Dualism, Poverty Exits and Growth Accelerations

We propose a simple theoretical model to study the dynamics of an economy in which individuals move out of poverty trap. These dynamics are characterized by growth acceleration and temporarily growing inequalities. We provide stylized facts based on income distribution data that suggest that many recent acceleration episodes fit our theoretical predictions. Although poverty exits may result from income growth we find a number of cases of autonomous poverty exits. These poverty exits may have two different causes: successful reforms creating more job opportunities for the poor and successful pro-poor transfer policies.