Efficiency in Poverty Reduction: A State-Level Analysis for Bolivia

Gustavo J. Canavire Bacarreza (), Alejandro Puerta-Cuartas and Javier Beverinotti ()
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Gustavo J. Canavire Bacarreza: World Bank
Javier Beverinotti: Inter-American Development Bank
Authors registered in the RePEc Author Service: Gustavo Javier Canavire-Bacarreza

No 16794, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: A decline in poverty generally masks regional disparities that are due to varying efficiency among states. Using a generalized true random-effects model, we distinguish between persistent and transient inefficiencies on subnational efficiency to reduce poverty and its determinants in Bolivia. Our findings reveal that states differ in terms of efficiency, with some excelling and others facing challenges. Persistent inefficiency emerges as pivotal, emphasizing the need for long-term policy recalibration. We find that when the macroeconomic conditions in Bolivia allow for a 10 percent reduction in the poverty rate, states can achieve at most an 8.2 percent reduction, and on average, they reduce it by 7.3 percent. Efficiency correlates positively with the tertiary sector's size; relationships with the primary and secondary sectors depend on their size, showing positive associations only if these sectors are fairly large. Additionally, states with lower unemployment and informality tend to be more efficient, highlighting the labor market's crucial role.

Keywords: poverty; Bolivia; efficiency analysis (search for similar items in EconPapers)
JEL-codes: C23 D63 I32 O41 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2024-02
New Economics Papers: this item is included in nep-dev, nep-lab and nep-ure
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