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Economic poverty: exploring a relational dimension

Maria Sophia Aguirre[1]

Introduction

The World Bank 2018 study entitled Poverty and Share Prosperity: Piecing Together the Poverty Puzzle Overview, reports a billion fewer people living in extreme poverty between 1990 and 2015. Most of them live in East Asia and Pacific and South Asia, were the population is large. In Africa, on the other hand, poverty has increased. Today it houses 27 out of the 28 most poor countries in the world, all of which have poverty rates above 30%. These estimations of extreme poverty are bases on the standard IPL definition, i.e., people whose income is less than US$1.90 a day in 2011 purchasing power parity (PPP). Central and South America’s population, has little share in extreme poverty, as only Haiti classifies as a low-income country.

Albeit its overall optimistic tone, the study also acknowledges that, although economic growth in Asian countries and the consequent increase in per capita income has contributed to the reduction of extreme poverty; it must be also recognized that it is insufficient to define poverty just by a lack of income. Thus, the World Bank Group report, proposes a “multidimensional” measure of income where other aspects of life, which they deem “critical for well-being”, are included. These “critical” aspects comprise education, access to basic infrastructure or utilities, health care, and security. Utilizing this comprehensive measure, the same study reports an increase of poverty estimates of about 50%.[2] The study also reports, that while most of the extreme poor in Sub-Sahara Africa are deprived from more than three of the multidimensional measures, this is not the case among the Asian poor and it is rear in Latin America. However, the picture of poverty in all regions, including Latin America, becomes more alarming when measured at a higher poverty line. The same study reports that 10.8% of the population in Latin America and the Caribbean live in less than $3.20 a day, while 26.4% of the population lives in less than $5.5 dollars a day.[3] In Argentina, 6% and 2.4% of the population live in extreme poverty and poverty respectively, while 25.7% suffers relative poverty.[4] The gap between these three different measures for Argentina, highlights the need for more comprehensive measures of poverty than those typically used.    

These monetary income measures, can be useful as a first approximation to material poverty, but they fall short as they do not capture the differences of what constitute basic needs across countries, i.e., relative poverty.[5]  To assess these differences, the World Bank proposed a new measure in its 2018 report of poverty, the Societal Poverty Line (SPL). This new measure is a “combination of the absolute IPL and a poverty line that is relative to the median income level of each country. Specifically, it is equal in value to either the IPL or US$1.00 plus half of daily median consumption in the country, whichever is greater.”[6] Under this new measure of poverty, the same study reports an almost three times increase in the number of people living in poverty vis a vis those living under the US$1.90 level. Aligned with the efforts of the World Bank to measure poverty in a more comprehensive and accurate manner, many others studies have tried to measure, understand, and estimate existing poverty around the world from a material, need based, point of view. The 2018 Universidad Católica Argentina (UCA)’s study about the material living conditions in Argentina and about what they denominate “Social Debt” is one of these studies.[7]

The inter-personal relational dimension of any economic activity typically is not considered in these approaches to poverty, albeit evidence seems to highlight its importance.  For example, the mentioned UCA study measures comprehensive poverty or social debt in terms of six components: 1) Nutrition, health, and habitat; 2) Subsistence; 3) Early stimulation and socialization; 4) Education; 5) Access to information and media or communication; and 6) Children labor. Utilizing this measure, the study reports that child poverty increased in Argentina by 65.5% and that eight million children in the country are deprived of one or more of the measures included in the social debt index.[8] Similarly, to estimate the income gap faced by poor households, they include in their estimation: income, household size, and the basket of goods consumed. No relational or interpersonal factors are included. This paper seeks to fill this gap by bringing this relational dimension of economic activity into the understanding, measurement, and treatment of poverty.  It also seeks to address the consequences of introducing relational factors in the analysis of poverty, for any policy design aiming at alleviation of poverty.

