Vasco Molini

Poverty in Mozambique : New Evidence from Recent Household Surveys

This paper has three primary objectives: (i) to investigate potential problems regarding Mozambiques most recent nationally representative household survey on poverty dynamics; (ii) to assess the robustness and reliability of official poverty statistics; and (iii) to provide alternative estimates of poverty and welfare indicators in light of the methodological and analytical issues raised in areas (i) and (ii). It is determined that at least two significant weaknesses affect the official poverty-rate estimates: measurement errors in consumption data and flaws in the methodology used to calculate poverty lines (the cost-of-basic-needs approach based on provincial food bundles with entropy correction). A number of observations appear to be affected by substantial measurement errors, which severely distort the official poverty statistics. The paper provides methods to correct the consumption distribution by recalculating poverty lines based on a single national food basket -- as opposed to the current estimates, which are based on province-specific food baskets. The revised poverty statistics differ considerably from the official estimates of poverty across provinces and are far more consistent with other poverty indicators. In addition, poverty appears to be highly concentrated in certain areas, with dramatically higher rates found in Central and Northern Mozambique, as well as in rural areas overall, compared with relatively low rates in Southern Mozambique and in the countrys urban centers. These findings substantially contradict the governments official poverty figures, which appear to systematically overestimate poverty rates in Mozambiques Southern provinces and urban areas while simultaneously underestimating the prevalence of poverty in the countrys Central and Northern regions and in rural areas nationwide.

Safety Nets and Index-Based Insurance: Historical Assessment and Semiparametric Simulation for Northern Ghana

This article considers index‐based safety nets aimed at assuring participants a minimum income at the village level, set by a prespecified poverty line. The participating villages collectively manage a pooled budget, offering an index‐based per capita indemnity to the villages financed from a uniform per hectare premium, possibly supplemented by an external subsidy. The scheme involves implicit cross‐subsidies in favor of the poorest villages. Otherwise, it focuses on covariate risk, leaving it to mutual arrangements to deal with intravillage idiosyncratic risk. Its design is obtained from a risk‐minimizing model for the collective of villages with constraints of two kinds. The first is the budget that ensures that payments receive adequate finances. The second concerns the set of admissible schedules requiring that payments are triggered by a flexible function of only a few variables. For this we propose a semiparametric form from kernel learning, noting its capacity to combine a priori on the impact of shocks via the parametric term, with a flexible fit to the data at hand via the nonparametric term. To test the approach, we estimate and simulate an index‐based safety net for northern Ghana, constructing a pseudovillage panel from four rounds of household surveys and assembling all villages in a single risk pool. Results of a fully self‐financed arrangement indicate a reduction by 20 percentage points of the poverty incidence from an initial level of 63% and are robust under resampling. Yet, for the given typology of villages, this arrangement requires an unrealistically high premium and large cross‐subsidies. We show that both can be reduced significantly when a moderate external subsidy is allowed for. Nonetheless, in all cases, the basis risk remains considerable, reflecting the limited capacity of the selected price and weather variables to eliminate poverty.

When the Centre Cannot Hold: Patterns of Polarization in Nigeria

This paper advances the hypothesis that Nigeria is going through a process of economic polarization. The notion of polarization is concerned with the disappearance or non-consolidation of the middle lass, which occurs when there is a tendency to concentrate in the tails, rather than the middle, of the income or consumption distribution. This paper uses newly available data and the relative distribution methodology (Handcock and Morris, 1998, 1999) to present new results on polarization. The findings confirm the sharp increase of polarization. Compared to 2003, the distribution of consumption hasbecome more concentrated in upper and lower deciles in 2013, while the middle deciles have thinned.A between-group analysis shows the emergence of a macro-regional gap: while the South-South and South-West regions contribute mainly to polarization in the upper tail, households in the North Eastand North West zones—the conflict-stricken areas—are more likely to fall in the lower national deciles.

Can we measure resilience ? a proposed method and evidence from countries in the Sahel

Although resilience has become a popular concept in studies of poverty and vulnerability, it has been difficult to obtain a credible measure of resilience. This difficulty is because the data required to measure resilience, which involves observing household outcomes over time after every exposure to a shock, are usually unavailable in many contexts. This paper proposes a new method for measuring household resilience using readily available cross section data. Intuitively, a household is considered resilient if there is very little difference between the pre- and post-shock welfare. By obtaining counterfactual welfare for households before and after a shock, households are classified as chronically poor, non-resilient, and resilient. This method is applied to four countries in the Sahel. It is found that Niger, Burkina Faso, and Northern Nigeria have high percentages of chronically poor: respectively, 48, 34, and 27 percent. In Senegal, only 4 percent of the population is chronically poor. The middle group, the non-resilient, accounts for about 70 percent of the households in Senegal, while in the other countries it ranges between 34 and 38 percent. Resilient households account for about 33 percent in all countries except Niger, where the share is around 18 percent.

