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Relative price shifts, economies of scale and poverty during economic transition

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  • Jean O. Lanjouw
  • Peter Lanjouw
  • Branko Milanovic
  • Stefano Paternostro

Abstract

Economic transition is associated with significant shifts in relative prices between private and public goods. If, as a result, public goods claim a larger share of total expenditures, economies of scale in consumption increase. We show how relative price changes might alter the welfare of different-sized households in the short run and over time. We illustrate, for a selection of transition economies, that conventional poverty profiles are quite sensitive to assumptions made about economies of scale in consumption. In particular, the common view that large households with many children are poor relative to small households (such as those comprising the elderly) is shown to be highly non-robust. Copyright (c) The European Bank for Reconstruction and Development, 2004.

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Bibliographic Info

Article provided by The European Bank for Reconstruction and Development in its journal Economics of Transition.

Volume (Year): 12 (2004)
Issue (Month): 3 (09)
Pages: 509-536

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Handle: RePEc:bla:etrans:v:12:y:2004:i:3:p:509-536

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Cited by:
  1. Vandeninden, Frieda, 2012. "A Simulation of Social Pensions in Europe," MERIT Working Papers 008, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  2. Vandeninden, Frieda, 2012. "A Simulation of Social Pensions in Europe," MERIT Working Papers 008, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  3. Tilman Brück & Alexander M. Danzer & Alexander Muravyev & Natalia Weißhaar, 2007. "Determinants of Poverty during Transition: Household Survey Evidence from Ukraine," ESCIRRU Working Papers 2, DIW Berlin, German Institute for Economic Research.
  4. Filmer, Deon & Scott, Kinnon, 2008. "Assessing asset indices," Policy Research Working Paper Series 4605, The World Bank.
  5. Jean-Jacques Dethier & Pierre Pestieau & Rabia Ali, 2011. "The impact of a minimum pension on old age poverty and its budgetary cost. Evidence from Latin America," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO.
  6. Milanovic, Branko, 2006. "Global income inequality : what it is and why it matters," Policy Research Working Paper Series 3865, The World Bank.
  7. Brück, Tilman & Danzer, Alexander M. & Muravyev, Alexander & Weisshaar, Natalia, 2010. "Poverty during transition: Household survey evidence from Ukraine," Journal of Comparative Economics, Elsevier, vol. 38(2), pages 123-145, June.

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