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The Assessment of Poverty and Inequality Through Parametric Estimation of Lorenz Curves
Abstract
The estimation of poverty and inequality often requires the use of grouped data as complete household surveys are neither always available to researchers nor easy to analyze. In this study we assess the performance of two functional forms for the Lorenz curve proposed by Kakwani (1980) and Villasenor and Arnold (1989). The methods are implemented using the computational tool POVCAL, developed and distributed by the World Bank. To identify biases associated with this method of estimating the two Lorenz curve functional forms, we analyze unit data from several household surveys and a wide range of theoretical distributions. We find that poverty and inequality is better estimated when the data is generated from unimodal distributions than when it is drawn from multimodal distributions. For unimodal distributions, the biases in the estimation of poverty measures are rarely larger than one percentage point. Inequality (measured by the Gini coefficient) is well estimated in most cases considered. Neither of the two Lorenz curve estimation methods provides consistently superior performance, and performance does not always improve with the number of data points analyzed.
... The biases are thus computed across successful program runs. For more examples on technical problems encountered when running POVCAL, seeMinoiu and Reddy (2007a).11 The findings presented in this section are consistent with those from analyzing theoretical distributions such as Weibull, Log-normal, Pareto, and Generalized Beta II. ...
... The findings presented in this section are consistent with those from analyzing theoretical distributions such as Weibull, Log-normal, Pareto, and Generalized Beta II. (The results are reported inMinoiu and Reddy, 2007a.) 12 We employ for Brazil a survey that includes (rather than discards) zero values for income, recognizing that this is only one plausible treatment of the underlying data. ...
Poverty and inequality are often estimated from grouped data as complete household surveys are neither always available to researchers nor easy to analyze. In this study we assess the performance of functional forms proposed by Kakwani (1980a) and Villasenor and Arnold (1989) to estimate the Lorenz curve from grouped data. The methods are implemented using the computational tools POVCAL and SimSIP, developed and distributed by the World Bank. To identify biases associated with these methods, we use unit data from several household surveys and theoretical distributions. We find that poverty and inequality are better estimated when the true distribution is unimodal than multimodal. For unimodal distributions, biases associated with poverty measures are rarely larger than one percentage point. For data from multi-peaked or heavily skewed distributions, the biases are likely to be higher and of unknown sign.
... Like the Lorenz curve approach it can be applied to various types of research such as the study of poverty and inequality, cf. Ackland et al. (2013);Chotikapanich et al. (2007);Pinkovskiy and Sala-i Martin (2009);Minoiu and Reddy (2009);or Sala-i Martin (2006). The accuracy of the results depends essentially on the data and bandwidth used in the calculation of the density, especially when grouped data are the source of information (Minoiu and Reddy (2014); Wu and Perloff (2003)). ...
... In the empirical literature the software POVCAL, developed and distributed by World Bank (Chen, Datt and Ravallion, 2001) is widely used to implement the first of the above mentioned approaches and to parametrically interpolate the Lorenz curve 13 . In our 13 Minoiu and Reddy (2007) evaluate the performance of the POVCAL software in estimating Lorenz curves from grouped data and finds that the interpolation techniques employed by the software provide a good fit to the Lorenz curve for a wide range of income distribution. Moreover, Minoiu and Reddy (2006) also finds that the parametric interpolation provided by POVCAL often outperforms kernel density methods in the estimation of poverty and inequality. ...
In this paper we provide evidences on the cross-country and intertemporal dynamics of aggregate welfare. Firstly, we apply and compare alternative inequality indexes to have an insight on the actual within-country income distribution. The same measures, combined with information on average incomes, are then used to address the impact of inequality on social welfare and to obtain a comparative assessment of well-being levels across space and time. In this respect, we limit the attention to the class of social welfare functions implied by the Atkinson index and the single parameter Gini index (Donaldson and Weymark, 1980), which allow to compute the corresponding equally distributed equivalent incomes by correcting actual income distribution by the extent of inequality aversion and relative deprivation, respectively. The empirical application has been carried out on 10 selected OECD countries for the period 1970-2000, using a dataset that combines comparable data on per capita incomes from Penn World Tables (Heston et al., 2002) with income distribution information drawn from the World Income Inequality Database (WIID, 2007). The results obtained highlight how inequality-accounting welfare measures significantly modify the perception of well-being, affecting both the within-country evolution of aggregate welfare and inter-countries well-being levels. Finally, for selected sub-periods, the issue of progressivity of income growth process has been considered to evaluate whether or not income growth leads to lower inequality over time.
This paper calculates poverty and inequality elasticities using the latest‐available World Bank primary survey household consumption expenditure data for the rapidly growing urban sectors of India, Indonesia, and China. Our approach compares the conventional use of the overly simple headcount measure to the poverty gap squared (PG2) measures of poverty and focuses the effectiveness of reducing inequality on the disutility of the poor using a microeconomic utility‐based point elasticity measure of poverty loss. The calculations show that reducing urban inequality is more effective in reducing (1) urban poverty than promoting growth and (2) poverty distress more than that in the rural sector. The optimal policy prescription is to reduce urban inequality by targeting the urban very poor using the PG2 measure. Further research is required to identify and quantify the determinants of the point elasticity magnitudes and the possible directions of causation.
The paper provides first generation estimates of poverty and inequality rates for three countries in Francophone Africa – Cameroon, Côte d’Ivoire, and Gabon – in the aftermath of independence. Sources – a large collection of historical household budgets – are new, as is the method that allows to connect historical sources to modern household budget surveys, and to deliver nationally representative estimates. The second part of the paper identifies the trend of poverty and inequality in Côte d’Ivoire for the years 1965 to 2015: mean income growth failed to reduce poverty during the 15 years of economic boom post-independence (1965–1979) because of increasing inequality. Conversely, in the following period (1979–2015) poverty changes are mostly guided by the evolution of growth.
We introduce two separate datasets [The Global Consumption Dataset (GCD) and The Global Income Dataset (GID)] making possible an unprecedented portrait of consumption and income of persons over time, within and across countries, around the world. The current benchmark version of the dataset presents estimates of monthly real consumption and income for every percentile of the population (a “consumption/income profile”) for more than 160 countries and more than half a century (1960–2015). We describe the construction of the datasets and demonstrate possible uses by presenting some sample results concerning the distribution of consumption, poverty and inequality in the world.
The extent of economic inequality in its different dimensions is one parameter that has an effective bearing on (1) the choice of policies and strategies; and (2) the very development process, both form and spread, in a democratic society. Some pertinent questions from an economic perspective would be:
What is the nature and extent of economic inequality? What are its policy imperatives in a welfare state?
What would be the secular behaviour of wealth and income distribution during the development process?
How far would this pattern differ in a context marked by state intervention, as given by the Indian experience, in pursuit of ‘growth with distributive justice?
What would be their implications for economic inequalities and human development?
C1-class interpolation methods that preserve monotonicity and convexity and are thus suitable for the estimation of the Lorenz curve from grouped data are not widely known. Instead, parametric models are usually applied for such estimation. Parametric models, however, have difficulty in accurately approximating every part of income/expenditure distributions. This paper proposes two types of C1-class shape-preserving interpolation methods. One is a piecewise rational polynomial interpolation (proposed independently by Stineman and Delbourgo) that enables consistent interpolation of the concentration curves for income/expenditure components, attaining approximately the same accuracy as that of the existing methods when applied to decile-grouped data or to more detailed aggregation. Another is a Hybrid interpolation that employs pieces of curves derived from parametric models on end intervals. Empirical comparisons show that the Hybrid interpolation (with the assistance of parametric models for class-boundary estimation) outperforms the existing methods even when applied to quintile-grouped data without class boundaries.
After decades of intensive research dedicated to efficient and flexible parametric statistical distributions, the lognormal distribution still enjoys, despite its empirical weaknesses, widespread popularity in the applied literature related to poverty and inequality analysis. In the present study, we emphasize the drawbacks of this choice for the calculation of the elasticities of poverty. For this purpose, we estimate the growth and inequality elasticities of poverty using 1,132 income distributions, and 15 rival assumptions on the shape of the income distributions. Our results confirm that the lognormal distribution is not appropriate in most cases for the analysis of poverty: the magnitude of the elasticities is generally overestimated and the estimation of the relative impact of growth and redistribution on poverty alleviation is biased in favor of the growth objective. Copyright 2009 The Author. Journal compilation International Association for Research in Income and Wealth 2009.
Seen in historical perspective the main economic predicaments of the present world (such as poverty, inequality, backwawardness) appear in a somewhat different light than in many current discussions, especially by sociologists, radical economists and political scientits. In the present paper the achievements of the modern age, and in particular of the post-World War II period, are considered in the perspective of economic and demographic history, and in their connection with the contemporary system of production and of international relations. Some considerations concerning future possible developments conclude the paper.
Abstract This ,article argues ,that the decline ,in the ,incidence ,of poverty ,in Indonesia during the past two decades, as shown by the official estimates, is statistically as well ,as practically ,significant. Decomposition ,results using ,the official estimates indicate that intra-sectoral effects, in particular the decline in rural poverty in the 1980s, were the largest contributor to the drop in aggregate poverty. The decomposition ,also shows ,an unexpected ,result that population shift did not ,have ,a positive ,impact ,on poverty ,reduction. Growth-equity decomposition,proves ,that economic ,growth ,has been ,responsible ,for much ,of the,poverty ,reduction. The official estimates ,of inequality ,in consumption distribution, measured by the Gini coefficient, do not show obvious changes in inequality, but an over-time pattern can still be detected. I discuss two key issues that concern ,the official poverty ,estimates: the poverty ,level and ,urban-rural poverty comparison. I also consider the usual expenditure inequality, provide estimates of income inequality, and address issues concerning the group price- specific index and different ways,of looking at changes in equality. KeywordsIndonesia, official estimates, poverty lines, inequality, decomposition.
revised draft This paper is a report to the Poverty Reduction Taskforce of the Millennium Development Goals Project of the United Nations. We are deeply indebted to Shaohua Chen for immense help in extending the poverty measures to cover the 1998-2002 period, and to Chen Huiya for excellent research assistance. Chandrika Bahadur and John McArthur provided valuable guidance to the revision of this report.
This paper addresses a key issue in the current debate on economic development: the impact of glob-alization on poverty. After having discussed the problems related to the definition and measurement of both poverty and globalization, we perform a panel analysis which adds to recent literature by explicitly considering relative poverty and by conducting robustness analysis with respect to data, sources and dimensions of globalization. As far as absolute poverty is concerned, both trade open-ness and the "size of the government" seem to be associated with lower poverty levels. Conversely, financial openness is not linked to more poverty. With respect to relative poverty, trade openness does not affect it significantly, while weak evidence suggests that financial openness and policies aimed at reducing the size of the public intervention in the economy are linked to higher relative poverty.
This paper makes an assessment of Nepalese poverty situation during 1977 - 1997 using a comparative static approach. Income and human poverty indices have been estimated using World Bank and UNDP methods, respectively. Moreover, it also makes exploratory analysis to study the causes and nature of Nepalese poverty. It concludes that Nepalese income poverty was drastically reduced during the period 1976/77 - 1984/85, but increased afterwards. However, human poverty has reduced in sustenance during the whole period. Poverty in Nepal is more pervasive, deep and uneven as compared to the rest of the South Asia. Comparing the income and human poverty indices, we conclude that income poverty is volatile as compared to the human poverty. Poverty in Nepal has some economic, demographic, and political origins; and more remote and occupational caste people are poorer as compared to the rest
We argue that inter-country comparisons of income poverty based on poverty lines uniformly reflecting the costs of the basic requirements of human beings are superior to the existing money-metric approaches. In this exercise, we implement a uniform approach to poverty assessment based on basic human capabilities for three countries: Nicaragua, Tanzania, and Vietnam. We compute standard errors of the resulting poverty estimates and compare the incidence of poverty across these three countries. The choice of approach affects both cardinal estimates and ordinal rankings of poverty across countries and over time. Meaningful and coherent inter-country poverty comparisons can be advanced through international co-ordination in survey design and in the construction of income poverty lines that uniformly reflect the costs of the basic requirements of human beings.
