Poverty remains widespread in the country despite efforts to reduce it. Official figures suggest that around one third of the total population live in poverty, defined as the inability to afford a basket of basic food and non-food items. Many others are very close to the poverty line. In fact, increasing the poverty line by only 10.0 per cent leaves well over half of the population mired in poverty. Whatever figure is chosen, the poverty reduction challenge facing the country is significant indeed.

Poverty most certainly increased dramatically in the early years of transition as national income plummeted, unemployment increased, price inflation soared and social spending fell. There is insufficient data to determine what has happened since the mid-1990s. The two poverty figures presented in the graph are not comparable as there were important changes in survey design over the period.

Poverty affects different households differently. Female-headed households, large households, and households in urban areas are all more likely to be poor. The urbanization of poverty is striking and has been accentuated by the migration from rural areas and attributed to urban poverty.

Over half of total poverty is concentrated in urban areas and around one quarter in the capital, Ulaanbataar. This change in the composition of poverty has brought with it new-found social ills including crime, street children, urban slums and has increased pressure on social services, already strained during transition.

Poverty is also closely associated with unemployment and low levels of education and health care, including reproductive health services. Indeed, household survey data reveal that one third of the very poor are unemployed, a rate over three times that of the non-poor. The social costs of unemployment are severe, contributing to low self-esteem, depression, alcohol abuse, domestic violence and crime. A final characteristic of poor households is their heavy reliance on income from pensions and benefits, despite their very low levels. The share of these transfers in household income is three times higher for the very poor than the non-poor in urban areas and twice as high in rural areas.
A range of coping strategies have been used to respond to these shocks including migration to the cities and to more prosperous regions, sale of assets, withdrawal of boys from school as well as other petty activities. Clearly, many of these strategies have harmful consequences for those involved.