Measuring Vulnerability to Poverty in Chile Using the National Socio Economic Characterization Panel Survey for 1996, 2001, 2006

Chile provides an interesting setting to analyze vulnerability to poverty, especially today, after the last poverty count presented in 2013 by the Ministry of Planning. After twenty years of declining poverty, national indicators showed an increase in poverty from 13% in 2006 to 14% in 2011. Using the CASEN panel data set, this paper explores some of poverty dynamics of poverty in Chile. To begin with, I examine socioeconomic transitions using transition matrices, confirming a great deal of social movement into and out of poverty. Furthermore, this paper advances the knowledge on vulnerability to poverty in Chile by estimating a vulnerability measurement. The evidence reveals a high level of vulnerability to poverty present in Chilean society; vulnerability to poverty affects a larger quantity of households than actual poverty counts. For each of the years surveyed (1996, 2001, and 2006), vulnerability to poverty surpasses poverty estimates by a significant percentage. This forward-looking measure of poverty should be taken into account when designing poverty alleviation policies by targeting social programs not just to those living below the national poverty line, but also to those at risk of becoming poor in the future.