We estimate the world distribution of income by integrating individual income distributions for 125 countries between 1970 and 1998. We estimate poverty rates and headcounts by integrating the density function below the 2/day poverty lines. We find that poverty rates decline substantially over the last twenty years. We compute poverty headcounts and find that the number of one-dollar poor declined by 235 million between 1976 and 1998. The number of 1/day poor in Africa increased by 175 million between 1970 and 1998, and the number of $2/day poor increased by 227. Africa hosted 11% of the world's poor in 1960. It hosted 66% of them in 1998. We estimate seven indexes of income inequality implied by our world distribution of income. All of them show substantial reductions in global income inequality during the 1980s and 1990s.
We use aggregate GDP data and within-country income shares for the period 1970-1998 to assign a level of income to each person in the world. We then estimate the gaussian kernel density function for the worldwide distribution of income. We compute world poverty rates by integrating the density function below the poverty lines. The 2/day rate has fallen from 44% to 18%. There are between 300 and 500 million less poor people in 1998 than there were in the 70s. We estimate global income inequality using seven different popular indexes: the Gini coefficient, the variance of log-income, two of Atkinson's indexes, the Mean Logarithmic Deviation, the Theil index and the coefficient of variation. All indexes show a reduction in global income inequality between 1980 and 1998. We also find that most global disparities can be accounted for by across-country, not withincountry, inequalities. Within-country disparities have increased slightly during the sample period, but not nearly enough to offset the substantial reduction in across-country disparities. The across-country reductions in inequality are driven mainly, but not fully, by the large growth rate of the incomes of the 1.2 billion Chinese citizens. Unless Africa starts growing in the near future, we project that income inequalities will start rising again. If Africa does not start growing, then China, India, the OECD and the rest of middle-income and rich countries diverge away from it, and global inequality will rise. Thus, the aggregate GDP growth of the African continent should be the priority of anyone concerned with increasing global income inequality.
This paper challenges the current belief that income inequality has a negative relationship with economic growth. It uses an improved data set on income inequality, which not only reduces measurement error, but also allows estimation via a panel technique. Panel estimation makes it possible to control for time-invariant country-specific effects, therefore eliminating a potential source of omitted-variable bias. Results suggest that in the short and medium term, an increase in a country's level of income inequality has a significant positive relationship with subsequent economic growth. This relationship is highly robust across samples, variable definitions, and model specifications.
Recently, there has been a resurgence of studies on the distribution of income and inequality at regional and global levels, largely driven by the concerns of economists, international development organisations and the general public about the overall effects of globalisation on growth and inequality. A major data problem encountered in these studies is the nature of income distribution data that are available mainly in a summary form that includes mean (average) income and income shares of quintile or decile groups of the population. Past studies have either ignored distributional characteristics within each population sub-group, implying that all individuals in a quintile or decile group have the same income, or used simple distributions like the lognormal or Pareto to model income distribution within each country. The aim of the paper is to estimate national and regional income distributions within a more general framework that relaxes the assumption of constant-income-within-groups and is based on a general and versatile class of income distributions. A technique to estimate parameters of a class of generalised Beta distributions using grouped data is proposed. Regional income distribution is modelled using a mixture of country-specific distributions and its properties are examined. The techniques are used to analyse national and regional inequality trends for eight East Asian countries and three benchmark years 1988, 1993 and 2000.
