Economics of Poverty
This course aims at providing students with a broad knowledge about poverty. The focus is on the manifold relationships between poverty and the labor and housing markets, family composition and fertility choices, and education. It starts with poverty measurement in the following perspectives: static, dynamic, uni-dimensional, and multi- dimensional, this latter relating to equality of opportunity and civic participation. It provides an understanding of poverty’s main causes, and helps the students into critical thinking about how to fight it. It also covers the basics of low-income support programs. The students are endowed with the tools to critically assess different programs aiming at reducing poverty in developed countries.
Weekly - Available soon
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Pre-requisites: the students should have prior knowledge of statistics. No prior knowledge of econometrics is necessary, but it is recommended. Students are also expected to have basic knowledge of intermediate microeconomics.
The Economics of Poverty, by Martin Ravaillon (2016)
Poverty and Discrimination, by Kevin Lang (2007)
Selected research papers and book chapters
The class meets on TBA. The classes will be partly based on slides and blackboard notes. For each topic, a general overview of the theoretical and empirical issues will be given. The participation of students is strongly encouraged to foster discussion and active thinking. For some of the topics, selected applied readings will be provided to the students who are expected to present it in class.
In addition, the students will have to complete two assignments: small report on household budget surveys using micro data and one research proposal.
Students are invited to attend the Novafrica seminar series, a great forum to get in touch with recent research on topics related to this course. It is also a very efficient means to learn about how to present a research paper and ask interesting questions about it.
• Presentation of empirical papers in class – 15%
At the end of the syllabus you will find a list of empirical papers on topics which are direct applications or closely related to those discussed in the course. You should form groups of 4 to 6 people (the actual group size depends on the final number of students who register for the course, with the objective of having a total of 8 groups). Each group chooses a paper to present. If two groups choose the same paper, we toss a coin to allocate the paper. We then allocate groups to presentation slots randomly. Students are welcome to swap slots on mutually beneficial grounds, and inform the instructor. In addition, each group should prepare 2 challenging questions to the other group presenting in the same session. There will be peer grading, i.e., each individual student assigns a grade to each group.
• Data assignment (groups of 4) – 35%
Using either the SILC data set or the Portuguese Household budget survey, you should prepare a maximum 7-page report, with font size 12 and reasonable margins. You are welcome to use data from another country.
The essay should focus on static poverty or inequality measurement, uni or multi-dimensional, at your choice. Possible topics include: impact of government transfers on poverty indices in different countries or in different regions of Portugal, or across time; decomposition of poverty across several groups (regional, urban/rural, demographic composition of the household, capital vs labour income earners, jobless vs employed, etc.); multi- dimensional poverty measurement across countries or time (or both); impact of non-monetary income on poverty; comparison of household vs individual- level measures of poverty etc.
The two datasets are available from the instructor. Both are household-level databases. Both include the basics like the demographic composition of the household (age and gender-wise). Here is a brief account of the features of the two datasets:
1 – SILC (Recommended)
Covers all EU countries; annual frequency; representative at the country level; more detail on income sources than on spending categories; lots of subjective and non-monetary measures of
well-being; allows longitudinal studies (i.e., follows families across time)
2 – Portuguese HBS
Only Portuguese households; every five years; representative at the NUTS II regional level; lots of detail on all income sources and spending patterns of the households; data on ownership of durable goods
• Final exam (individual) – 35%
The exam is closed book. Whenever appropriate and useful to answer a question, tables from empirical papers will be reproduced in the exam paper.
• Research proposal (individual) – 15%
The 3-page research proposal will be based on research question, survey the existing literature, and detail a clear empirical strategy to test the research question. The empirical strategy may be based on observational data, building your own survey, an experiment in the lab or in the field, etc.
The research proposal is not compulsory. For students wishing to drop this item, we shall consider a weight of 50% in the final exam.
• In addition, the grade can increase up to 1 point, based on class participation and general commitment of the student towards the course, at the discretion of the instructor.
Some history: the concept of Poverty, how the idea has evolved through time Concepts of Welfare Economics
Using household surveys for welfare measurement Alternatives to welfare measurement
Increasing global and national inequality
Poverty lines Equivalence scales Measuring povertly Week 4
Uni-dimensional vs multidimensional poverty Static vs dynamic poverty
Impact evaluation: the counterfactual; internal and external validity; experiments; observational data; ethics.
Education policy, cognitive non-cognitive skills, early childhood interventions Neighbourhoods and urban policy
Aspirations and role models
Price (wage and rents) interventions Low income support policies IMPORTANT DATES (tentative!)
• Final exam TBA
• Data assignment TBA
• In-class presentations: TBA
• Research proposal: TBA
Please read below for details on each of these assessment items
Programs where the course is taught: