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A Decomposition of Poverty Tre across Regions: The Role of Variation in the Income and Inequality Elasticities of Poverty

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  • Adriaan Kalwij

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  • Arjan Verschoor

Abstract

The impact of globalization on global and local inequality is hotly debated in the recent literature. This study considers the separate issue of the impact of globalization on poverty through quantifying explicitly the responsiveness of poverty to aggregate changes in income distribution. We illustrate the quantitative importance of such an approach through decomposing poverty trends observed in the six major developing regions over the period 1980-98 under the assumption of a log-normal income distribution. We find that differential income growth accounts for most of the diversity in poverty trends, both across regions and over time, but leaves a substantial amount of variation unexplained. The impact of changes in inequality is relatively small, except in Eastern Europe and Central Asia. Income and inequality elasticities of poverty change.[Research Paper No. 2005/36]

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Paper provided by eSocialSciences in its series Working Papers with number id:2611.

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Date of creation: Jun 2010
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Handle: RePEc:ess:wpaper:id:2611

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Keywords: globalization; poverty; income growth; inequality;

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  1. Lee, Ha Yan & Ricci, Luca Antonio & Rigobon, Roberto, 2004. "Once again, is openness good for growth?," Journal of Development Economics, Elsevier, vol. 75(2), pages 451-472, December.
  2. Ravallion, Martin, 2001. "Growth, Inequality and Poverty: Looking Beyond Averages," World Development, Elsevier, vol. 29(11), pages 1803-1815, November.
  3. Stanislav Kolenikov & Anthony Shorrocks, 2005. "A Decomposition Analysis of Regional Poverty in Russia," Review of Development Economics, Wiley Blackwell, vol. 9(1), pages 25-46, 02.
  4. Bigsten, Arne & Kebede, Bereket & Shimeles, Abebe & Taddesse, Mekonnen, 2003. "Growth and Poverty Reduction in Ethiopia: Evidence from Household Panel Surveys," World Development, Elsevier, vol. 31(1), pages 87-106, January.
  5. Ravallion, Martin & Huppi, Monika, 1991. "Measuring Changes in Poverty: A Methodological Case Study of Indonesia during an Adjustment Period," World Bank Economic Review, World Bank Group, vol. 5(1), pages 57-82, January.
  6. Theo S Eicher & Cecilia Garcia Penalosa, . "Inequality and Growth," Discussion Papers in Economics at the University of Washington 0083, Department of Economics at the University of Washington.
  7. Collier, Paul & Dollar, David, 2000. "Can the world cut poverty in half ? how policy reform and effective aid can meet international development goals," Policy Research Working Paper Series 2403, The World Bank.
  8. John Gibson, 2000. "The impact of growth and distribution on poverty in Papua New Guinea," Applied Economics Letters, Taylor & Francis Journals, vol. 7(8), pages 541-544.
  9. Paul Mosley & John Hudson & Arjan Verschoor, 2004. "Aid, Poverty Reduction and the 'New Conditionality'," Economic Journal, Royal Economic Society, vol. 114(496), pages F217-F243, 06.
  10. Ravallion, Martin & Shaohua Chen, 1996. "What can new survey data tell us about recent changes in distribution and poverty?," Policy Research Working Paper Series 1694, The World Bank.
  11. Anne Epaulard, 2003. "Macroeconomic Performance and Poverty Reduction," IMF Working Papers 03/72, International Monetary Fund.
  12. Dollar, David & Kraay, Aart, 2001. "Growth is good for the poor," Policy Research Working Paper Series 2587, The World Bank.
  13. Ravallion, Martin, 1997. "Can high-inequality developing countries escape absolute poverty?," Policy Research Working Paper Series 1775, The World Bank.
  14. Timothy Besley & Robin Burgess, 2003. "Halving Global Poverty," Journal of Economic Perspectives, American Economic Association, vol. 17(3), pages 3-22, Summer.
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