How Good is Growth for the Poor? The Role of Initial Income Distribution in Regional Diversity in Poverty Trends

A.S. Kalwij, A. Verschoor

Research output: Working paperDiscussion paperOther research output

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Abstract

Using panel data of 58 developing countries for the period 1980-1998, this study shows that the responsiveness of the $2 a day poverty headcount measure to changes in mean income and inequality significantly decreases with initial inequality and the ratio poverty line over mean income - taken as proxies for the initial density of income near the poverty line.Variations in these proxies account for the large crossregional differences in the income elasticity of poverty during the 1980s and 1990s.We find that the income elasticity of poverty in the mid 1990s equals -1.31 on average and ranges from -0.71 for Sub-Saharan Africa to -2.27 for the Middle East and North Africa, and that the Gini elasticity of poverty equals 0.80 on average and ranges from 0.01 in South Asia to 1.73 in Latin America.While variation in income growth accounts for most of the variation in poverty reduction across regions, the impact of variations in inequality and in elasticities of poverty is almost always too large to be ignored, and in particular in Eastern Europe and Central Asia.
Original languageEnglish
Place of PublicationTilburg
PublisherEconometrics
Number of pages32
Volume2004-115
Publication statusPublished - 2004

Publication series

NameCentER Discussion Paper
Volume2004-115

Fingerprint

Poverty
Income distribution
Income
Elasticity
Income elasticity
Poverty line
Sub-Saharan Africa
Developing countries
Latin America
Responsiveness
Middle East and North Africa
South Asia
Poverty measures
Central Asia
Poverty reduction
Panel data
Gini
Eastern Europe
Income growth

Keywords

  • Panel data
  • Poverty
  • Income Growth
  • Inequality

Cite this

Kalwij, A. S., & Verschoor, A. (2004). How Good is Growth for the Poor? The Role of Initial Income Distribution in Regional Diversity in Poverty Trends. (CentER Discussion Paper; Vol. 2004-115). Tilburg: Econometrics.
Kalwij, A.S. ; Verschoor, A. / How Good is Growth for the Poor? The Role of Initial Income Distribution in Regional Diversity in Poverty Trends. Tilburg : Econometrics, 2004. (CentER Discussion Paper).
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Kalwij, AS & Verschoor, A 2004 'How Good is Growth for the Poor? The Role of Initial Income Distribution in Regional Diversity in Poverty Trends' CentER Discussion Paper, vol. 2004-115, Econometrics, Tilburg.

How Good is Growth for the Poor? The Role of Initial Income Distribution in Regional Diversity in Poverty Trends. / Kalwij, A.S.; Verschoor, A.

Tilburg : Econometrics, 2004. (CentER Discussion Paper; Vol. 2004-115).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - How Good is Growth for the Poor? The Role of Initial Income Distribution in Regional Diversity in Poverty Trends

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AU - Verschoor, A.

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N2 - Using panel data of 58 developing countries for the period 1980-1998, this study shows that the responsiveness of the $2 a day poverty headcount measure to changes in mean income and inequality significantly decreases with initial inequality and the ratio poverty line over mean income - taken as proxies for the initial density of income near the poverty line.Variations in these proxies account for the large crossregional differences in the income elasticity of poverty during the 1980s and 1990s.We find that the income elasticity of poverty in the mid 1990s equals -1.31 on average and ranges from -0.71 for Sub-Saharan Africa to -2.27 for the Middle East and North Africa, and that the Gini elasticity of poverty equals 0.80 on average and ranges from 0.01 in South Asia to 1.73 in Latin America.While variation in income growth accounts for most of the variation in poverty reduction across regions, the impact of variations in inequality and in elasticities of poverty is almost always too large to be ignored, and in particular in Eastern Europe and Central Asia.

AB - Using panel data of 58 developing countries for the period 1980-1998, this study shows that the responsiveness of the $2 a day poverty headcount measure to changes in mean income and inequality significantly decreases with initial inequality and the ratio poverty line over mean income - taken as proxies for the initial density of income near the poverty line.Variations in these proxies account for the large crossregional differences in the income elasticity of poverty during the 1980s and 1990s.We find that the income elasticity of poverty in the mid 1990s equals -1.31 on average and ranges from -0.71 for Sub-Saharan Africa to -2.27 for the Middle East and North Africa, and that the Gini elasticity of poverty equals 0.80 on average and ranges from 0.01 in South Asia to 1.73 in Latin America.While variation in income growth accounts for most of the variation in poverty reduction across regions, the impact of variations in inequality and in elasticities of poverty is almost always too large to be ignored, and in particular in Eastern Europe and Central Asia.

KW - Panel data

KW - Poverty

KW - Income Growth

KW - Inequality

M3 - Discussion paper

VL - 2004-115

T3 - CentER Discussion Paper

BT - How Good is Growth for the Poor? The Role of Initial Income Distribution in Regional Diversity in Poverty Trends

PB - Econometrics

CY - Tilburg

ER -

Kalwij AS, Verschoor A. How Good is Growth for the Poor? The Role of Initial Income Distribution in Regional Diversity in Poverty Trends. Tilburg: Econometrics. 2004. (CentER Discussion Paper).