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«I Wish I had 100 Dollars a Month … » The Intergenerational Transfer of Poverty in Mongolia

IZA/Higher School of Economics Workshop: Labor Market Adjustment in the Commonwealth of Independent States, Central Asia and China in the Wake of the Great Recession. «I Wish I had 100 Dollars a Month … » The Intergenerational Transfer of Poverty in Mongolia. Francesco Pastore

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«I Wish I had 100 Dollars a Month … » The Intergenerational Transfer of Poverty in Mongolia

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  1. IZA/Higher School of Economics Workshop: • Labor Market Adjustment in the Commonwealth of Independent States, Central Asia and China in the Wake of the Great Recession «I Wish I had 100 Dollars a Month … »The Intergenerational Transfer of Poverty in Mongolia Francesco Pastore SecondaUniversità di Napoli and IZA

  2. Inequality and Poverty in Mongolia • Mongolia ranks: • 116 in the Human Development Index, but only • 42 in the Human Poverty Index • The median household income, once excluding the 10th and 90th deciles, equals TUGs 100,000 (US$ 85.9 or € 63.8) • Poverty: • 10.1 % live on US$ 30 a month or less • 32.9 % live on US$ 30 through 60

  3. Motivation • Assessing the importance of the UN MDG 1: “eradicating poverty and hunger” in Mongolia, one of the 50 poorest countries of the world by: • Measuring the impact of household poverty on the next generation poverty measured as: • Dropout from school • Educational marginalization • Working poverty • Hinting at the existence of poverty traps; • Suggesting the possible implication of cash transfers as a policy tool in the poorest countries to eradicate poverty;

  4. Outline • Methodology • The data used • Determinants of • Dropping out of school • Educational marginalization • Working poverty • Concluding remarks

  5. Methodology Pi is one of the three indicators of poverty: • Dropping out of school • Educational marginalization • Working poverty HIjis household income, the variables of interest, namely households living on US$ 1, 2 and 3 a day HCk are other family characteristics, such as number of siblings, being a orphan, parents’ education Xm is a set of individual characteristics (age, civil status, working while at school, main goals in life, place of residence)

  6. The data used • Ad hoc (and unique) SWTS on 6871 young people aged 15-29 years carried out in 2006 • The questionnaire captures both quantitative and qualitative information: • education and training, • family's influence in career choice, • perceptions and aspirations in terms of employment and life goals and values, • job search processes, • barriers to and supports for entry into the labour market, • wage versus self-employment preference, • working conditions

  7. Reasons to leave school for the uneducated by age and gender (in %) • Dropouts are here all those individuals who left school before completion of high secondary school not for normal causes, including having achieved the desired educational level

  8. Table 9. Determinants of dropping out of school in Mongolia by gender (Logit estimates)

  9. Determinants of dropping out of school • Cont’d

  10. Determinants of dropping out of school • Cont’d

  11. Table 10. The type of diploma that leads to educational marginalization, by age group and gender • Note: the educationally marginalized are those young people holding a type of diploma that the lowest 20% holds. It means that we identify the lowest type of diploma that is possessed by at least 20% of the sample population. We only consider those individuals aged 20-29 years who are not students any more. • Source: own elaboration on the Mongolian SWTS.

  12. Table 11. Mongolia: Odds ratios of the probability of being educationally marginalized (aged 25-29 years)

  13. Determinants of educational marginalization (aged 25-29 years) Cont’d

  14. Determinants of educational marginalization (aged 25-29 years) • Cont’d

  15. Table 12. Logistic regression of the determinants of working poverty in Mongolia

  16. Determinants working poverty Cont’d

  17. Determinants working poverty • Cont’d

  18. Concluding remarks • Weak household background seems to be associated with a high risk of poverty, hinting at massive processes of intergenerational transfers of poverty • All household characteristics appear to importantly affect the youth poverty status, suggesting that poverty traps might be in place. • One finding stands out: A young person born in a household living out of $1 a day has a probability • about 4 times greater of dropping out of school, • 2.5 times greater of being educationally marginalized • and 20 times greater of being a working poor than a young person born in a family living out of more than $3 a day. • Special financial support should be provided to those young people who were born in households living on $1 a day.

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