Ample evidence exists of the close relationship between poverty and the problems caused by conflict and weak institutions, as the latter hampers the growth process and generate institutional instability.[9] Those who find themselves in the lower levels of income, tend to suffer this instability the most.[10] People living in poverty lack income and assets to attain basic needs: food, shelter, clothing, and acceptable levels of education and health.  They lack access to human assets, as they often lack education and training as well as good health.  They also lack access to natural assets such as land.[11] As mentioned earlier, they often do not have access to infrastructure or physical assets such as housing, sewers, electricity, etc. as well as to financial structures such as savings and access to credit. They also have diminished access to social assets, such as networks of contacts and reciprocal obligations that can be called on in time of need. Finally, they are without aging security, as they have no access to sound social security systems. In most developing countries, the social security system is provided by the families, yet, these are becoming smaller. These problems make those in poverty highly vulnerable to adverse shocks, as they are unable to cope with them. Yet, more recent literature highlights, that there is more to this situation of vulnerability. People, and those living in poverty are not exception, are more able to cope with and overcome adverse situations when real and meaningful personal relationships exist in their lives.[12]

This paper suggests that to reduce poverty in a context of sustainable development, a new approach to understanding poverty’s causes and transmission mechanisms is needed; an approach that takes into consideration the inter-personal dimension of the economic agent. This, in turn, necessitates an integrated view of the person in society and, consequently, a focus on the economic agent’s decision process acknowledging the person making the economic decisions in a holistic manner and in his or her social dimension.

In the following section we review some important finding regarding poverty in areas other than income. Section III links the empirical findings on the sources of poverty with an integral approach to economic development. Some consequences for the understanding of the household’s economic activity and of its link to poverty as well as to policy design follow.  The last section presents some conclusions.

Other than income poverty

Table 1, reports typically used measures of poverty for Argentina, Chile, Brazil and the United States. Chile and Argentine have similar income per capita and this is higher than Brazil’s. All three Latin American countries’ GDP per capita are significantly lower than the Unites States, however. At the same time, the percentage of population living under extreme poverty report same values for Chile and the United States. Population poverty levels are lower in Argentina than in Chile, while relative poverty is significantly higher in Brazil and Argentina vis a vis Chile and the United States. When looking a more desegregated measure, similar inconsistencies are found. For example, malnourishment levels and deaths cause by it, across the three South American countries, are similar and in the low one digits. Similarly, the population of all countries have comparable levels of access to improve water and health services. At the same time, while Argentina and Brazil have a significant proportion of the population living in slams, Chile and the Unites States have none; and net migration, often view as an important cause of rising poverty, is significantly higher in the United States than in the mentioned Latin American countries. The mixed results across typically used tools to measure poverty across countries, highlight some of the limitations previously mentioned regarding typically tools used to define poverty levels.

Socio-economic aspects have been found to be important sources of poverty. Specifically, the breakdown of the long-term commitment of marriage and the divergence in family structure that often follows, have been found to be leading causes of poverty. Other relevant factors linked to the breakdown of the family have also been found to be relevant for poverty.  These include the weakening of social capital, lack of appropriate  consumption, the deterioration of personal health, lack of appropriate education, and a decline of personal and societal security.[13] In this section we address briefly these factors.

Table 1: Poverty indicators

Sources: World Bank Database and CIA World Factbook, 2017

The increase in the number of one parent households, especially single-mothers, is one of the prominent causes of poverty for women and children across developed and developing countries.[14]Lundberg et al (2016) in a review of the literature on family structure and its connection to poverty and inequality, provide two main explanations for the change in family structure and the consequent effect on poverty and inequalities.[15]  The first explanation in the literature for the growing disparity in family structure, finds its cause in what is perceived as the diminished economic prospects of less-educated men due to the relative wage increase for women. The latter, authors typically argue, decreases the returns to specialization and exchange within marriage, i.e., no longer women stay at home and men work outside their home to obtain income for the family. Instead, the women opt out of marriage as they can now earn more income than men on their own. The second explanation provided by the literature for the growing disparity in family structure, emphasizes educational differences in the demand for marriage due to technological changes in the home and in the workplace. The combination of these two changes, the same line of argument sustains, have reduced the gains from specialization and thus couples have substituted cohabitation for marriage, especially among persons with low levels of education. Lundberg et al (2016) submit that in order to facilitate joint investments in their children, college educated parents continue to use marriage as a commitment device; but low educated parents for whom such investments are less desirable or less feasible, opt for cohabitation or for other type of living arrangements.

