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Testing for poverty dominance: an application to Canada

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  • Wen-Hao Chen
  • Jean-Yves Duclos

Abstract

The paper proposes and applies statistical tests for poverty dominance that check for whether poverty comparisons can be made robustly over ranges of poverty lines and classes of poverty indices. This helps provide both normative and statistical confidence in establishing poverty rankings across distributions. The tests, which can take into account the complex sampling procedures that are typically used by statistical agencies to generate household-level surveys, are implemented using the Canadian Survey of Labour and Income Dynamics (SLID) for 1996, 1999, and 2002. Although the yearly cumulative distribution functions cross at the lower tails of the distributions, the more recent years tend to dominate earlier years for a relatively wide range of poverty lines. Failing to take into account SLID's sampling variability (as is sometimes done) can inflate significantly one's confidence in ranking poverty. Taking into account SLID's complex sampling design (as has not been done before) can also decrease substantially the range of poverty lines over which a poverty ranking can be inferred.

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Bibliographic Info

Article provided by Canadian Economics Association in its journal Canadian Journal of Economics.

Volume (Year): 44 (2011)
Issue (Month): 3 (August)
Pages: 781-803

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Handle: RePEc:cje:issued:v:44:y:2011:i:3:p:781-803

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  1. Valentino Dardanoni & Antonio Forcina, 1999. "Inference for Lorenz curve orderings," Econometrics Journal, Royal Economic Society, Royal Economic Society, vol. 2(1), pages 49-75.
  2. Bishop, John A & Formby, John P & Thistle, Paul D, 1992. "Convergence of the South and Non-South Income Distributions, 1969-1979," American Economic Review, American Economic Association, American Economic Association, vol. 82(1), pages 262-72, March.
  3. Oliver Linton & Esfandiar Maasoumi & Yoon-Jae Whang, 2004. "Consistent testing for stochastic dominance: a subsampling approach," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 24755, London School of Economics and Political Science, LSE Library.
  4. Russell Davidson & Jean-Yves Duclos, 2000. "Statistical Inference for Stochastic Dominance and for the Measurement of Poverty and Inequality," Econometrica, Econometric Society, Econometric Society, vol. 68(6), pages 1435-1464, November.
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  9. Beach, Charles M & Davidson, Russell, 1983. "Distribution-Free Statistical Inference with Lorenz Curves and Income Shares," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 50(4), pages 723-35, October.
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Cited by:
  1. Van de gaer, Dirk & Vandenbossche, Joost & Figueroa, Jose Luis, 2013. "Children's health opportunities and project evaluation : Mexico's Oportunidades program," Policy Research Working Paper Series 6345, The World Bank.
  2. Judith Clarke & Nilanjana Roy, 2012. "On statistical inference for inequality measures calculated from complex survey data," Empirical Economics, Springer, Springer, vol. 43(2), pages 499-524, October.
  3. repec:ese:iserwp:2013-29 is not listed on IDEAS
  4. Șeker, Sirma Demir & Jenkins, Stephen P., 2013. "Poverty Trends in Turkey," IZA Discussion Papers 7823, Institute for the Study of Labor (IZA).

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