  We model the dynamics of poverty using a stochastic model of Geometric
Brownian Motion with reallocation (RGBM) and explore both transient and
persistent poverty over 1952-2006. We find that annual transitions in and out
of poverty are common and show a rising trend, with the rise largely being
driven by transitions out of poverty. Despite this promising trend, even toward
the end of the time frame, there is a non-trivial proportion of individuals
still transitioning annually into poverty, indicative of the economic fragility
of those near the poverty line. We also find that there is still a marked
persistence of poverty over time, though the probability of poverty persistence
is slowly declining. Particularly concerning in this context are the poverty
trajectories of those at the very bottom of the income distribution. The choice
of poverty line appears to impact the dynamics, with higher poverty lines
corresponding to lower transitions and higher persistence probabilities. The
distinct nature of emergent transient and persistence dynamics suggests that
the approaches to counter these phenomena need to be different, possibly
incorporating both missing financial markets and state action.
