Why do the poor stay poor? Three essays on asset dynamics and poverty traps

World poverty is a persistent phenomenon despite international efforts and the improvements achieved in the last few decades. For many people it can be a chronic condition. This thesis aims at testing that the main reason some people are poor is due to a poverty trap, i.e., to some contextual mechanisms which limit their ability to escape poverty, reproducing it over time. To investigate this hypothesis, this thesis is guided by three different questions. First, does a poverty trap emerge in the aftermath of an extreme weather shock? Second, do communities in a humanitarian context have the same wealth dynamics? Third, what is the role of income diversification for agricultural households for asset accumulation, and does it depend on their wealth? The analysis focuses (a) on the case of Nigeria and a devastating flood, (b) on refugees and host communities in Uganda and (c) on agricultural households in Tanzania, respectively. Results show that Nigerian flooded households have poverty traps dynamics, condemning the poorest in a destitute state over time. Refugees and host communities in Uganda have similar wealth dynamics but both converge to a low-wealth equilibrium, suggesting a structural poverty trap that worse for refugees. Income diversification in Tanzania shows important nonlinearities according to households’ wealth: it fosters the accumulation of durable assets for better-off households only, while helping the poorest to accumulate livestock. These findings shed light on the interaction of low-income conditions and contextual challenges and opportunities, suggesting policy actions able to lift poor people above a wealth threshold, improve their living conditions and favouring their profitability.