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Poverty Dynamics in Bhutan, 2017-2022 : Evidence from Synthetic Panels
This paper examines the dynamics of poverty in Bhutan between 2017 and 2022, utilizing cross-sectional data from the Bhutan Living Standards Surveys. The paper constructs synthetic panels and estimates poverty transition probabilities. Three main findings emerge. First, poverty turnover in Bhutan is low overall (not many people, as a share of the population, moved in and out of poverty during the period considered). Second, chronic poverty, defined as the probability of remaining poor in both years (2017 and 2022), was also low, both in absolute terms and compared to other countries for which similar estimates are available. The probability of being poor in both years is 6 percent of households in Bhutan, compared to over 15 percent in India and 17.5 percent in Pakistan. Third, upward poverty mobility (the probability of escaping poverty between 2017 and 2022) is 20 times higher than downward poverty mobility.
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