Poverty Traps in Argentina - Poverty and Equity Assessment

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Table of Contents

• Acknowledgments 8
• Executive Summary 9
• Overcoming poverty traps 15
• Poverty persists despite the implementation of strengthened policies aimed at reducing it 9
• Trap 1. Fiscal imbalance and inflation: a vicious cycle that limits allocative efficiency 11
• Trap 2. Intergenerational and geographical imbalances leading to chronic poverty 12
• Trap 3. Spiral of low productivity and income vulnerability 13
• Trap 4. Increasing climate risks and limited capacity for resilience 14
• Chapter 17
• 1 17
• 1.1 Poverty has increased in Argentina, while it has declined in most countries in the region 17
• 2.1. An assets approach to analyzing household income generation 29
• 1.5. Better data are needed for more efficient policy impact 27
• 1.4. Official poverty measurements cover only part of the country’s population 24
• 1.3. Poverty is concentrated among children, youth, and geographically in the suburbs and northern regions 21
• 1.2. The poverty floor has persisted for four decades in Argentina, and the country faces a new recent cycle of deterioration 19
• 2.9. Wages have lost value amid inflation and volatility 43
• 2.8 Lack of stable job creation hinders labor productivity 40
• 2.7. Restrictions affect market participation and asset use 39
• 2.6. Low-income population is more vulnerable to adverse climate events 39
• 2.5. Structural barriers and economic distortions affect productive capital accumulation 37
• 2.4. Social capital: A subtle yet crucial asset 36
• 2.3. Accumulation of human capital and productive assets is insufficient and of low quality 31
• 2.2. Labor income is the largest component of total household income 30
• Chapter 44
• 3 44
• Policy responses and poverty traps 44
• 3.1. Income transfer programs have been the cornerstone of anti-poverty policy 44
• 3.2. The limits of income transfer policies: building solid walls on quicksand 47
• 3.3. The complexity of transforming the lives of the most vulnerable 48
• 3.4. Overcoming poverty traps: a short- and medium-term strategy 49
• 3.4.1. Macroeconomic stabilization and inflation reduction: Essential foundations 50
• 3.4.2. Protection mechanisms during economic stabilization 50
• 3.4.3. Overcoming structural barriers 50
• 3.4.4. Information for efficiently addressing diverse needs 50
• References 51
• Figure 1 9
• Poverty levels—measured using the national methodology—have remained above 25 % over the past decades 9
• Figure 2 10
• Average per capita household income declined by over 40 percent between 2016 and 2023 10
• Figure 3 10
• Labor income is the largest component of total income, primarily from vulnerable employment in middle and lower segments 10
• Figure 4 11
• Food prices have often outpaced headline inflation 11
• Figure 5 12
• More than half of children and adolescents live in poverty 12
• Figure 6 13
• Half of all workers are informal or self-employed 13
• Figure 7 13
• In certain provinces, formal private employment constitutes less than 20 percent of total employment 13
• Figure 8 14
• Number of poverty baskets affordable to workers earning the median wage, by type of employment and quarter, 2016–2023 14
• Figure 9 15
• High flood risk and chronic poverty rates converge in specific territories 15
• Figure 10 18
• The poverty rate in Argentina is low compared to the region but has increased in the last decade 18
• Figure 11 18
• Real per capita income has declined for the general population and the bottom 40 percent in Argentina 18
• Figure 12 19
• The middle class in Argentina declined over the past decade 19
• Figure 13 19
• Inequality has remained relatively stable at a level below regional average 19
• Figure 14 20
• The official measurement shows four in ten Argentines in major urban areas living in poverty; one in ten living in extreme poverty 20
• Figure 15 21
• Limited economic growth largely accounts for rising poverty rates 21
• Figure 17 21
• Reductions in formal and nonformal labor income explain 60 percent of the increase in poverty between 2016 and 2023 21
• Figure 18 22
• Poverty rates are highest among households with children, particularly in extended households and female-headed households 22
• Figure 19 22
• Poverty incidence is higher among women in the 24-44 age group 22
• Figure 20 23
• Poverty concentration is higher in suburbs surrounding the City of Buenos Aires 23
• Figure 21 23
• Poverty measurement in Argentina is limited to 31 urban areas, with higher incidence in the North and Greater Buenos Aires regions 23
• Figure 22 25
• In most provinces, poverty date cover less than half the population 25
• Figure 23 25
• The prevalence of unmet basic needs is higher among the rural population 25
• Figure 24 30
• Household income-generating capacity depends on available assets, asset utilization, and the obtained returns to use 30
• Figure 25 31
• The share of labor income and pensions has decreased over the last decade 31
• Figure 26 33
• Vulnerable populations have lower early education attendance and higher dropout rates 33
• Figure 27 33
• Children and young people form a higher proportion of the most vulnerable groups 33
• Figure 28 34
• Higher parental education levels correlate with fewer students falling behind in school 34
• Figure 29 34
• Average school performance is low in Argentina, especially for low-income populations 34
• Figure 30 36
• Deficits in health checkups are most prevalent among children from disadvantaged households 36
• Figure 31 37
• Lack of internet connectivity is a barrier in northern regions 37
• Figure 32 38
• Low-income households have limited productive asset accumulation and rental income 38
• Figure 33 38
• Motorcycles are key productive assets among low-income populations 38
• Figure 34 40
• Informal employment dominates among the poorest two quintiles, concentrated in construction, retail, manufacturing and domestic services 40
• Figure 35 41
• The number of private sector employers reporting workers has remained stagnant for over a decade 41
• Figure 36 42
• Map of chronic poverty estimates related to private employment and Potenciar Trabajo program, 2019-2021 42
• Figure 37 43
• Most of the firms that manage to stay in business retain their original size five years after establishment 43
• Figure 38 43
• Average wages decreased by 40 percent between 2016 and 2023, with informal workers most affected 43
• Figure 39 45
• Pension moratoria17 represent the largest expenditure on noncontributory transfers 45
• Figure 40 46
• Spending on transfer programs for the elderly is almost 3 times that for children and adolescents 46