When Does Economic Growth Reduce Poverty and Strengthen the Middle Class? A State‐Level, Sector‐Specific Analysis of Peru.

Using novel state‐level data of Peru from 1997 to 2010, we investigate how growth in different sectors affects poverty rates and the middle class. Our results indicate that only the manufacturing sector seems to robustly decrease poverty. Growth in the service sector emerges as a meaningful predicto...

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Published in:Southern Economic Journal Vol. 84; no. 4; pp. 1067 - 1088
Main Authors: Canavire‐Bacarreza, Gustavo, Jetter, Michael, Robles, Marcos
Format: Article
Published: Wiley-Blackwell Apr2018
Subjects:
Online Access:View this record in EBSCOhost
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        atl: When Does Economic Growth Reduce Poverty and Strengthen the Middle Class? A State‐Level, Sector‐Specific Analysis of Peru.
      aug:
        au:
          Canavire‐Bacarreza, Gustavo
          Jetter, Michael
          Robles, Marcos
      su:
        Economic development
        Poverty
        Middle class
        Manufacturing industries
        Regional differences
      sug:
        subj:
          Economic development
          Poverty
          Middle class
          Manufacturing industries
          Regional differences
      keyword:
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        D63
        I32
        O41
        C23
        D63
        I32
        O41
      ab: Using novel state‐level data of Peru from 1997 to 2010, we investigate how growth in different sectors affects poverty rates and the middle class. Our results indicate that only the manufacturing sector seems to robustly decrease poverty. Growth in the service sector emerges as a meaningful predictor of a rising middle class. Allowing for regional differences, we find substantial variation across the 25 Peruvian states with large shifts in magnitudes, signs, and statistical importance. Beyond the immediate implications for Peru, these findings highlight the importance of analyzing the link between economic performance and poverty rates on a subnational level. Policy implications are likely to differ substantially, depending on the source of economic growth and regional particularities.
      pubtype: Academic Journal
      doctype: Article
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    language: English
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