Primary Research Focuses: Development Economics and Econometrics

References: 

• Michael Kremer (Committee Chair)
• Stéphane Bonhomme
• Anne Karing
• Sid Kankanala

Job Market Paper: "Traps and Transfers"

[Abstract] Do poverty traps exist? This question is central to development economics as it implies initial conditions can have lasting effects on long-run prosperity. I estimate the existence and prevalence of poverty traps using harmonized microdata from 27 randomized control trials covering 80,000 households. By estimating how poor households’ assets evolve over time, accounting for differences in their ability and consumption-savings decisions, I find that poverty traps are widespread: 60% of studies show signs of them. Yet within a study, on average, only 25% of households are actually trapped. This is driven by differences in productivity and forward-looking consumption responses which allow households to preemptively invest and escape low-asset states. The results suggest that while the underlying frictions for poverty traps are widespread, their practical importance may be limited.