Poverty Dynamics in Rural Mexico: An Analysis Using Four Generations of Poverty Measurement

Drawing on four generations of poverty measurement, this paper uses panel data from the 2002-2007 period to analyze rural poverty in Mexico. The results show that almost three fifths of the surveyed households experienced poverty at least once, while one fifth was persistently poor. While these standard poverty measures are informative, the key challenge is to determine who can expect to escape poverty over time. According to an asset-based expectation of household welfare, from 36% of households that were poor in 2007, 29% can expect to escape poverty over time and 7% structurally-poor households cannot. However, asset accumulation dynamics show that in the long term all households can expect to escape poverty because a single stable equilibrium was found at 6.35 times the food poverty line. Nevertheless, one should not be overly optimistic because this still represents an average rural individual living with 105 pesos per day.