This paper introduces some relatively simple computational tools for estimating poverty measures from the sort of data that are typically available from published sources. All that is required for using these tools is an elementary regression package. The methodology also easily lends itself to a number of poverty simulations that are discussed. The paper addresses the central question: How do we construct poverty measures from grouped data? Two broad approaches are examined: simple interpolation methods and methods based on parameterized Lorenz curves. The second method is examined in detail. CONTENTS Acknowledgments .................................................... iv 1. Introduction .......................................................1 2. Poverty Measures Derived from Parameterized Lorenz Curves .................3 3. A Recipe for Constructing Poverty Measures ..............................8 4. Checking for a Valid Lorenz Curve ..................................... 12 5. Cho...
We analyze the distribution of income and income tax of individuals in Japan for the fiscal year 1998. From the rank-size plots we find that the accumulated probability distribution of both data obey a power law with a Pareto exponent very close to -2. We also present an analysis of the distribution of the debts owed by bankrupt companies from 1997 to March, 2000, which is consistent with a power law behavior with a Pareto exponent equal to -1. This power law is the same as that of the income distribution of companies. Possible implications of these findings for model building are discussed.
The five-parameter generalized beta distribution and ten of its special cases are considered as models fore the size distribution of income. The models are fit to income data for 23 countries and various years - a total of 82 datasets. Of the models considered, the Weibull, Daagum and generalized beta of the second kind are best fitting of the models with two, three and four parameters for 62 percent, 84 percent, and 96 percent of the data sets, respectively. Increasing inequality with respect to pre-tax income is observed in most of the countries considered.
This article considers the prospects for Tanzania in achieving the international development targets, especially those relating to reductions in absolute poverty. A key conclusion is that the analysis depends on how poverty is defined, in particular what poverty line is used and which data sets define the base line. There is no officially recognised Tanzanian poverty line and even the use of the international poverty line, of US1 per day poverty line is to be achieved. The key requirement is to reduce rural poverty and this will require sustained investment in rural infrastructure and both intensification and diversification in agriculture.
The article examines why so few public and private resources have been allocated to health and education in Pakistan over such a long period. Two possible reasons are discussed. The first is the high level of defence expenditure which, given the country's weak fiscal structure, precludes other types of expenditures. The second reason is that a strongly patriarchal gender order in society works against the expression of private demand for social services (for both males and females). This may help account for the small size of the private sector in Pakistan (both market and non-market (NGOs)). The article concludes with two policy suggestions. The first relates to the level and character of defence spending. Secondly, the analysis shows, perhaps paradoxically in view of the dismal record to date, that there may be scope for public policy to bring about significant improvements in at least some aspects of health. Recent changes in public sector resource allocations have succeeded in reducing some gender disparities in education. The introduction of similarly anti-discriminatory policies within an increased public health sector expenditure allocation could also be expected to show good results, for both female-specific and overall health indicators.
In this paper we subject the influential cross-section estimation of the inequality-development relationship by Ahluwalia to detailed scrutiny. We investigate the robustness of his estimates to variations in functional form, and find that different functional forms - between which the data cannot choose - lead to widely differing shapes for the inequality-development relationship. We also examine his data set which consists of income distributions for 60 developing and developed countries, and find that the distributions are not comparable with respect to income concept, population unit, and survey coverage. We construct a minimally consistent data set to reestimate the relationship, and show that the preferred functional form displays a reversal of the commonly accepted U-hypothesis.
A family of elliptic Lorenz curves is proposed for fitting grouped income data. The associated distribution and density functions are displayed together with the Gini indices. Estimation procedures are discussed. Comparisons are made with alternative models using Australian 1967–68 income data.
In this paper we propose a new functional form for the Lorenz curve that overcomes some of the limitations of existing functional forms. The proposed functional form, which is defined by an arc of an optimal circle, yields a very simple expression for the Gini index. The model is applied to several data sets with encouraging results.
