Dynamic Relationship Between Social Factors and Poverty: A Panel Data Analysis of 23 Selected Developing Countries

This research paper aims to investigate the social factors affecting poverty in selected developing countries, which have been hardly investigated. We incorporated the income poverty index (poverty headcount ratio and poverty gap) and human poverty indices dependent variables. At the same time, social factors have been used as explanatory variables from 1997 to 2016 for a group of twenty-three developing nations. The poverty indices have been constructed through PCA (principal component analysis). Friedman and Pesaran CD (cross-dependence) tests have been applied to confirm the occurrence of cross-dependency in the panel data, and the CIPS (second-generation panel unit root) test has been applied to verify the stationarity of the variables. We applied Pedroni’s panel co-integration to check for long-run linkages among the variables, while system and difference GMM (one-step) techniques have been used to find dynamic effects on poverty. The results conclude that the age dependency ratio showed a positive and significant relationship with poverty, whereas social globalization depicted a negative and significant relationship with poverty. Nevertheless, health (life expectancy at birth) and education (primary school enrolment) have a negative and significant relationship with human poverty, while these variables do not impact the income poverty model. Similarly, population growth had a positive and significant impact on human poverty but had no impact on income poverty.