Download: Poverty Traps in Argentina
Solid walls on quicksand
Argentina faces a paradox: it has good programs and allocates significant resources to fighting poverty, yet it has not fallen below a floor of 25 percent over the last 40 years. The report Poverty illustrates this situation by saying that Argentina builds solid walls on quicksand. In other words, an economy that does not grow and does not generate quality employment limits the opportunities to escape poverty for the population that increasingly requires social assistance. As a result, poverty and income inequality worsened between 2013 and 2023.
The report Poverty Traps in Argentina explains how macroeconomic dynamics have hindered the ability of poor and middle-income households to generate higher incomes in a sustainable manner.
The Four "Poverty Traps"
What are the four interrelated obstacles that contribute to the persistence of poverty in Argentina?
- Inflation and Fiscal Imbalance: Price increases particularly affect the poorest families, who spend a larger share of their income on food and basic products. Inflation also erodes the purchasing power of wages, especially in the informal sector and low-income households. The constant need to adjust social programs and maintain economic subsidies to compensate for inflation has strained government budgets and created a vicious cycle of dependency, limiting the redistributive efficiency of public spending.
- Labor informality: A large part of the Argentine population works in the informal sector or is self-employed. These jobs are often precarious and poorly paid, making it difficult for people to save and improve their quality of life. The average labor income is lower for informal jobs and has been progressively reduced towards the poverty line since 2018 due to losses in its real value, a situation that also occurs among formal workers. In addition, informality limits access to services such as health care through social security.
- Generational and regional inequality: Although poverty is higher among children and adolescents, social spending is skewed toward the elderly population, resulting in chronic poverty and lack of social mobility. Moreover, it is difficult to address territorial inequalities since poverty measurement does not include the population in small cities and rural areas.
- The impact of climate change: Extreme weather events, such as droughts and floods, disproportionately affect the most vulnerable populations. These events destroy crops, homes, and livelihoods, pushing many into poverty. For example, the index of flood risk is highest in the northern provinces and the Great Buenos Aires area, where the incidence of poverty is higher. These households find it difficult to recover from the loss of assets. For example, in the face of severe flooding, 80% of the population in Formosa would take almost 5 times longer to recover than in the city of Buenos Aires.
