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Defining Poverty Lines As a Fraction of Central Tendency

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Author Info
Christophe Muller () (Universidad de Alicante)

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Abstract

We show under lognormality that when the Gini coefficient is stable over time, defining the poverty line as a fraction of a central tendency of the living standard distribution restricts the evolution of the poverty measures to stability. That is, poverty does not change if the Gini coefficient does not change. Moreover, when the Gini coefficient slightly changes, most of the poverty change can be considered a change in inequality. The consequences of using different poverty lines are then analyzed. Thus, important features in studies of poverty change based on these lines may result from methodological choices, rather than from economic mechanisms.

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Publisher Info
Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 72 (2006)
Issue (Month): 3 (January)
Pages: 720-729
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Handle: RePEc:sej:ancoec:v:72:3:y:2006:p:720-729

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Find related papers by JEL classification:
I32 - Health, Education, and Welfare - - Welfare and Poverty - - - Measurement and Analysis of Poverty
O15 - Economic Development, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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  1. Zheng, Buhong, 2001. "Statistical inference for poverty measures with relative poverty lines," Journal of Econometrics, Elsevier, vol. 101(2), pages 337-356, April. [Downloadable!] (restricted)
  2. Chambaz, Christine & Maurin, Eric, 1998. "Atkinson and Bourguignon's Dominance Criteria: Extended and Applied to the Measurement of Poverty in France," Review of Income and Wealth, Blackwell Publishing, vol. 44(4), pages 497-513, December.
  3. Madden, David, 2000. "Relative or Absolute Poverty Lines: A New Approach," Review of Income and Wealth, Blackwell Publishing, vol. 46(2), pages 181-99, June.
    Other versions:
  4. Ravallion, M., 1998. "Poverty Lines in Theory and Practice," Papers 133, World Bank - Living Standards Measurement.
  5. Musgrave, R.A., 1985. "A brief history of fiscal doctrine," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 1, chapter 1, pages 1-59 Elsevier. [Downloadable!] (restricted)
  6. Mercedes Prieto Alaiz & Maria-Pia Victoria-Feser, 1996. "Modelling Income Distribution in Spain: A Robust Parametric Approach," STICERD - Distributional Analysis Research Programme Papers 20, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  7. Christophe Muller, 2001. "The Properties of the Watts Poverty Index under Lognormality," Economics Bulletin, Economics Bulletin, vol. 9, pages 1-9. [Downloadable!]
  8. Hagenaars, Aldi J M & van Praag, Bernard M S, 1985. "A Synthesis of Poverty Line Definitions," Review of Income and Wealth, Blackwell Publishing, vol. 31(2), pages 139-54, June.
  9. Sen, Amartya, 1983. "Poor, Relatively Speaking," Oxford Economic Papers, Oxford University Press, vol. 35(2), pages 153-69, July. [Downloadable!] (restricted)
  10. Foster, James E, 1998. "Absolute versus Relative Poverty," American Economic Review, American Economic Association, vol. 88(2), pages 335-41, May. [Downloadable!] (restricted)
  11. McDonald, James B & Ransom, Michael R, 1979. "Functional Forms, Estimation Techniques and the Distribution of Income," Econometrica, Econometric Society, vol. 47(6), pages 1513-25, November. [Downloadable!] (restricted)
  12. van Praag, Bernard M S & Hagenaars, Aldi J M & van Eck, Wim, 1983. "The Influence of Classification and Observation Errors on the Measurement of Income Inequality," Econometrica, Econometric Society, vol. 51(4), pages 1093-108, July. [Downloadable!] (restricted)
  13. van Praag, Bernard & Goedhart, Theo & Kapteyn, Arie, 1980. "The Poverty Line-A Pilot Survey in Europe," The Review of Economics and Statistics, MIT Press, vol. 62(3), pages 461-65, August. [Downloadable!] (restricted)
  14. Callan, Tim & Nolan, Brian, 1991. " Concepts of Poverty and the Poverty Line," Journal of Economic Surveys, Blackwell Publishing, vol. 5(3), pages 243-61.
    Other versions:
  15. James E. Foster & Efe A. Ok, 1999. "Lorenz Dominance and the Variance of Logarithms," Econometrica, Econometric Society, vol. 67(4), pages 901-908, July.
    Other versions:
  16. Pradhan, Menno & Ravallion, Martin, 1998. "Measuring poverty using qualitative perceptions of welfare," Policy Research Working Paper Series 2011, The World Bank. [Downloadable!]
  17. Ravallion, M. & Datt, G., 1991. "Growth and Redistribution Components of Changes in Poverty Measures," Papers 83, World Bank - Living Standards Measurement.
  18. Slesnick, Daniel T, 1993. "Gaining Ground: Poverty in the Postwar United States," Journal of Political Economy, University of Chicago Press, vol. 101(1), pages 1-38, February. [Downloadable!] (restricted)
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