Household asset dynamics and shocks: an empirical assessment of asset-based poverty traps in Peru

Alicia Chavez () and Marcelo Lufin
Additional contact information
Alicia Chavez: Universidad Católica del Norte

The Annals of Regional Science, 2022, vol. 69, issue 1, No 3, 57-87

Abstract: Abstract Households that experience persistent poverty fall behind economically and can be caught in a poverty trap, especially in the presence of shocks capable of shifting their level of assets. However, empirical evidence can be instrumental in the design of policies and measures that would allow households an opportunity to escape. Using household level panel data from 2007 to 2010 and the 2007 magnitude 8.0 earthquake in Pisco, Peru, as an exogenous shock, we construct an asset index of two dimensions in order to explore household sensibility to shocks and to assess the existence of poverty traps. Our results reveal that a shock in assets is associated with an increase in both housing materiality and water/sanitation asset stocks and can be explained by access to mitigating factors such as aid, labour and finance. Furthermore, our findings indicate the existence of multiple equilibria, which is consistent with the poverty trap hypothesis. The existence of poverty traps in Peru has real implications for fighting poverty, in that without the adequate assistance, it cannot be eradicated.

JEL-codes: G50 I32 N36 R20 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://link.springer.com/10.1007/s00168-021-01108-4 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:anresc:v:69:y:2022:i:1:d:10.1007_s00168-021-01108-4

Ordering information: This journal article can be ordered from
http://link.springer.com/journal/168

DOI: 10.1007/s00168-021-01108-4

Access Statistics for this article

The Annals of Regional Science is currently edited by Martin Andersson, E. Kim and Janet E. Kohlhase

More articles in The Annals of Regional Science from Springer, Western Regional Science Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().