However, empirical evidence seems to suggest that the two explanations reviewed by Lundberg et al (2016) fall short when confronted to the reality of most single mother households and co-habitation arrangements. A close analysis of the evidence suggests that the fall in the demand for long-term commitment has led to negative socioeconomic outcomes. Specifically, it has increased poverty and harmful inequalities, suggesting that when couples opt out of marriage in favor of alternative arrangements, they are neither rational nor efficient in their decision maximization process.[16] Indeed, evidence indicates that the scarcer are the means a household possesses, the more it benefits from marriage.[17] This is so because more efficiency is needed in the use of the household’s limited means. More efficiency is achieved under intertemporal maximization, as it facilitates among other things, the smoothing of consumption over time. For intertemporal maximization to take place, stability is key. The latter is provided in the context of marriage but not typically in other type of family structures. 

Cohabitation relationships and single parent households are much less stable than married households and this also has intergenerational socioeconomic effects. Adults as well as children living in households under other than married arrangements typically experience instability in living conditions, household income, and parental presence. These experiences in turn generate negative socioeconomic outcomes for both child and spouses.[18] For example, Aguirre et al (2015) find a clear link between households’ family structure and the spread of moral and social ills, such as drug abuse, delinquency, physical abuse, etc. All of which also undermine personal and community security.

These types of social ills undermine social capital and post a threat to both personal and social security. Although social networks such as extended family and religious and civil societies can ameliorate the mentioned social ills, that are often consequences of family disintegration, there is no evidence supporting the elimination of these negative effects among broken families.[19] Similarly, Richaud et al (2012) report a clear connection between parental behavior and the presence or absence of prosocial behavior among early adolescence. Institutional stability is one of the necessary conditions for sustainable development. A key threat to stability is crime in all its forms because it increases transaction costs. Thus, empirical evidence seems to suggest that the deterioration of marriage is one of the transmission mechanisms of intergenerational poverty.[20] In this context, it is important to remember that the most basic relational aspects of every person take place and are shaped within the family.[21]   

In summary, even though some authors’ claims that the deterioration of marriage has led to women gaining independence, in reality, these women now face a high probability of living in poverty, jeopardizing the very independence they sought to gain. It also jeopardizes the institutions needed for sustainable development. Figure 1, presents the 2016 United States poverty distribution of households, women, and children by family structure (married households vs single parents headed households) and by race. Single parent households face a higher recurrence of poverty independently of their race and levels of education, as the former is correlated with the latter. Similar results, are found in Argentina as well as in developed and underdeveloped countries across the world.[22] Figure 2 presents the percentage of Argentinean’s households living in poverty by family structure. The two measures used are households’ income below 40% and 80% of the current minimum salary (as of January 2019 this has been set at $11,300).  

Graf 1

Graf 2

The poverty disparity across family structures is corroborated by the significant disproportion of families receiving welfare assistance in the Unites States (Figure 3). Single and cohabiting households are over 20 times more likely to request welfare assistance than married households. This gap was sustained before, during, and after the economic downturn caused by the sub-prime crisis. Similar trend is found in Argentina, where the proportion of households receiving social welfare is between 4 and 5 times higher if head of households are cohabiting, single mothers and separates/divorce (Figure 4) than if households are married or widows.

These findings regarding the link between family structure and poverty as well as the need for welfare assistance, are especially relevant for Argentina, as in 2017 less than 50% of the households reported being married while cohabiting, separation and divorce have been on the rise (Figure 5).

graf3

graf4

graf 5

As previously mentioned, empirical evidence indicates that there is a connection between family structure and insufficient consumption. The framing of the relationship is complex, however. Among other things, this is the case because income, the typical measurement used to determine poverty, and consumption are not the same. For example, at a given point in time, a household can be a net lender or borrower, thus household income can be higher or lower than its consumption. Indeed, the very fact of having the capacity to become either a lender or a borrower is very important for a household, as it affects its capacity for smoothing or not consumption over time. Long-term or permanent factors such as the skills and human capital, and short-term factors that determine income, can affect consumption levels differently. This difference depends on the households’ income stability and on their capacity to borrow; married households have a higher probability of having both. Nevertheless, the aspirations of poor persons and those of higher income levels seem to be the same. Among other things, their patterns of consumption reflect similar quality concerns as well as value for passive and active leisure, including personal care and social activities.[23] However, low income households often lack stable income streams and this places them in a highly vulnerable position to exogenous economic shocks.

