Poverty dynamics in Nairobi’s slums, testing for state dependence and heterogeneity

Ousmane Faye, African Population and Health Research Center (APHRC)

What are the factors associated with becoming or remaining poor? Who are the individuals at risk of entering or exiting poverty? Is it the same individuals who are stuck in poverty? In other words, does poverty experienced in one period has a causal effect on future poverty? Do individuals who are poor have particular characteristics making them prone to poverty? Answers to these questions are central to understand poverty and then inform public policies aimed at fixing it. This paper takes advantage of the uniquely rich dataset from the Nairobi Urban Health and Demographic Surveillance System (NUHDSS) to addresss these questions. In this paper, we have been able to offer some insights in the dynamics of poverty in Nairobi’s slums. A very interesting result is that there is substantial state of dependence in poverty after controlling for initial poverty status and for panel retention.