Two Paths in One Country: The Divide in Mobility
Everyone in Peru has heard it before: poverty is reduced by growing the economy. And it’s not wrong. The famous phrase attributed to Nobel laureate in economics Robert Lucas is: "Once you start thinking about growth, it's hard to think about anything else.” The World Bank’s report Rising Strong: Peru Poverty and Equity Assessment shows that over the last twenty years, economic growth alone explained 79% of the drop in poverty and 50% of the decline in extreme poverty.
But growth is only part of the story. A new study by Juan F. Castro, Gustavo Yamada, Santiago Medina, and Joaquín Armas looks at what happened to individual households over time. Using detailed data from the Young Lives projectthey followed Peruvian families across 14 years, from 2002 to 2016, tracking how people moved within the wealth distribution. This lets us see not just whether Peru grew, but who moved up—or didn’t. They find substantial mobility in both absolute and relative terms. This challenges claims by political scientists like Vergara, who have emphasized Peru’s lack of mobility as a key driver of widespread discontent. That said, I want to reconcile Vergara’s position with the evidence of substantial mobility. I base my argument on the study by Castro, Yamada, Medina, andArmas, titled Economic Mobility and Fairness in a Developing Country: Evidence from Peru.
Even though mobility was significant, it was not equally distributed. Positive transitions were skewed in favour of households whose only native language is Spanish. Two first-order results illustrate this. For any starting point in the wealth distribution, Spanish-speaking households were predicted to end up higher than similarly situated households from linguistic minorities. This doesn’t mean minority-language households were worse off in absolute terms by 2016—Peru’s rapid growth did raise living standards broadly. But it does suggest that growth had a pro–Spanish-speaking bias when comparing equally poor households at baseline. Not everyone had the same chance to climb. The study finds a persistent gap between households whose only native language is Spanish and those from linguistic minorities like Quechua or Aymara. On average, Spanish-speaking households ended up 12.69 percentiles higher than otherwise similar households from linguistic minorities, even when they started in the same place.
Spanish-speaking households were also more likely to move up (30.8% vs. 20.3%) and less likely to move down (29.2% vs. 37.5%). If a Spanish-speaking household started poor, it had a better chance of escaping poverty. If it started rich, it was more likely to stay rich. For linguistic minorities, the opposite held: poor families were more likely to stay poor, and rich ones more likely to fall. I interpret these results as suggestive evidence that shocks—like El Niño or the COVID-19 pandemic—can undo mobility gains, especially for vulnerable groups lacking insurance or protection. COVID-19, in fact, erased a decade’s worth of poverty reduction.
As with any intergenerational mobility study, there were bottlenecks and nonlinear effects. Only a few people escaped poverty and affluence traps. Households at the bottom and top showed signs of “sticky floors” and “sticky ceilings,” respectively. Most large movements happened in the middle of the distribution.
In sum, economic growth in Peru lifted living standards, but it didn’t close the opportunity gap. Mobility was real, but uneven. Language—representing identity and ethnicity—remains a silent barrier. Households from linguistic minorities face structural disadvantages that persist, even in times of progress. If Peru wants to move from poverty reduction to fairness, growth alone won’t be enough. The roots of inequality run deep. More research on intergenerational mobility should explore how these ethnic and linguistic divides shape long-term outcomes.
The Aymara worldview offers a powerful metaphor. In their culture, the future lies behind us and the past is what we see ahead. Time moves like walking backward: we see the past clearly—what’s right in front of our eyes—but we can’t see where we’re going. The Aymara word for the past is nayra nayra (what is visible), and the word for the future is qhipa qhipa (what is behind). Forgive any imprecise translations. But perhaps we must move forward like the Aymara walk into time—facing the past, aware of how past inequalities still shape our present.
References:
Castro, J. F., Yamada, G., Medina, S., & Armas, J. (2023). Economic Mobility and Fairness in a Developing Country: Evidence from Peru (No. 16465). IZA Discussion Papers.
World Bank. (2023). Rising Strong: Peru Poverty and Equity Assessment. Washington, D.C.: The World Bank. Retrieved from https://documents1.worldbank.org/curated/en/099042523145533834/pdf/P17673806236d70120a8920886c1651ceea.pdf
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