Abstract:
Poverty has been a global issue which affects all the countries irrespective of the
development status. However, the situation of developing countries is remarkably adverse
compared to developed counterparts as lower income groups in developing countries are
suffering from the lack of income and other economics resources. This study attempts to
understand the multi-faceted poverty in Sri Lanka by expanding the traditional two way of
poverty categorisation into four ways – extreme poor, poor, vulnerable non-poor and non
poor, in order to provide more precise policy recommendations. Ordered Probit Model
(OPM) estimation was employed to examine the determinants of multi-faceted poverty
using the Household Income and Expenditure Survey (2012/13) data. The results highlight
that 1.4% of households are suffering from Extreme Poverty, while 9.3% and 73%
households have been recognised as poor and non-poor respectively. The most crucial fact
is that 16.2% are in vulnerable non-poor category who are at a greater risk of falling back
into poverty due to any shock at micro or macro levels. The OPM estimates indicate that
staying in urban and rural sectors, having higher educational attainments and secured
employments, having agricultural lands and remittances essentially reduce the probability
of falling into extreme poor and poor categories. Conversely, increased family size, elderly
household heads and being a Tamil increase the probability of falling into both extreme poor
and poor categories. current study strongly recommends promoting education, employment
opportunities and providing agricultural lands to get them out of poverty while
implementing appropriate safety nets that effectively target specially the Vulnerable NonPoor, Poor and Extreme Poor households.
