PORTRAIT OF THE POOR: AN ASSETS-BASED APPROACH
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Using information from the surveys and variables obtained from other sources, the first econometric exercise estimated functions of spending per capita nationally and for the urban and rural sectors in terms of a set of socio-demographic variables, including proxy variables for human, public and social capital. Note that some variables in these exercises may in fact be endogenous, even though they are presented as explanatory of per capita spending. These exercises should be interpreted more as correlations than with a strict sense of causality. Table 5.4 shows the results of the national model. The explanatory variables of per capita spending are socio-demographic relative to the head of the household (educational level, age, gender, migrant status and branch of activity); and to access of the household to public capital (credit, social security membership or a prepaid health scheme, and illiteracy of the head). In the regional context, they are socioeconomic variables of infrastructure and social capital (unemployment rate, home purchase credit, primary coverage, time in school, existence of waterworks and roads, level of alcoholism and level of abuse by the authorities). For the national model, the percentage of the variance explained is 32 percent, a satisfactory level for cross-section analysis. The level of per capita household spending depends positively on the educational level, age (decreasingly, although not significant) and migrant status of the head.8 The branch of activity where the head of household works also influences per capita spending, in decreasing order as follows: commerce, financial services, transport and communications, mining and oil, industry, construction, other services, public services and agriculture. With respect to access to public capital, the variables of access to credit and social security (public or private) have a positive effect on per capita spending, while the illiteracy of the head has a negative impact. Among contextual variables, per capita spending is negatively affected by the unemployment rate in the region, primary health coverage, longer average schooling of children, and waterworks infrastructure. The negative effects of primary health coverage and waterworks infrastructure must be inter8
See Leibovich (1996), who explains how migrants to cities do relatively well at assimilating into labor markets.
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Functions of Per Capita Household Spending