Understanding the multidimensional structure of poverty in Argentine households

Abstract

A question of great interest for the design of multidimensional poverty measures is whether they should include a monetary poverty indicator. One of the most common arguments for keeping income poverty separate from non-monetary poverty is that they reflect different dimensions of the phenomenon. This paper explores the multidimensional structure of poverty in Argentina and investigate whether monetary poverty should be considered as another indicator of multidimensional poverty using generalized structural equation modeling (GSEM) methods. Using categorical data from a household survey, a generalized confirmatory factor analysis model (GCFA) and a GSEM with a second order factor are analyzed. The GCFA model postulates the traditional assumption that monetary poverty is just another dimension of poverty, while the GSEM supports the hypothesis that monetary poverty is a cause of non-monetary poverty. The results show that the data fit well in both cases, but that it is more plausible to consider that the non-monetary factors are indicators of a higher order dimension and that this non-monetary poverty, as a whole, is explained by monetary poverty. Finally, the implications of these results for the design of multidimensional poverty indicators in Argentina are discussed. JEL Classification: C38, I32