latin Americans--about 130 million people--have never known anything but poverty, subsisting on less than US$4 a day throughout their lives. These are the region's chronically poor, who have remained so despite unprecedented inroads against poverty in Latin America and the Caribbean since the turn of the century. This book takes a closer look at the region/s entrenched poor, who and where they are, and how existing policies need to change to effectively assist the poor. The book shows significant variations of rates of chronic poverty across and within countries. The book posits that refinements to the existing policy toolkit --as opposed to more programs--may come a long way in helping the remaining poor. These refinements include intensifying efforts to improve coordination between different social and economic programs, which can boost the income-generation process and deal with the intergenerational transmission of chronic poverty by investing in early childhood development. In addition, there is an urgent need to adapt programs to directly address the psychological toll of chronic poverty on people's mindsets and aspirations, which currently undermines the effectiveness of existing policy efforts."--Descripción del editor

One out of every five Latin Americans—about 130 million people—have never known anything but poverty, subsisting on less than US$4 a day throughout their lives. These are the region's chronically poor, who have remained so despite unprecedented inroads against poverty in Latin America and the Caribbean since the turn of the century. This book takes a closer look at the region's entrenched poor, who and where they are, and how existing policies need to change to effectively assist the poor. The book shows significant variations of rates of chronic poverty across and within countries. The book posits that refinements to the existing policy toolkit —as opposed to more programs—may come a long way in helping the remaining poor. These refinements include intensifying efforts to improve coordination between different social and economic programs, which can boost the income-generation process and deal with the intergenerational transmission of chronic poverty by investing in early childhood development. In addition, there is an urgent need to adapt programs to directly address the psychological toll of chronic poverty on people's mindsets and aspirations, which currently undermines the effectiveness of existing policy efforts.