Being Poor and Becoming Poor: Poverty Status and Poverty Transitions in Rural Pakistan

Abstract

This paper contrasts the results of conventional poverty status regressions with an alternative approach, the analysis of poverty transitions, using a five-year longitudinal household survey from rural Pakistan. The results show that while the incidence of income poverty in the sample villages was high, turnover among the poor was rapid. Almost 60 percent of households experienced poverty during the five years of the panel but only 35 percent stayed in poverty for two or more years. Only 3 percent of households were poor in all five years of the panel. Furthermore, the correlates of entries and exits from poverty are found to differ in important but unexpected ways from those of poverty status. The policy implications of these findings, if confirmed elsewhere, indicate that targeting antipoverty policies using the characteristics of the currently poor is highly problematic.