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This paper uses three waves of panel surveys at the household level to study growth and poverty in Albania over the period 2002-2004. It attempts to answer two main questions. The first question is directed at finding the micro determinants of growth and aims to expose the obstacles households face to improve their economic situation. The main focus of the analysis is to investigate the importance of health, education, and infrastructure indicators for income growth. The second question asks whether growth in Albania during the period 2002-2004 has been pro-poor. I find that there is some evidence for a convergence of incomes and a pro-poor growth, which has led to a substantial decrease in the number of people living under the poverty line. I also find that infrastructure has not been an important determinant for income mobility, and neither has health. Only the higher education of poor urban households seems to have affected prospects for growing out of poverty, and unexpectedly, the relationship is negative.



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