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Poverty and Inequality Components: a Micro Framework

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  • Abdelkrim Araar
  • Jean-Yves Duclos

Abstract

This paper explores the link between poverty and inequality through an analysis of the poverty impact of changes in income-component inequality and in between -an within- group inequality. This can help shed light on the theoretical and empirical linkages between poverty, growth and inequality. It might also help design policies to improve both equity and welfare. The tools are illustrated using the recent 2004 Nigerian national household survey. The analytical derived linkages are supported by the empirical illustration, and interesting insights also emerge from the empirical analysis. One such insight is that both the sign and the size of the elasticities can be quite sensitive to the choice of measurement assumptions (such as the choice of inequality and poverty aversion parameters, and that of the poverty line). The elasticities are also very much distributive-sensitive and dependent on the type of inequality-changing processes taking place. This also suggests that the response of poverty to growth can also be expected to be significantly context specific.

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Bibliographic Info

Paper provided by CIRPEE in its series Cahiers de recherche with number 0735.

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Date of creation: 2007
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Handle: RePEc:lvl:lacicr:0735

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Keywords: Poverty; inequality; poverty elasticities; redistribution;

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References

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  1. Dollar, David & Kraay, Aart, 2001. "Growth is good for the poor," Policy Research Working Paper Series 2587, The World Bank.
  2. Donaldson, David & Weymark, John A., 1980. "A single-parameter generalization of the Gini indices of inequality," Journal of Economic Theory, Elsevier, vol. 22(1), pages 67-86, February.
  3. Deininger, Klaus & Squire, Lyn, 1998. "New ways of looking at old issues: inequality and growth," Journal of Development Economics, Elsevier, vol. 57(2), pages 259-287.
  4. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  5. Essama-Nssah, B., 2005. "A unified framework for pro-poor growth analysis," Economics Letters, Elsevier, vol. 89(2), pages 216-221, November.
  6. Abdelkrim Araar & Awoyemi Taiwo, 2006. "Poverty and Inequality Nexus: Illustrations with Nigerian Data," Economics Bulletin, AccessEcon, vol. 28(15), pages A0.
  7. Frazer, Garth, 2006. "Inequality and development across and within countries," World Development, Elsevier, vol. 34(9), pages 1459-1481, September.
  8. Wolfson, Michael C, 1994. "When Inequalities Diverge," American Economic Review, American Economic Association, vol. 84(2), pages 353-58, May.
  9. repec:ebl:ecbull:v:28:y:2006:i:15:p:a0 is not listed on IDEAS
  10. 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.
  11. Abdelkrim Araar, 2006. "On the Decomposition of the Gini Coefficient: an Exact Approach, with an Illustration Using Cameroonian Data," Cahiers de recherche 0602, CIRPEE.
  12. Stephan Klasen, 2004. "In Search of the Holy Grail: How to Achieve Pro-Poor Growth?," Macroeconomics 0401005, EconWPA.
  13. Duclos, Jean-Yves & Echevin, Damien, 2005. "Bi-polarization comparisons," Economics Letters, Elsevier, vol. 87(2), pages 249-258, May.
  14. Son, Hyun Hwa, 2004. "A note on pro-poor growth," Economics Letters, Elsevier, vol. 82(3), pages 307-314, March.
  15. Almas Heshmati, 2010. "The Relationship between Income Inequality, Poverty, and Globalization," Working Papers id:3237, eSocialSciences.
  16. Makdissi, Paul & Wodon, Quentin, 2002. "Consumption dominance curves: testing for the impact of indirect tax reforms on poverty," Economics Letters, Elsevier, vol. 75(2), pages 227-235, April.
  17. Ravallion, Martin & Chen, Shaohua, 2003. "Measuring pro-poor growth," Economics Letters, Elsevier, vol. 78(1), pages 93-99, January.
  18. 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.
  19. Abdelkrim Araar & Awoyemi Taiwo Timothy, 2006. "Poverty and Inequality Nexus: Illustrations with Nigerian Data," Cahiers de recherche 0638, CIRPEE.
  20. Yaari, Menahem E., 1988. "A controversial proposal concerning inequality measurement," Journal of Economic Theory, Elsevier, vol. 44(2), pages 381-397, April.
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