The effect of growth on poverty reduction
AbstractThe aim of this paper is to understand the impact of growth on poverty reduction in a right-skewed income distribution setting. Ex- isting literature focuses on the effect of aggregate growth on the mean income of the poor by means of a regression of the latter on the for- mer. This, however, neglects the effect of other distributional changes (e.g. inequality change) on the income of the poor thus making the above regression misspecified. This paper proposes a suitable theoret- ical framework consistent with the right-skewness for examining the growth impact on poverty taking inequality (dispersion) into account. We show that an economic policy that positively affects the median income of the distribution has a proportional change on the median income of the poor, whatever be the change in inequality. On the other hand, when a policy has a positive impact on the mean income, its effect on the mean income of the poor can be uncertain depending on the accompanying change in inequality. This is illustrated by sim- ulations as well as an empirical application.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Département des Sciences Économiques, Université de Genève in its series Research Papers by the Department of Economics, University of Geneva with number 11061.
Length: 27 pages
Date of creation: Jun 2011
Date of revision:
Contact details of provider:
Postal: 40 Boulevard du Pont-d'Arve, CH-1211 Geneva 4, Switzerland
Phone: +41 22 379 8263
Fax: +41 22 379 82 93
Web page: http://www.unige.ch/ses/dsec/
Pro-poor growth; Poverty; Inequality; Income distribution.;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kraay, Aart, 2006. "When is growth pro-poor? Evidence from a panel of countries," Journal of Development Economics, Elsevier, vol. 80(1), pages 198-227, June.
- David Dollar & Aart Kraay, 2004.
"Trade, Growth, and Poverty,"
Royal Economic Society, vol. 114(493), pages F22-F49, 02.
- Lombardo, Vincenzo, 2008.
"Growth and inequality effects on poverty reduction in Italy,"
14351, University Library of Munich, Germany.
- Lombardo Vincenzo, 2011. "Growth and Inequality Effects on Poverty Reduction in Italy," Rivista italiana degli economisti, Società editrice il Mulino, issue 2, pages 241-280.
- Vincenzo Lombardo, 2008. "Growth and inequality effects on poverty reduction in Italy," Discussion Papers 9_2008, D.E.S. (Department of Economic Studies), University of Naples "Parthenope", Italy.
- John Thornton, 2001. "The Kuznets inverted-U hypothesis: panel data evidence from 96 countries," Applied Economics Letters, Taylor & Francis Journals, vol. 8(1), pages 15-16.
- Humberto Lopez & Luis Serven, 2014.
"A normal relationship? Poverty, growth, and inequality,"
Annals of Economics and Finance,
Society for AEF, vol. 15(2), pages 593-624, November.
- Lopez, Humberto & Serven, Luis, 2006. "A normal relationship ? Poverty, growth, and inequality," Policy Research Working Paper Series 3814, The World Bank.
- Ferreira, Francisco H.G. & Leite, Phillippe G. & Ravallion, Martin, 2010.
"Poverty reduction without economic growth?: Explaining Brazil's poverty dynamics, 1985-2004,"
Journal of Development Economics,
Elsevier, vol. 93(1), pages 20-36, September.
- Ferreira, Francisco H. G. & Leite, Phillippe G. & Ravallion, Martin, 2007. "Poverty reduction without economic growth ? explaining Brazil's poverty dynamics, 1985-2004," Policy Research Working Paper Series 4431, The World Bank.
- Dollar, David & Kraay, Aart, 2002.
" Growth Is Good for the Poor,"
Journal of Economic Growth,
Springer, vol. 7(3), pages 195-225, September.
- Ravallion, Martin & Shaohua Chen, 2001.
"Measuring pro-poor growth,"
Policy Research Working Paper Series
2666, The World Bank.
- Ravallion, Martin, 2001.
"Growth, inequality, and poverty : looking beyond averages,"
Policy Research Working Paper Series
2558, The World Bank.
- Ravallion, Martin, 2001. "Growth, Inequality and Poverty: Looking Beyond Averages," World Development, Elsevier, vol. 29(11), pages 1803-1815, November.
- Son, Hyun Hwa, 2004. "A note on pro-poor growth," Economics Letters, Elsevier, vol. 82(3), pages 307-314, March.
- 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.
- Ahluwalia, Montek S, 1976. "Income Distribution and Development: Some Stylized Facts," American Economic Review, American Economic Association, vol. 66(2), pages 128-35, May.
- Ravallion, Martin & Datt, Gaurav, 2002. "Why has economic growth been more pro-poor in some states of India than others?," Journal of Development Economics, Elsevier, vol. 68(2), pages 381-400, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.