Chapter 8 Vulnerability to Poverty: A Microeconometric Approach and Application to the Republic of Haiti

Purpose – This chapter investigates vulnerability to poverty in the Republic of Haiti. Methodology – We use a hierarchical modeling technique to allow the assessment and decomposition of vulnerability to poverty by exploiting the short-panel structure of nested data in a cross section. Originality – Specifically, a three-level hierarchical model with a partially Bayesian restricted maximum likelihood is used in the estimation procedure. This is novel in this literature. Findings – The decomposition method adopted in this chapter reveals that vulnerability in the Republic of Haiti is largely a rural phenomenon and is correlated negatively with schooling. The results also disclose the lack of equality in various aspects of circumstances or opportunities, including education, as the salient factor determining the status and level of vulnerability of households. Most importantly, among the different shocks affecting household's income, it is found that meso-level shocks are in general far more important than covariate shocks. This finding points to some interesting policy implications in terms of decentralizing policies and delegating more powers and providing better means to local governments to enhance household resilience to shocks and to alleviate their vulnerability to poverty.