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Expected Poverty Changes with Economic Growth and Redistribution

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  • Abdelkrim Araar

Abstract

This paper focusses on the theoretical and computational framework in order to estimate the impact of economic growth or that of the change in inequality on poverty. During the last few years, there was a growing interest to perform such estimations and to anticipate the implication of some strategic policies, that can be adopted to meet the Millennium Development Goal (MDG, henceforth), that is to cut poverty by half. As is illustrated in this paper, estimated poverty changes may be less precise or even wrong. Precisely, this bad estimation occurs when the distributive changes are non-marginal, whereas the used approach is based on the assumption of marginal changes. In an other case, and where the estimation is implicitly based on a parameterized model of the income distribution, results may be less precise when the predicted distribution cannot reproduce perfectly that derived with the sample. In this study, by using some popular methods, we have used some household surveys of the African countries, as well as, fictive data to show the error size that can occur. Further, we propose a new numerical method to allow to estimate accurately the impact of distributive changes on poverty.

Suggested Citation

  • Abdelkrim Araar, 2012. "Expected Poverty Changes with Economic Growth and Redistribution," Cahiers de recherche 1222, CIRPEE.
    • Handle: RePEc:lvl:lacicr:1222
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    File URL: http://www.cirpee.org/fileadmin/documents/Cahiers_2012/CIRPEE12-22.pdf
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    References listed on IDEAS

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    1. Wolfson, Michael C, 1994. "When Inequalities Diverge," American Economic Review, American Economic Association, vol. 84(2), pages 353-358, May.
    2. Misselhorn, Mark & Klasen, Stephan, 2006. "Determinants of the Growth Semi-Elasticity of Poverty Reduction," Proceedings of the German Development Economics Conference, Berlin 2006 15, Verein für Socialpolitik, Research Committee Development Economics.
    3. Duclos, Jean-Yves & Echevin, Damien, 2005. "Bi-polarization comparisons," Economics Letters, Elsevier, vol. 87(2), pages 249-258, May.
    4. Abdelkrim Araar & Jean-Yves Duclos, 2010. "Poverty and Inequality: A Micro Framework," Journal of African Economies, Centre for the Study of African Economies, vol. 19(3), pages 357-398, June.
    5. 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 121-139, June.
    6. Jean-Yves Duclos & Abdelkrim Araar, 2006. "Poverty and Equity," Economic Studies in Inequality, Social Exclusion, and Well-Being, Springer, number 978-0-387-33318-2, Fall.
    7. Bearse, Peter & Canals-Cerdá, José & Rilstone, Paul, 2007. "Efficient Semiparametric Estimation Of Duration Models With Unobserved Heterogeneity," Econometric Theory, Cambridge University Press, vol. 23(2), pages 281-308, April.
    8. 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, vol. 38(2), pages 275-295, April.
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    Cited by:

    1. Jude Okechukwu Chukwu, 2019. "Poverty Impact of Variations in Within-group and Between-group Inequality in Nigeria: New Estimates Using Two Household Survey Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 141(2), pages 539-549, January.
    2. Jude Okechukwu Chukwu, 2017. "Estimating Inequality Semi-elasticity of Poverty Reduction in Nigeria," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 131(3), pages 1087-1101, April.

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    More about this item

    Keywords

    Poverty; inequality; poverty elasticities; redistribution;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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