How Poverty Falls

The share of the world’s population in extreme poverty declined from 43% in 1981 to 36% in 1990 to 10% in 2015, representing one of humanity’s great successes. Despite this success, the process by which poverty reduction takes place in nations is not well understood. This research project will use a large data set and innovative methods to study how this reduction in poverty happened: what changed across generations and within the lives of individual households as they moved out of poverty.

The researchers do this systematically by using detailed household survey data from countries that collectively accounted for up to 85% of global poverty reduction since 1990. The project aims to advance understanding of the forces that give rise to shared prosperity, as well as contribute to scientific literacy about poverty’s decline and to graduate training in economics.

The results of this research will provide important inputs into the design of policies to reduce poverty in the US and across the globe. It will also establish the US as the global leader in poverty reduction research.

Understanding the mechanisms through which poverty decreases is important in crafting policies to reduce poverty. This research project will use household- and individual-level data from many countries to systematically describe and study the forces behind the global fall of extreme poverty since circa 1990. The research will examine what accounts for changes in households’ earnings as they exit from (and enter into) extreme poverty, considering the roles of structural change, occupational choice, the division of labor, and gendered participation in labor markets, among other factors.

This research will also examine the importance of these within-generation changes in aggregate poverty decline, relative to between-generation dynamics, as older, poorer generations are replaced by younger, less-poor ones. The research will use nationally and near-nationally representative longitudinal and repeated cross-section datasets from countries that collectively account for as much as 85% of the global reduction in extreme poverty since 1990.

The results of this research will provide important inputs into the design of policies to reduce poverty in the US and across the globe. It will also establish the US as the global leader in poverty reduction research.

This award reflects NSF's statutory mission and has been deemed worthy of support through evaluation using the Foundation's intellectual merit and broader impacts review criteria.