While the incidence of extreme poverty fell dramatically in China over 1980–2001, progress was uneven over time and across provinces. Rural areas accounted for the bulk of the gains to the poor, though migration to urban areas helped. Rural economic growth was far more important to national poverty reduction than urban economic growth; agriculture played a far more important role than the secondary or tertiary sources of GDP. Taxation of farmers and inflation hurt the poor; local government spending helped them in absolute terms; external trade had little short-term impact. Provinces starting with relatively high inequality saw slower progress against poverty, due both to lower growth and a lower growth elasticity of poverty reduction.
The maximum entropy approach is a flexible and powerful tool for density approximation. This paper proposes a sequential updating method to calculate the maximum entropy density subject to known moment constraints. Instead of imposing the moment constraints simultaneously, the sequential updating method incorporates the moment constraints into the calculation from lower to higher moments and updates the density estimates sequentially. The proposed method is employed to approximate the size distribution of U.S. family income. Empirical evidence demonstrates the efficiency of this method.
The purpose of this paper is to present several descriptive approximations of empirical Lorenz curves. Each of these hypothetical forms is less restrictive than those considered before. We compare these alternative forms by goodness of fit, F-tests of nested forms, and measurement of the Gini coefficient.
"The estimates of the extent, distribution and trend of global income poverty provided in the World Bank's World Development Reports for 1990 and 2000/01 are neither meaningful nor reliable. The Bank uses an arbitrary international poverty line unrelated to any clear conception of what poverty is. It employs a misleading and inaccurate measure of purchasing power equivalence that vitiates international and inter-temporal comparisons of income poverty. It extrapolates incorrectly from limited data and thereby creates an appearance of precision that masks the high probable error of its estimates. The systematic distortion introduced by these three flaws likely leads to a large understatement of the extent of global income poverty and to an incorrect inference that it has declined. A new methodology of global poverty assessment is feasible and necessary."
Online document. Incl. bibl.
The extent to which growth reduces global poverty has been disputed for 30 years. Although there is better data than ever before, controversies are not resolved. A major problem is that consumption measured from household surveys, which is used to measure poverty, grows less rapidly than consumption measured in national accounts, in the world as a whole, and in large countries, particularly India, China, and the US. In consequence, measured poverty has fallen less rapidly than appears warranted by measured growth in poor countries. One plausible cause is that richer households are less likely to participate in surveys. But growth in the national accounts is also upwardly biased, and consumption in the national accounts contains large and rapidly growing items that are not consumed by the poor and not included in surveys. So it is possible for consumption of the poor to grow less rapidly than national consumption, without any increase in measured inequality. Current statistical procedures in poor countries understate the rate of global poverty reduction, and overstate growth in the world.
We estimate the World Distribution of Income by integrating individual income distributions for 138 countries between 1970 and 2000. Country distributions are constructed by combining national accounts GDP per capita to anchor the mean with survey data to pin down the dispersion. Poverty rates and head counts are reported for four specific poverty lines. Rates in 2000 were between one-third and one-half of what they were in 1970 for all four lines. There were between 250 and 500 million fewer poor in 2000 than in 1970. We estimate eight indexes of income inequality implied by our world distribution of income. All of them show reductions in global inequality during the 1980s and 1990s. Copyright (c) 2006 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..
We investigate the shape of the Italian personal income distribution using microdata from the Survey on Household Income and Wealth, made publicly available by the Bank of Italy for the years 1977-2002. We find that the upper tail of the distribution is consistent with a Pareto power-law type distribution, while the rest follows a two-parameter lognormal distribution. The results of our analysis show a shift of the distribution and a change of the indexes specifying it over time. As regards the first issue, we test the hypothesis that the evolution of both gross domestic product and personal income is governed by similar mechanisms, pointing to the existence of correlation between these quantities. The fluctuations of the shape of income distribution are instead quantified by establishing some links with the business cycle phases experienced by the Italian economy over the years covered by our dataset.