Argentina, once again seems to be no exception. A clear relationship between family structure and insufficient food consumption, as captured by one of the manifestations of malnutrition: stenting growth, is found in this country. Single-parents household report a 49% higher prevalence of stenting among their children than children in married households (Figure 6). Malnutrition undermines education and the overall development of children and adults. In fact, while overall poverty has been reduced, malnourishment among the poor remains prevalent in certain regions of the country.[24]  

graf 6

The findings thus far seem to suggest that the relational dimension of the household in its most basic form, i.e., its structure, can be of assistance in understanding the complex relationship between poverty and consumption. This is so, because, as previously mentioned, family structure is a relevant factor in the generation and perpetuation of poverty. Furthermore, empirical evidence also indicates that deterioration in consumption is more accentuated in other than married households.[25] Finally, the empirical evidence also seems to suggests the need for acknowledging causes other than material limitations, when considering the causes of insufficient consumption. Specifically, it underlines the importance of taking into account quality concerns and the value people attach to leisure, all of which are connected to family structure. This in turn also suggests a strong influence of relational aspects in the generation of insufficient consumption.

Similarly, empirical evidence indicates that across the developed and the developing world, low income persons typically have worse health than higher income persons, this pattern extends to other measures of health including mortality.[26] Burkhauser et al (2012, 2013) find that accounting for health-related noncash transfers has a substantial poverty reduction effect.[27] Consistent with these findings, Deaton (2013) presents evidence suggesting that across countries, income affects health outcomes but much less than one typically thinks. For example, he finds that when dealing with mortality rates among the young, disparities across countries are diminishing, but there is no single driver determining this trend. Rather, evidence favors multiple factors affecting different segments of the population within and across countries.[28] While income has a moderate impact on health, Deaton (2013) claims that advances in health technology and education, seem to explain better the transmission mechanism between income and health. The key determining factor in this transmission mechanism is the application of knowledge received, particularly in government interventions and by each person as well as by each community.[29] Notwithstanding, Deaton (2013) finds that the leading causes of death among the poor are not caused by poverty itself, but rather by lack of access to education and by weak structural institutional factors.  Income has some effects on health outcomes via nutrition, because can affect access to medical treatment as well as the ability of governments to afford the provision of public health services. He also notes that not many health improvements across countries have come about without large needs of funds. Yet, Deaton and others hold that quality of institutions seems to be the key, as it facilitates the application of health-related knowledge by persons and by communities. It also acts as a preventive factor by fostering healthier lives and lower violence. Once again, findings seem to underline the importance of interpersonal relational aspects in understanding the connection between inequality and health.

Regarding education, there is ample evidence indicating the importance of relational dimensions in educational outcomes. Specifically, the relation between parents, teachers, and students significantly influence academic outcomes and overall performance of children. Family structure also is an important determinant of academic retention and educational outcomes, as well as of overall wellbeing of children.[30] Once again Argentina does not seem to be an exception. Of the 808 children 13 years of age included in the 2018 Encuesta Permanente de de Hogares, 83.5% report having completed only up to second grade. Of these, 34% report having no schooling, and only 4.84% report having achieve age appropriate educational levels. 10.96% of the total children having received no education, live in the Gran Buenos Aires. These numbers suggest alarming levels of drop up rates happening across the country. Figure 7, presents grade completion by 13 years old children in the country, by family structure.  80% and 66.7% of children living in cohabiting and separated/divorce parents’ households report not having received any schooling.  For married couples this proportion is 40%. 35.58% and 16.67% of children 13 years of age in married households and separated/divorce report. As in most countries, there is a clear relationship between family structure and educational achievements. 

graf7

The empirical evidence presented in this section, highlights the relevance of relational factors in the generation of poverty, as captured by the most basic human relational structure, i.e. family structure. In the following section we address these relational dimensions of poverty in the context of economic development by introducing an integral economic development approach.

