What are the determinants of chronic and transient poverty in El Salvador?

This study seeks to analyse the determinants of chronic and transient poverty in El Salvador. To carry out this analysis, two un-intended panel data were constructed using the main Salvadoran household survey, one for the period 2008-2009 and 2009-2010. This paper finds that approximately one out three households are in chronic poverty and one out of four are in transient poverty in the periods analysed. On the one hand, chronic poverty can extend across generations, perpetuating the vicious cycle of poverty. On the other hand, the levels of transient poverty show that an important percentage of Salvadoran households are economically vulnerable to risks that have the capacity of making them fall into poverty. In this paper, the proposed determinants of chronic and transient poverty were grouped in five categories: demographic characteristics, access to economic resources, educational characteristics, labour characteristics and residence characteristics. The econometric models – multinomial logit models and simultaneous quantile regressions – show that the determinants tend to differ for transient and chronic poverty, but this difference mainly arises from the level of impact of the proposed determinants. Thus, different policies are needed to address each kind of poverty. The paper ends by presenting some conclusions and public policy recommendations.