Indonesia adjusted rapidly to sharply falling external terms of trade during the 1980's - using a classic package of currency devaluation, budgetary and monetary restraint, and regulatory relaxation. This paper discusses how the country fared in its efforts to alleviate poverty and undernutrition during that period. The paper studies a wide range of possible poverty lines and poverty measures - and the sensitivity of key results to many of the underlying assumptions about poverty. Although caloric intake data are not ideal, the authors found evidence that the extent of undernutrition also fell significantly. For a caloric intake level which 37 percent of the population failed to attain in 1984, only 27 percent of the population failed to attain it in 1987. Why was this so? Gains to the rural sector contributed greatly to the alleviation of poverty. Gains to the urban sector and population shifts were quantitively less important than direct gains to the rural poor. Increases in average real consumption and an improvement in overall equity both helped to reduce poverty. In addition, Indonesia's recent economic history had created conditions favorable to alleviating poverty so long as modest growth in private consumption per capita could be maintained during the adjustment period.
The authors investigate recent rends in poverty, and inequality in China, decomposing data on poverty reduction to see who has benefited most from China's economic growth. They find that, by several measures, poverty declined significantly in the 1990s, across a wide range of poverty lines, except that a slight slowdown in China's export, and economic growth in 1997-99 might have hurt the poor. There was a slight increase in the poverty headcount between 1997 and 1999, using lower poverty lines, and a worsening of the poverty gap index. Average per capita consumption declined for farmers, especially those living in poor regions such as Gans, Heilongjiang, Sanxi, and Xinjiang. It is unclear whether this decline was attributable to Asia's economic crisis. Economic growth contributed significantly to poverty reduction, but rising inequality worsened both rural, and urban income distributions - except during the Asian crisis, when the distribution remained relatively stable. The poor benefited far less than the rich from economic growth. Income growth reached, or exceeded the average growth rate only for the richest twenty percent of the population. The authors then examine the relationship between human capital, growth, and poverty. They find that the accumulation of human capital had slowed, and that there is a huge regional disparity in human capital stock. And the distribution of education is becoming increasingly skewed. China must address this problem if it is to succeed in attacking poverty, and inequality.
When the World Bank dreams of "a world free of poverty," what should it be dreaming? In measuring global income or consumption expenditure poverty, the World Bank has widely adopted the 2 a day. And in tracking progress toward a world free of poverty, the World Bank should compute measures of global poverty using a variety of weights on the depth and intensity of poverty for a range of poverty lines between the global lower and upper bounds. For instance, rather than trying to artificially force the global population of 6.2 billion (a billion is 1,000 million) into just two categories "poor" and "not poor," with the new range of poverty lines the estimates would be that 1.3 billion people are "destitute" (below 1 a day but below $2 dollar a day), and another 2.5 billion are in "global poverty" (above extreme poverty but below the upper bound poverty line). Copyright 2006, Oxford University Press.
A new assessment is made of the developing world's progress against poverty. By the frugal 2 a day rose, so that there has been a marked bunching up of people living between 2 a day. Sub-Saharan Africa has become the region with the highest incidence of extreme poverty and the greatest depth of poverty. If these trends continue, the 1990 aggregate $1 a day poverty rate will be halved by 2015, meeting the Millennium Development Goal, though only East and South Asia will reach this goal. Copyright 2004, Oxford University Press.
This article presents a new data set on inequality in the distribution of income. The authors explain the criteria they applied in selecting data on Gini coefficients and on individual quintile groups' income shares. Comparison of the new data set with existing compilations reveals that the data assembled here represent an improvement in quality and a significant expansion in coverage although differences in the definition of the underlying data might still affect intertemporal and international comparability. Based on this new data set the authors do not find a systematic link between growth and changes in aggregate inequality. They do find a strong positive relationship between growth and reduction of poverty. Copyright 1996 by Oxford University Press.