Relational dimension of poverty and integral economic development framework

Development economics is typically described in the field of economics as the area that studies the causes and effects of poverty around the world. In more recent years, it also studies the causes and effects of the slowdown of progress in developed countries. Based on its findings, it seeks to improve interventions and policy design in such a way that persons, regions, and countries can achieve greater economic wellbeing. The relevance of interpersonal relations in the generation of poverty have been discussed in the previous section. They seem to have consequences for long-term economic growth as well as for the welfare and wellbeing of people, as it affects not only economic agent’s material aspects, but also personal and institutional aspects, such as education and personal and community security, all of which are necessary for sustainable development.[31] 

Aguirre (2011 and 203) propose an integral economic development framework as a means to incorporate the interpersonal relational dimension in economic analysis. At the core of this approach is a more complex understanding of maximization in the economic decision-making process. It understands the economic agent as a person who is social by nature and maximizes as such rather than as a self-utility maximizer. Consequently, in the analysis of economic transmission mechanisms as well as in the economic outcomes, this approach takes into account the interpersonal-relational dimension of economic actions. It considers that personal interaction can help or jeopardize economic outcomes. In the current discussion, these economic outcomes are the generation and the reduction of poverty. 

The integral approach also acknowledges the fact that socio-economic processes are not isolated processes but rather they are interrelated processes linked by interpersonal relational dimensions. For these processes to interact efficiently and thus facilitate sustainable development, while reducing poverty, the relational dimensions that connect them need to elicit optimal channels for these relationships. People exist, live, and act together with others, not in isolation. Thus, economic agents while seeking to meet their needs, they also must incorporate the needs of others. Sen (1999) proposes a capability approach as a means to ensure these optimal channels of relations. According to Sen’s vision, these capabilities in their different aspects, empower the self-utility maximizer economic agent vis a vis other economic agents who also maximize in the same manner. This is so, because these capabilities provide agency ability. They do so through the official acknowledgment and definition of certain human rights. The integral approach to economic development proposes an alternative approach to the optimization of economic human interaction. In the latter view, it is the acknowledgement of the relational dimension of the human person, and thus the fostering of proactive participatory engagement -service-, that ensures the generation of optimal channels of relations in the economy. The former approach, as it requires the acknowledgement of legal rights, which is carried out by governmental authorities, fosters a top-bottom policy design and implementation, while the latter approach has a preference for bottom-up interventions, even if government lead.

Figure 8 depicts the two mentioned perspectives of how socioeconomic processes relate to one another.  It also highlights the consequences for policy design if sustainable development and growth is to be achieved.  Institutions, production processes, and policies, as well as human and social capital are neither isolated nor overlapping processes.  They are processes that interact with one another, and to achieve sustainable development and growth they need to do so in a complementary manner. These complementarities are generated through interpersonal relations, i.e. human interactions. Thus, the definition of efficiency, within the integral economic framework, requires the incorporation of these relations in the maximization process of the economic agent, in a way that generate optimal outcomes.

Specifically, the integral approach redefines optimization in such a way that it takes into consideration the impact that any economic decision has on the quality of life of its beneficiaries, families, and communities. In this approach, relational aspects of the decision process are not considered spillover effects, as it is the case under the self-utility maximizing framework in economics. Rather they are considered endogenous to the decision process of the economic agent, and therefore they need to be incorporated in the maximization analysis when seeking to determine efficiency points. In other words, how economic agents interact with one another and  how  they the maximize are not value neutral. Therefore, the integral approach seeks to identify effective channels of relationships, i.e. effective human interactions, that make economic development sustainable. It focuses on the person engaged in an economic activity as well as on the relevant interpersonal relationships around that person. In doing so, it gives primacy to “action”, i.e. behavior, when measuring. This approach, because it acknowledges this relational dimension, seeks to measure beyond the direct or immediate impact of poverty on economic development. The integral economics approach requires measuring and evaluating the change in the way of life and actions of those being affected and/or benefitting from the economic decision or intervention. These are especially relevant when considering that perceptions, opinions, attitudes, and decisions are formed and changed through social interactions. The paramount place where these forming and changing processes take place is within the family. It is at home where habits that are relevant for functional markets or the lack thereof are learned.[32]

graf 8

The empirical findings of poverty and its effect on wellbeing previously discussed, seem to support the proposed integration of interpersonal relations into economic analysis.  Doing so, would help address and/or prevent some of the harmful effects of poverty mentioned. As discussed in the previous section, findings suggest that institutional factors are at the root of poverty. The underpinnings of these factors are interpersonal relational interactions manifested in human actions or behaviors that define life styles. Thus, taking into account these interpersonal relational dimensions in the analysis of inequality, can also assist in making distinctions when understanding the causes as well as ways to reduce poverty. They also can assist in providing policy insights. Specifically, family dynamics, which as previously mentioned, are the first and most basic manner of human interaction, appear to be key in the determination of poverty as well as in explaining intergenerational harmful effects in consumption, health, education, personal security, and social capital outcomes. They in turn affect other important inputs of production such as savings and long-term investment.

