Assets and Economic Context - Factors related to the poverty in Peru

The purpose of this paper is to identify the main determinants of the probability of being poor in Peru. We follow an Asset-Based approach, incorporating variables related with the economic conditions of a province, such as the degree of development and the incidence of mining activities. A favorable economic context, i.e. a relatively higher per-capita income, reduces the probability of being poor, either for urban or rural households. Furthermore, living in a district with high mining incidence reduces the probability of being poor, but this is not relevant for explaining the probability of being extremely poor. The latter is only relevant for the urban space. We identify Ancash, Arequipa and Madre de Dios as regions where this effect is significant.