In the problem of economic development, a phrase that crops up frequently is ‘the vicious circle of poverty.’ It is generally treated as something obvious, too obvious to be worth examining. I hope I may be forgiven if I begin by taking a look at this obvious concept. (R. Nurkse, 1953)

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Number 115

This paper demonstrates that there are potentially large returns to social protec-tion policy that stakes out a productive safety net below the vulnerable and keeps them from slipping into a poverty trap. Much of the value of the productive safety net comes from mitigating the ex ante e

, if children expect that other children of the same generation do not receive education, they anticipate that firms will not create enough jobs for educated and thus are discouraged from schooling. These two mechanisms of poverty trap reinforce each other–creating a dual poverty trap. Escaping from the trap

(preliminary work, please do not cite) Macroeconomists, development scholars, and policy makers have long recognized the importance of poverty traps as a mayor cause of persistent inequality and a serious limitation to growth. A poverty trap may be defined as a threshold level below which

Can location make the difference between growth and contraction in living standards for otherwise identical households? We test for the existence of spatial poverty traps using a micro model of consumption growth incorporating geographic externalities, whereby neighborhood endowments of physical

The paper develops a growth model of multiple equilibria. In the model, poverty trap is caused by the presence of negative externalities – side e¤ects – during an economy’s take o¤. The role of growth-maximizing public investment in this economy is more decisive than in ergodic ones. Depending

poverty trap induced by high aid volatility is first examined in a benchmark case where taxation is absent. The analysis is then extended to account for self insurance (taking the form of a first-period contingency fund) financed through taxation. An increase in aid volatility is shown to raise