POVERTY AND HUMAN CAPITAL DEVELOPMENT: EVIDENCE FROM DEVELOPING AND DEVELOPED COUNTRIES

Abstract

Poverty remains a significant hurdle for equitable human development and socioeconomic progress, notably where lack of educational opportunities, health services, employment and financial resources restricts the advantages economic growth. This study systematically investigates the impact of human capital on poverty alleviation, specially highlighting the variation among developing and developed countries. The analysis defines human capital with education (pupil-teacher ratio), health (life expectancy), individually and includes income inequality, financial development, employment-to-population ratio and personal remittances received as supplementary socioeconomic determinants. Poverty is estimated by a composite Poverty index comprises of both the poverty headcount ratio and poverty gap, thus covering the degree and deepness of poverty. The analysis utilizes a strong balanced panel of developing and developed countries for the time period of 1990-2024 for examining the long-term relations and causal mechanisms across the variables. The findings indicate cross-sectional dependence and long-run cointegration across the variables and show heterogeneous relations among country panels. Life expectancy indicates strong negative connection with poverty across developing and developed countries. The Gini Index has positive ling with poverty for developed countries, while personal remittances strongly contribute to poverty reduction for developing countries. Furthermore, the causality results reveal significant association across poverty and its socioeconomic determinants. The results of this study indicates the need of human capital development and interrelated socioeconomic policies for attaining sustainable poverty alleviation. The study advances to the prior research by evaluating and comparing multiple dimensions of poverty drivers and by highlighting the significance of human capital development inside socioeconomic context. The findings of the study reveals policy implications for improving education and health care services, generating employment opportunities and financial inclusion, mitigating inequality, and optimizing remittances inflows for supporting poverty alleviation.