Agency vs integral economic development at the household level

Understanding the economic reality of the family dynamic could be of assistance in identifying successful economic initiatives that seek to prevent or reduce poverty. Household economic activity takes place in the family, for the family and from the family. It is at home, where economic agents experience, at the most basic level, their needs -material and otherwise- as well as their vulnerability. It is where they experience dependency in these different dimensions, and where they develop their identity. It is also at home, where persons first learn how to live and act together with others, including in their economic activity.   

Departing from this experiential reality of the home, the agency approach views household economic interactions as a set of contractual relations defined in terms of rights. These rights help each member of the household meet his or her needs and desires. The family, in this perspective, is understood as a common aid society, where each family member seeks to maximize his or her own utility when making economic decisions. Clear definition and coordination of contractual relations among them is what facilitates the utility maximization process in the economic activity of the household. This is so because their mutual engagement empowers each of its members to do so. Under this framework, interventions and government policies seeking to reduce or prevent harmful inequalities, should unleash the empowering agency of each family member by clearly defining his or her rights.

Fostering this type of agency in economic agents, however, seems to have generated distorted incentives in households. This is the case because, promoting engagement in family members for the sake of empowerment, typically lead family members to focus on maximizing their current utility when making economic decisions while jeopardizing future economic wellbeing. Rather than maximizing intertemporally, they focus on the present and on themselves. As this way of behaving is not aligned to the reality of the relational dimension of a household economic activity, the family’s economic, human and social capital is weakened, and sooner or later poverty arise. This is first experienced within the home, typically in the breakdown of the family structure, and then it spills over on to the economy as a whole, by an increase in poverty.  Figure 9 depicts this process.

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Starting from the same experiential reality of the home described at the beginning of this section, the integral approach views household economic interactions as an interpersonal relational reality, not a contractual one. The former calls for proactive participation, sharing, and service among household members. This cooperation helps meet the needs of the family and contributes to keeping alive a hopeful outlook towards the future.[33] The family, in this perspective, is understood as a relational reality, where the optimization process of each family member takes into account his or her needs as well as the needs of other members of the household. Working together in a collaborative fashion, inside and outside of the home, facilitates efficiency in production and consumption. This is so because by their mutual engagement, economic agents unleash their complementarity and act together in a way that contributes to their mutual human flourishing. Rather than seeking to be empowered when engaging others, economic agents seek to become an empowering presence for those they engage.[34] Under this framework, interventions and government policies seeking to reduce or prevent poverty, need to identify, foster and protect effective channels of relations among household members that strengthen the household’s economic activity and its wellbeing.Proactive and participatory interactions among economic agents in married households, seem to be one of these effective channels of relations. This is the case because, facilitating cooperative behavior among family members, typically leads each member of the family to focus on his or hers as well as others’ current and future economic wellbeing. This requires intertemporal maximization, which increases efficiency in production, exchange, and consumption. Marriage, because of the legal and otherwise lasting commitment, facilitates intertemporal maximization. As this way of behaving is aligned to the reality of the relational dimension of a household economic activity, the family’s human and social capital is strengthen, and the probability of falling into poverty decreased. Figure 10 depicts this dynamic process in the home.

 graf 10

Conclusion

There is widespread agreement on the harmful effects of poverty. Because of this, in the past decades, efforts have been undertaken to reduce its prevalence around the world, while improving the way it is measured. The latter typically expand the measurement from solely focusing on income per capita, to a multidimensional measure of different material needs. Evidence, however, seems to suggest that to understand the generation of poverty, and therefore to introduce effective interventions to reduce it, taking into account relational factors is crucial. Often, at the root of the harmful mechanisms that lead to poverty, is a disruption of the family structure, the most fundamental interpersonal relationship human beings have. These mechanisms are also affected by the specificities of countries and regions.