Vulnerability to Malnutrition in the West African Sahel

This study estimates marginal increase in malnutrition for children ages 1-3 years from exposure to an extreme shock in the West African Sahel. The study uses knowledge of a childs birth and high resolution spatial and temporal distribution of shocks, calculated from the Normalized Difference Vegetation Index and satellite-based measures of rainfall and temperature to link a child to the shock experienced in-utero. The study finds that while around 20 percent of the children in the sample are stunted or underweight, more than 30 percent of the children in the sample are highly vulnerable to either form of malnutrition.

Are we confusing poverty with preferences

Modifying the national poverty line to the context of observed consumption patterns of the poor is becoming popular. A context-specific poverty line would be more consistent with preferences. This paper provides theoretical and empirical evidence that the contrary holds and that the national poverty line is more appropriate for comparing living standards among the poor, at least under prevailing conditions in Mozambique and Ghana. The problem lies in the risk of downscaling the burden associated with cheap-calorie diets and the low nonfood component of the rural poor. The paper illustrates how observed behavior may neither reveal preferences nor detect heterogeneous preferences among the poor. Rather, the consumption pattern is the upshot of the poverty condition itself. Poverty is confused with preferences if observed cheap-calorie diets are seen as a matter of taste, whereas in fact they reflect a lack of means to consume a preferred diet of higher quality, as food Engel curve estimates indicate. Likewise, a smaller nonfood component is not a matter of a particular distaste, but an adaptation to the fact that various nonfood items (such as transport) and basic services (such as electricity and health) are simply absent in rural areas.

No Condition is Permanent Middle Class in Nigeria in the Last Decade

Abstract The economic debate on the existence and definition of the middle class has become particularly lively in many developing countries. Building on a recently developed framework called the Vulnerability Approach to Middle Class (VAMC) to define the middle class, this paper tries to estimate the size of the Nigerian middle class in a rigorous quantitative manner and to gauge its evolution over time. Using the VAMC method, the middle class group can be defined residually from the vulnerability analysis as those for which the probability of falling into poverty is below a certain threshold. The results show the size of the Nigerian middle class from is around 20 percent of the total population in 2012/13. However, the rate has been slower than expected given the high growth rates experienced in the country over the same period. The results also paint a heterogeneous picture of the middle class in Nigeria with large spatial differences. The southern regions have a higher share and experienced more growth of the middle class compared with the northern regions.

The devil is in the details: growth, polarization, and poverty reduction in Africa in the past two decades

This paper investigates the distributional changes that limited pro-poor growth in the past two decades in Sub-Saharan Africa; these changes went undetected by standard inequality measures. By developing a new decomposition technique based on a nonparametric method -- the relative distribution -- the paper finds a clear distributional pattern affecting almost all the analyzed countries. Nineteen of 24 countries experienced a significant increase in polarization, particularly in the lower tail of the distribution, and this distributional change lowered the pro-poor impact of growth substantially. Without this change, poverty could have decreased an additional 5-6 percentage points during the past decade.

A Continuous‐time Markov Chain Approach for Modeling of Poverty Dynamics: Application to Mozambique

This paper explores the use of continuous†time Markov chain theory to describe poverty dynamics. It is shown how poverty measures can be derived beyond the commonly reported headcounts and transition probabilities. The added measures include the stationary situation, the mean sojourn time in a given poverty state and an index for mobility. Probit regression is employed to identify the most influential factors on the transition probabilities. Moreover, sensitivity analysis shows that the results are robust against perturbations of the transition matrix. We illustrate the approach with pseudo†panel data constructed from a repeated cross†section survey in Mozambique, using a pairwise matching method to connect households in the 2003 sample to similar households in 2009. Results reflect high and persistent poverty levels with considerable movements into and out of poverty. An estimated 57 percent of the poor in the first wave remained poor in the second wave and 43 percent moved out. Likewise, 64 percent remained non†poor and 36 percent moved in. The corresponding stationary poverty headcount is 45 percent with respective mean sojourn time of 6.9 years in poverty and 8.4 years out of poverty. Conditioning the Markov chain on covariates identified by probit regressions indicates that poverty dynamics are responsive to household characteristics and livelihoods.