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Levels and Trends in Absolute Poverty in the World: What we know and what we don’t

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Abstract

This paper critically reviews the recent changes to the Global Poverty numbers generated by the World Bank in 2008. While they have little impact on observed poverty trends and while there are good reasons to believe that the previous numbers were on weak foundations, the new numbers on levels of poverty in the developing world create new uncertainties und questions. In particular, there are conceptual issues involved in using one ICP round to update all poverty numbers and more empirical issues related to the particular results of the 2005 ICP round. This paper reviews these issues and finds that we cannot be very certain about levels of absolute poverty in the world and that the current method for generating these absolute poverty numbers is problematic and should possibly be abandoned. At the same time, poverty trends are much less affected by these methodological issues. The paper also discusses potential alternatives to the current methods and highlights their strengths and weaknesses. Unfortunately, there is no readily available alternative to the current method, though with some difficulty, such an alternative could be developed.

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File URL: http://www2.vwl.wiso.uni-goettingen.de/courant-papers/CRC-PEG_DP_11.pdf
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Paper provided by Courant Research Centre PEG in its series Courant Research Centre: Poverty, Equity and Growth - Discussion Papers with number 11.

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Date of creation: 31 Aug 2009
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Handle: RePEc:got:gotcrc:011

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Keywords: International Comparison of Prices; Purchasing Power Parity; World Poverty;

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References

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  1. Haddad, L. & Kanbur, R., 1989. "How Serious Is The Neglectof Intra-Household Inequality?," Papers 450, Stockholm - International Economic Studies.
  2. Chen, Shaohua & Ravallion, Martin, 2007. "Absolute poverty measures for the developing world, 1981-2004," Policy Research Working Paper Series 4211, The World Bank.
  3. Stephan Klasen & Mark Misselhorn, 2008. "Determinants of the Growth Semi-Elasticity of Poverty Reduction," Ibero America Institute for Econ. Research (IAI) Discussion Papers 176, Ibero-America Institute for Economic Research.
  4. Sanjay G. Reddy & Sujata Visaria & Muhammad Asali, 2006. "Inter-country Comparisons of Poverty Based on a Capability Approach: An Empirical Exercise," Working Papers 27, International Policy Centre for Inclusive Growth.
  5. Theo S Eicher & Cecilia Garcia Penalosa, . "Inequality and Growth," Working Papers 0083, University of Washington, Department of Economics.
  6. Klasen, Stephan, 2000. "Measuring Poverty and Deprivation in South Africa," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(1), pages 33-58, March.
  7. Chen, Shaohua & Ravallion, Martin, 2008. "The developing world is poorer than we thought, but no less successful in the fight against poverty," Policy Research Working Paper Series 4703, The World Bank.
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Cited by:
  1. Dhongde, Shatakshee & Minoiu, Camelia, 2013. "Global Poverty Estimates: A Sensitivity Analysis," World Development, Elsevier, vol. 44(C), pages 1-13.

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