Does Vulnerability Create Poverty Traps?

Abstract

The paper discusses whether vulnerability generates poverty traps. It contains a review of models of poverty traps and a discussion of whether these can accommodate vulnerability; it also includes a discussion of the empirical evidence available in support of these models and a discussion of their policy implications. The conclusions of this study delineate an important area of research, to which the CPRC is in a position to make a significant contribution. A clearer perspective on how to approach the linkages between vulnerability and persistent poverty, and a stronger, and comparative, body of evidence are needed to make the case that risk and vulnerability are significant factors behind poverty traps. The research planned under the Insecurity, Risk and Vulnerability theme of the CPRC will aim to develop a conceptual framework for examining the links between insecurity and vulnerability on the one hand and chronic poverty on the other. Special attention will be given to developing research in two areas: household dynamics and informality. The effectiveness of policy options will be assessed.