This paper describes the correlations between inequality and the growth rates in cross-country data. Using non-parametric methods, we show that the growth rate is an inverted U-shaped function of net changes in inequality: changes in inequality (in any direction) are associated with reduced growth in the next period. The estimated relationship is robust to variations in control variables and estimation methods. This inverted U-curve is consistent with a simple political economy model but it could also reflect the nature of measurement errors, and, in general, efforts to interpret this evidence causally run into difficult identification problems. We show that this non-linearity is sufficient to explain why previous estimates of the relationship between the level of inequality and growth are so different from one another. Copyright 2003 by Kluwer Academic Publishers
Using U.S. income data, we evaluate several functional forms for the Lorenz curve. On the basis of the goodness of fit, estimated income shares and Gini coefficients, the form proposed by Kakwani (1980) is found to be overall superior to the other forms.
Drawing on 297 national sample surveys spanning 88 countries, we find that there was a net decrease in the overall incidence of both absolute and relative consumption poverty between 1987 and 1998. But it was not enough to reduce the total number of poor by various definitions. The incidence of absolute poverty fell in Asia, Latin America, and the Middle East-North Africa, while it rose in Sub-Saharan Africa and Eastern Europe-Central Asia. Over the whole data set, interpersonal distribution improved slightly from the point of view of the poor, due mainly to growth in China. Copyright 2001 by The International Association for Research in Income and Wealth.
In recent years, there has been some interest in developing a functional form of the Lorenz curve and estimating it. This note suggests an alternative form of Lorenz curve that satisfies all the properties and can be estimated by the linear least squares method using its log-linear form. -after Author
The paper derives world income or expenditure distribution of individuals for 1988 and 1993. It is the first paper to calculate world distribution for individuals based entirely on household surveys from 91 countries, and adjusted for differences in purchasing power parity between countries. Measured by the Gini index, inequality increased from 63 in 1988 to 66 in 1993. The increase was driven more by differences in mean incomes between countries than by inequalities within countries. The most important contributors were rising urban-rural differences in China, and slow growth of rural incomes in South Asia compared to several large developed economies. Copyright Royal Economic Society 2002
Research on inequality and growth can be divided into two strands. One, deriving from Kuznets and Lewis, has tried to identify a mechanistic relationship between growth, or level, of income and inequality. The other has tried to find causal explanations of growth and inequality, treating each independently. In this paper, we draw from both strands to test whether growth and inequality are the joint outcomes of other variables and processes. We find that simultaneous examination of growth and inequality yields significantly different results and has different consequences for policy from previous independent studies. Copyright 2003 Royal Economic Society.
In his classic paper on economic growth and income inequality, Kuznets discussed the process of population shift from traditional to modern activities as the basis for a theory of distributional change during the course of development. In this paper, we present a formalization of the Kuznets process, conduct a general analysis of distributional change under this process, and derive the functional forms of, and conditions for a turning point in, the inequality—development relationship for six commonly used indices of inequality. The functional form appropriate to each index is then estimated using cross-section data on 60 developing and developed countries. Finally, some extensions to the initial formalization of the Kuznets process are considered.
This paper provides a generalization of Sen's poverty measure. The generalization is motivated by the failure of Sen's poverty measure to satisfy some transfer-sensitivity axioms proposed in this paper. A numerical method of computing the alternative poverty measures is provided along with an illustration based on the data from the Australian household expenditure survey carried out during 1974.
There are several functional forms for estimating Lorenz curves from grouped data. Based on studies of the Spanish distribution of income, the authors propose a new functional form which provides very good fits. Their specification contains the Pareto Lorenz curve as a particular case, and allows one to compute easily, with the provided formulae, the Gini, Kakwani, and Chakravarty inequality indexes. Coauthors are G. Martin, A. Fernandez, M. Ladoux, and A. Garcia. Copyright 1991 by The International Association for Research in Income and Wealth.
Explaining Sudan's Economic Performance", Country Study, Arab Planning Institute and the World Bank
- A A G Ali
- I Elbadawi
Ali, A.A.G. and Elbadawi, I. (2002) "Explaining Sudan's Economic Performance", Country
Study, Arab Planning Institute and the World Bank, Washington DC.