Paper short abstract:

The objective of this paper is to define and characterize the growing group of people that is out of poverty but facing a high risk of falling into poverty in Chile. A threshold of probability of falling into poverty is defined, which divides the population between vulnerable group and middle class.

Paper long abstract:

The population who has left poverty has been consistently growing in Chile since more than two decades. It is believed that this group of people who are out of poverty is feasibly better off than people in poverty but they still are facing a high risk of falling into poverty again. This paper aims at identifying and characterizing this group of people on vulnerability to poverty based on their probability of being in poverty. The paper uses panel data in Chile between the years 1996 and 2006 to identify the probability threshold that delimit the group in vulnerability to poverty and the income associated with each probability. These probability and income thresholds define the group of people in poverty -with low levels of income and a high probability to remain in poverty-, the population in vulnerability to poverty -with a high probability of being in poverty- and the population with a low probability of being in poverty, which can be understood as middle class. This paper characterizes these different groups and it explores how the different levels of insecurity that these groups confront are affected by their socioeconomic characteristics. This paper tries to contribute to the understanding of vulnerability to poverty in order to provide an effective Social Assistance to protect against poverty and deprivation.