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Determinants of the Growth Semi-Elasticity of Poverty Reduction

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Abstract

In this paper we examine the mathematical relationship between growth and distributional change on absolute (i.e. percentage point) changes in FGT poverty measures assuming a log-normal income distribution, which we argue to be a conceptually superior and more policy-relevant measure than the much used ’regular’ growth elasticity of poverty reduction. We also test the empirical relationship of these semi-elasticities of growth and distributional change on poverty and find them to explain actual changes in poverty very well (in fact, much better than a related study by Bourguignon (2003) that studied the growth elasticity of poverty reduction). This is particularly the case when poverty depth and severity is considered. Using our results helps in interpreting past performance in poverty reduction and will allow a rapid and quite reliable prediction of the impact of growth and distributional change on (absolute) poverty reduction across countries, taking heterogeneity in country circumstances into account.

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Bibliographic Info

Paper provided by Ibero-America Institute for Economic Research in its series Ibero America Institute for Econ. Research (IAI) Discussion Papers with number 176.

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Length: 33 pages
Date of creation: 17 Oct 2008
Date of revision:
Handle: RePEc:got:iaidps:176

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Keywords: Poverty reduction; growth elasticity; growth semi-elasticity; income distribution;

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References

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  1. 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, World Bank Group, vol. 5(1), pages 57-82, January.
  2. 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.
  3. Ravallion, Martin & Shaohua Chen, 2004. "China's (uneven) progress against poverty," Policy Research Working Paper Series 3408, The World Bank.
  4. Kraay, Aart, 2006. "When is growth pro-poor? Evidence from a panel of countries," Journal of Development Economics, Elsevier, Elsevier, vol. 80(1), pages 198-227, June.
  5. Rati Ram, 2006. "Growth Elasticity of Poverty: Alternative Estimates and a Note of Caution," Kyklos, Wiley Blackwell, Wiley Blackwell, vol. 59(4), pages 601-610, November.
  6. Datt, Gaurav & Ravallion, Martin, 1992. "Growth and redistribution components of changes in poverty measures : A decomposition with applications to Brazil and India in the 1980s," Journal of Development Economics, Elsevier, Elsevier, vol. 38(2), pages 275-295, April.
  7. Kakwani, Nanak, 1993. "Poverty and Economic Growth with Application to Cote d'Ivoire," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(2), pages 121-39, June.
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Cited by:
  1. Szirmai, Adam, 2013. "Institutions and economic growth: Summary and synthesis," MERIT Working Papers 070, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  2. Christiaensen, Luc & Demery, Lionel & Kuhl, Jesper, 2011. "The (evolving) role of agriculture in poverty reduction--An empirical perspective," Journal of Development Economics, Elsevier, Elsevier, vol. 96(2), pages 239-254, November.
  3. Klasen, Stephan, 2006. "Poverty, Undernutrition, and Child Mortality: Some Inter-Regional Puzzles and their Implications for Research and Policy," IZA Discussion Papers 2509, Institute for the Study of Labor (IZA).
  4. Stephan Klasen, 2006. "Economic Growth and Poverty Reduction: Measurement Issues using Income and Non-Income Indicators," Ibero America Institute for Econ. Research (IAI) Discussion Papers, Ibero-America Institute for Economic Research 142, Ibero-America Institute for Economic Research.
  5. Arndt, Channing & Jones, Sam & Tarp, Finn, 2013. "Assessing Foreign Aid.s Long-Run Contribution to Growth in Development," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  6. Bluhm, Richard & de Crombrugghe, Denis & Szirmai, Adam, 2013. "The pace of poverty reduction - A fractional response approach," MERIT Working Papers 051, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  7. Christiaensen, Luc J.M. & Todo, Yasuyuki, 2009. "Poverty Reduction during the Rural-Urban Transformation - The Role of the Missing Middle," 2009 Conference, August 16-22, 2009, Beijing, China, International Association of Agricultural Economists 51467, International Association of Agricultural Economists.
  8. Buhong Zheng, 2011. "Consistent comparison of pro-poor growth," Social Choice and Welfare, Springer, Springer, vol. 37(1), pages 61-79, June.
  9. Bentancor, A. & Modrego, F. & Berdegué, J., 2008. "Crecimiento y Distribución del Ingreso como Determinantes de la Reducción de la Pobreza en Comunas Rurales de Chile," Working papers, Rimisp Latin American Center for Rural Development 014, Rimisp Latin American Center for Rural Development.
  10. Catherine KORACHAIS & Patrick GUILLAUMONT, 2008. "When unstable, growth is less pro poor," Working Papers 200827, CERDI.
  11. Bentancor, A. & Modrego, F. & Berdegué, J., 2008. "Sensibilidad de la pobreza al crecimiento y a los cambios distributivos en las comunas rurales de Chile," Working papers, Rimisp Latin American Center for Rural Development 008, Rimisp Latin American Center for Rural Development.
  12. Berdegué, J. & Jara, B. & Modrego, F., 2012. "Ciudades, territorios y crecimiento inclusivo en Chile," Working papers, Rimisp Latin American Center for Rural Development 103, Rimisp Latin American Center for Rural Development.
  13. Clovis Freire & Alberto Isgut, . "High Food and Oil Prices and Their Impact on the Achievement of MDG 1 in Asia and the Pacific," MPDD Working Paper Series WP/11/18, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
  14. Bentancor, A. & Modrego, F. & Berdegué, J., 2008. "Crecimiento agrícola y pobreza rural en Chile y sus regiones," Working papers, Rimisp Latin American Center for Rural Development 006, Rimisp Latin American Center for Rural Development.
  15. Stephan Klasen, 2009. "Levels and Trends in Absolute Poverty in the World: What we know and what we don’t," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 11, Courant Research Centre PEG.
  16. Edward, Peter & Sumner, Andy, 2014. "Estimating the Scale and Geography of Global Poverty Now and in the Future: How Much Difference Do Method and Assumptions Make?," World Development, Elsevier, Elsevier, vol. 58(C), pages 67-82.

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