Chronic and transitory poverty in the Kyrgyz Republic: What can synthetic panels tell us?
Mira Bierbaum & Franziska Gassmann
#2012-064
The Kyrgyz Republic has enjoyed remarkable success in poverty reduction
in recent years. Poverty headcounts were halved between 2005 (63.9 per
cent) and 2008 (31.3 per cent), before they slightly increased again to
33.7 per cent (2010). However, these aggregate figures mask individual
or household trajectories into and out of poverty. Additionally, the
question arises as to who has remained poor for an extended duration,
i.e. has been chronic poor. Since the panel component of the Kyrgyz
Integrated Household Survey suffers from shortcomings, a synthetic panel
based on repeated cross-sections is created to investigate poverty
persistence and dynamics between 2005 and 2010, following an approach
proposed by Dang, Lanjouw, Luoto, and McKenzie (2011).
The share of chronic poor ranges between 23.6 per cent-31.5 per cent;
that is to say, 74.8 per cent-80.2 per cent of the people classified as
poor in 2010 have experienced it for an extended duration. At least two
chronic poverty traps are identified: Spatial disadvantages occur in the
rural oblasts of Jalal-Abad, Talas, and Naryn that are characterized by
adverse topography and low levels of human capital. Moreover, poor work
opportunities, particularly employment in informal, low-paid sectors
with high income-insecurity, hinder escapes from poverty. These spatial
and social traps coincide. Few people fell into poverty between 2005 and
2008, but the picture is more volatile in the years following the fuel
and food crisis and the global financial and economic crisis. People
employed in informal sectors are more vulnerable to economic downturns,
leading to questions regarding the scope, extent and level of existing
social safety nets.
Keywords: chronic and transitory poverty, synthetic panel, Kyrgyz
Republic