Economic mobility along the business cycle: The case of Peru

The performance of Latin American countries in reducing poverty and expanding the middle class has been remarkable. By taking a close look at the Peruvian experience, we explore how this aggregate behavior relates to business cycle conditions and if it is shared by population groups with different characteristics. We find social mobility to be cyclical, with recessions followed by a rise in downward mobility and strong economic growth driving boosts in upward mobility. Furthermore, the reduction in poverty appears to be the result of a sustained increase in the poverty exit rate, shared similarly among heterogenous groups, together with a prolonged decrease in the poverty entry rate, especially for households regarded as initially disadvantaged