It was suggested in this paper, that the economic agent is social by nature and that therefore maximizes as such. Consequently, incentives that foster proactive participation and benefit family stability seem to be fitting in a country’s efforts to diminish harmful inequality. At the most basic level, this means that in addressing policies -such as more equitable taxes and transfers’ systems, labor market mobility, education, or health policies- policy makers should consider how the particular mechanisms of a given policy foster proactive participation at the local level and how they affect family structure.

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  1. Ordinary Professor of Economics. Department of Economics School of Arts and Science. The Catholic University of America Washington, D.C. United States of America.
  2. World Bank (2018, p.9).
  3. These estimates are based on IPL standards 2011 purchasing power parity (PPP).
  4. World Bank Database, August 2018. The 2018 Ministerio de Hacienda’s study, Incidencia de la Pobreza y la Indigencia en 31 aglomerados Urbanos, reports similar values.
  5. Relative poverty is typically defined as the condition in which people lack the minimum amount of income needed in order to maintain the average standard of living in the society in which they live.  Therefore, the threshold at which relative poverty is defined varies from one country or society to another.
  6. World Bank (2018), p. 13.
  7.  ODS (2018)
  8. ODS (2018b), p. 7-14.
  9. North (1994, Acemoglu (2010), Alesina and Giuliano (2010), Alesina and Rodrik (1994), Alesina and Perotti (1996), Perotti (1996), Bardhan and Mookherjee (2000), Deaton (2010), Galbraith (2012), and Rodrick (2000).
  10. Benarjee/Duflo (2003) and Easterly (2001).
  11. With the increase of internal and external migration more and more poor populations live in crowded urban settlements where heavy rains can wipe out their homes, where access to clean water and basic sanitation is also low and where they face a high risk of diseases. In other cases, is war and conflict that is at the roots of property lost.
  12. See for example Duflo (2012) and Aguirre et al (2015).
  13. See Akerloff and Yellen (1996), Poponoe (1996), Amato (2005), Banerjee and Duflo 2007, Aguirre et al (2015), Attanasio/Pistaferri (2016), and Gwatkin (2007) among others.
  14. See Aguirre (2006 and 2007), Aguirre/Saidi (2013), and Poponoe (1996).
  15. For a review of the literature on family structure and inequality see Lundberg et al (2016).
  16. See Amato (2005), Aguirre (2006, 2007), and Aguirre/Saidi (2013).
  17. Aguirre (2007) reports a higher marginal contribution of marriage to household income and wealth, in household with both lower income and wealth.
  18. Akerlof (1994 and 1996) as well as Aguirre (2006 and 2007), and DeRose and Wilcox (2017).
  19. I am especially grateful to Dr. Roger Myerson for his comment on the positive role that social networks could have in diminishing some of the negative effects experienced by persons in broken families.
  20. See McLanahan/Percheski (2008), Poponoe (1996), and DeRose and Wilcox (2017)among others.
  21. See among others Amato (2005), Bernardinelli (2011), Richaud et al (2012), and Chen et al (2019).
  22. See for example Aguirre and Saidi (2013) and Aguirre (2007).
  23. Bernarjee/Durflo (2007).
  24. Behrman/Rosenzweig (2004), Gwatkin et al (2007), Case/Paxson (2010), and Allen (2017).
  25. Ibid.
  26. For evidence of this pattern in developed and developing countries see Deaton (2013), Deaton/Paxson (2004), Culter et al (2006), and Currie/Schwandt (2016).
  27. Haveman et al (2015).  This finding is consistent with the fact that poor families in developing countries often do not have access to health insurance and, the extended family is de facto their insurance.
  28. See Currie/Schwandt (2016) as well as Deaton (2013) for a review of the literature in developed and developing countries respectively.
  29. Deaton (2013).
  30. See Aguirre (2005, 2006, 2007, 2015), Richaud et al (2012), and Haveman et al (2015).
  31. Discussion of the relations between institutions and economic growth are well documented.  A discussion of these relationship is beyond the scope of this paper. For further discussion see North (1994), Acemoglu (2001), Alesina and Juliano (2016), Easterly (2001) among others.
  32. Among others, these habits include trust, honesty, conflict resolution, sobriety in the use of goods, and respect for the environment, among others.
  33. The importance of hope in the economic activity has been discussed more extensively in recent year. See Duflo (2012) and Travis/Wydick (2017).
  34. For a more detailed discussion of empowering presence, see Marcos/Bertolaso (2015).


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