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The Poverty Burden: A Measure of the Difficulty of Ending Extreme Poverty

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  • John Quiggin

    ()
    (Department of Economics, University of Queensland)

  • Renuka Mahadevan

    ()
    (Department of Economics, University of Queensland)

Abstract

In this paper, we consider an extension of the commonly used poverty gap measure that may be used to address he question of whether the elimination of poverty is a feasible objective, given sufficient political commitment. The resources potentially available to address poverty may be measured by the total amount by which the incomes of the non-poor exceed the same poverty line. The ratio of the poverty gap to the resources potentially available is equal to the proportional tax rate on incomes in excess of the poverty line that would be required to fund a transfer sufficient to raise the incomes of all poor people to the poverty line. We refer to this ratio as the ‘poverty burden’ (PB). We provide a formal definition of the poverty burden and an analysis of its properties as a poverty measure.

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Bibliographic Info

Paper provided by Risk and Sustainable Management Group, University of Queensland in its series Australian Public Policy Program Working Papers with number WPP10_2.

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Date of creation: Dec 2010
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Handle: RePEc:rsm:pubpol:p10_2

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Keywords: Index numbers; Poverty; Aid;

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  1. Ravallion, Martin, 1996. "Issues in Measuring and Modelling Poverty," Economic Journal, Royal Economic Society, vol. 106(438), pages 1328-43, September.
  2. Shorrocks, Anthony F & Foster, James E, 1987. "Transfer Sensitive Inequality Measures," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 485-97, July.
  3. Blakorby, Charles & Donaldson, David, 1980. "Ethical Indices for the Measurement of Poverty," Econometrica, Econometric Society, vol. 48(4), pages 1053-60, May.
  4. Oecd, 2002. "Aid volume, channels and allocations for poverty reduction," OECD Journal on Development, OECD Publishing, vol. 3(3), pages 33-46.
  5. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  6. Anand, Sudhir, 1977. "Aspects of Poverty in Malaysia," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 23(1), pages 1-16, March.
  7. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
  8. Beckerman, W, 1979. "The Impact of Income Maintenance Payments on Poverty in Britain, 1975," Economic Journal, Royal Economic Society, vol. 89(354), pages 261-79, June.
  9. Vaughan, R N, 1987. "Welfare Approaches to the Measurement of Poverty," Economic Journal, Royal Economic Society, vol. 97(388a), pages 160-70, Supplemen.
  10. Raghuram G. Rajan & Arvind Subramanian, 2008. "Aid and Growth: What Does the Cross-Country Evidence Really Show?," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 643-665, November.
  11. Mark J Machina, 1982. ""Expected Utility" Analysis without the Independence Axiom," Levine's Working Paper Archive 7650, David K. Levine.
  12. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2001. "On the Empirics of Foreign Aid and Growth," EPRU Working Paper Series 03-13, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics, revised Sep 2003.
  13. Collier, Paul & Dollar, David, 2002. "Aid allocation and poverty reduction," European Economic Review, Elsevier, vol. 46(8), pages 1475-1500, September.
  14. Foster, James E, 1998. "Absolute versus Relative Poverty," American Economic Review, American Economic Association, vol. 88(2), pages 335-41, May.
  15. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-31, March.
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Cited by:
  1. Ceriani, Lidia & Verme, Paolo, 2013. "The income lever and the allocation of aid," Policy Research Working Paper Series 6367, The World Bank.

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