Discipline: Social Science
Chronic and transient poverty basically aims to assess how shocks such as the Asian financial crisis and abnormal weather phenomenon affect the poverty situation in the Philippines. This kind of analysis has not been possible to make on a nationwide scale due to the absence of panel data. Fortunately, a set of panel data of 17,896 households has been made available by the National Statistics Office (NSO) through the samples of the 1998 and 1999 Annual Poverty Indicator Survey (APIS), which are subsamples of the 1997 Family Income and Expenditures Survey.
From the matched observations in the survey, poverty incidence estimates were obtained. Based on these estimates 31.4 percent of the Filipino families in 1997 were poor (this is very close to the 31.8 percent poverty incidence using the full sample). In 1998, 38.8 percent of the families were estimated to be poor can be defined. Chronic ones are defined as those who were poor throughout the three years while transient ones are defined as those who became poor for at least one year. From this definition, eight combinations of poverty status were derived and incidences in each of these were estimated: PPP, 20.8; PPN,4.0; PNP, 3.5; PNN, 3.2; NPP, 7.8; NPN, 6.4; NNP, 7.0; and NNN, 47.5. The chronic poor comprise almost half of the families who were somehow non-vulnerable (NNN) and also almost half of the poverty incidence in 1998 and 1999.
Hence, interest arises in finding out who recover easily from shocks, i.e., NPN, PPN, and who stay long to recover, i.e., NPP. Another groups, which are worth tracking, are those who are able to take advantage of the situation, i.e., PNN and those who are able to protect themselves, i.e., NNN. In short, there has been a great deal in finding out how poor and non-poor families were moving in and out of poverty due to shocks. The estimated chronic poverty incidence, or track of the poor families from 1997 to 1999 suggests that poor families are truly vulnerable to shocks. It is important to distinguish between chronic and transient poor sicne different policies are needed to address each type of poverty. Furthermore, profiles of these families suggest that poverty monitoring should be done carefully to answer the problem of targeting as one of the major challenges faced by the government.