Abstract The standard model of essential heterogeneity, whereby program take up depends on unobserved costs and benefits of take up, is generalized to allow the source of latent heterogeneity to influence counterfactual outcomes. The standard instrumental variables (IV) estimator is shown to...

We test for the existence of poverty traps and distribution-dependent growth using a nonlinear dynamic panel data model of household incomes allowing for endogenous attrition. Our estimates for Hungary and Russia in the 1990s reveal significant nonlinearity in the dynamics, consistent with the...