Understanding vulnerability. Three papers on Chile

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Abstract

Poverty eradication has been one of the most important, if not the most important, development goals of recent decades. It still represents one of the major challenges of our time. The first objective of the U.N. Sustainable Development Goals agreed in 2015 states: "End poverty in all its forms everywhere" (United Nations 2015). To meet the main objective of eliminating poverty by 2030, it has been recognized that protection must go not only to those in poverty but also to those who are in danger of falling into poverty in the future. Although vulnerability to poverty can be broadly defined as the likelihood of someone falling into poverty in the future, there is no agreement on how best to measure it or determine its impact on well-being. The main research question addressed in the thesis is: How can vulnerability to poverty be operationalized and measured? It explores this question empirically in three papers covering: (i) what are the shifts in vulnerability to poverty along the distribution of income over time; (ii) what do the measurements of vulnerability to poverty tell us about the sociodemographic characteristics of people in situations of vulnerability to poverty compared with those living in poverty and the middle class; (iii) what is the relationship between poverty, vulnerability and age and what is the role of social assistance in addressing these. The three papers take Chile as a case study to understand and measure vulnerability from three different approaches. Chile is a high-income country with a successful poverty reduction strategy but still facing the challenge of eradicating it. Most of its social programs are designed to reach the 60% most vulnerable sector of the population. The first paper employs a relative understanding of vulnerability. It examines population shifts along the distribution of income from deciles in poverty in an earlier period to deciles of vulnerability in a later period. Methods to analyse relative distribution proposed by Handcock & Morris (1999) are used to perform this analysis. The findings emphasize that poverty reduction can be accompanied by vulnerability reduction. The second paper measures vulnerability to poverty using the approach proposed by Lopez-Calva & Ortiz-Juarez (2014). This paper estimates the probability of falling into poverty and uses this to establish a vulnerability income threshold. The findings underline the differences between the group of people living in vulnerability, those living in poverty and people who belong to middle class. This paper contributes to the recognition of the group of people in vulnerability as a different group to those in poverty and the middle class providing the recommendation of different social programmes for these groups. Poverty reduction strategies should consider these differences. The third paper moves the analysis onto the vulnerable groups. It focuses on children and older people as vulnerable groups in need of state protection. A partial fiscal analysis is carried out following the guidelines of the Commitment to Equity Institute to compare the situation of these groups before and after direct taxes and cash transfers. It shows that current cash transfers have an age bias, being more effective in reducing poverty among the elderly than among children. The findings confirm the view that age bias in welfare institutions creates generational inequity in the allocation of public benefits. In the context of the general lack of agreement regarding what vulnerability to poverty is and how it can be measured, this thesis thus tries out three different ways to conceptualize and measure it.

Keyword(s)

poverty; social protection; vulnerability

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