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Consumption Growth and Spatial Poverty Traps: An Analysis of the Effect of Social Services and Community Infrastructures on Living Standards in Rural Peru

De Vreyer, Philippe; Herrera, Javier; Mesplé-Somps, Sandrine (2009), Consumption Growth and Spatial Poverty Traps: An Analysis of the Effect of Social Services and Community Infrastructures on Living Standards in Rural Peru, in Stefan Klasen and Felicitas Nowak-Lehman, Poverty, Inequality and Policy in Latin America, MIT Press : Cambridge (Mass), p. 129-158. 10.7551/mitpress/9780262113243.003.0005

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Type
Chapitre d'ouvrage
Date
2009
Book title
Poverty, Inequality and Policy in Latin America
Book author
Stefan Klasen and Felicitas Nowak-Lehman
Publisher
MIT Press
Published in
Cambridge (Mass)
ISBN
978-0-262-11324-3
Pages
129-158
Publication identifier
10.7551/mitpress/9780262113243.003.0005
Metadata
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Author(s)
De Vreyer, Philippe
Herrera, Javier
Mesplé-Somps, Sandrine
Abstract (EN)
Why are there areas with persistenly low levels of income or consumption? This could result from the concentration of households with a low capital endowment or from variations in households’ environment. Peru is a country with a very much fragmented topography and climate, that combines dry deserts, high mountains and rain forest. One important question is to assess the weight of the geographic endowment in the growth process. If differences in geographic endowment matter more than those in households’ characteristics, then encouraging migration to better endowed regions might be a good development policy whereas, in the opposite, it might be better to invest in households’ capital. Of course several factors, either geographic or not, can combine to explain persistent poverty in a given area. In this chapter we test the effect of local geographic endowment of capital on household growth in living standards in rural Peru, using a four years unbalanced panel data set. Our theoretical model of household consumption growth allows for the effect of community variables to modify the returns to augmented capital in the household production function. Three different sources of data are used: the ENAHO 1997-2000 households surveys, the population census of 1993 and the district infrastructure census of 1997. Altogether the addition of these different data sources makes an unusually rich data set, at least when considered with developing country standards. As in Jalan and Ravallion (2002), we use a quasi-differencing method to identify the impact of locally determined geographic and socioeconomic variables, while removing unobserved household and community level fixed effects. GMM are then used to estimate the model parameters. Several significant interesting results appear, showing that private consumption growth depends on local geographic variables, but more on local endowments of private and public assets than on pure geographic characteristics. This suggests to combine policies focused on private and public asset endowments that will reinforce local positive externalities, with infrastructure investments that will help poor households to take advantage of growth opportunities, offered by more dynamic markets across local communities.
Subjects / Keywords
Croissance; Trappes spatiales de pauvreté; Pérou; Services publics; Poverty; Geographic capital; Consumption; Community; Statistics
JEL
C33 - Panel Data Models; Spatio-temporal Models
H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
I18 - Government Policy; Regulation; Public Health
I32 - Measurement and Analysis of Poverty
I38 - Government Policy; Provision and Effects of Welfare Programs
O12 - Microeconomic Analyses of Economic Development

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