Determinants of Poverty Reduction: A Relative Panel Data Analysis Between Positive and Negative Poverty Reduction Economies

Proceedings of ‏The 2nd International Conference on Social Sciences in the 21st Century

Year: 2020

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 Determinants of Poverty Reduction: A Relative Panel Data Analysis Between Positive and Negative Poverty Reduction Economies

Tariro Madzimure, Edson Mbedzi

ABSTRACT: 

The study compares the effects of macroeconomic factors on poverty between positive and negative poverty reduction economies using panel data from 1991 to 2018. Performing a fixed effects model, the results indicate that from the whole sample, only interest and unemployment rate affect poverty while inflation does not. However, individualistic country characteristics suggest that poverty is deep-rooted more on the ability of the population to access funds from either employment income or financial markets than on prices of goods and services effects. This implies different policies be implemented to reduce poverty based on the level of income distribution and country structural income classification status as a low, middle or high income country. Conclusively, intervening policies implemented to reduce poverty yield the same results whether a country is a positive or negative poverty reduction economy, meaning this classification does not matter for policy targeting purposes, rather determinant macroeconomic factors do.

Keywords: poverty, inflation, unemployment, interest rate, panel data, JEL: E24, E25, E64