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Growth and Income Redistribution Components of Changes in Poverty: A Decomposition Analysis for Ireland, 1987-2005

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  • Wasiu Adekunle Are

    (University College Dublin)

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    Abstract

    This study analysed the contribution of economic growth and redistribution components to aggregate poverty changes in Ireland from 1987-2005, using the Shapley value decomposition approach. The analysis used the household disposable income data from the Household Budget Survey to calculate poverty indices. The result of the Shapley value decomposition of poverty changes into growth and redistribution components revealed that the growth component dominates the redistribution component in bringing about the decline in poverty. This suggests that the drastic fall in absolute poverty over the survey period could be attributed to the increase in the household mean income rather than the redistributive policies of government transfer and income tax systems. We also investigated the extent to which economic growth experienced over the survey period has been pro- poor, by using the Growth Incidence Curve proposed by Ravallion and Chen (2003). It was found that economic growth was slightly pro-poor between 1987 and 1994 and generally anti-poor between 1994 and 1999.

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    File URL: http://www.ucd.ie/t4cms/WP12_31.pdf
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    Bibliographic Info

    Paper provided by School Of Economics, University College Dublin in its series Working Papers with number 201231.

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    Length: 36 pages
    Date of creation: 20 Dec 2012
    Date of revision:
    Handle: RePEc:ucn:wpaper:201231

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    Keywords: economic growth; inequality; poverty decomposition; shapley value;

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    1. Florent Bresson, 2008. "The estimation of the growth and redistribution components of changes in poverty: a reassessment," Economics Bulletin, AccessEcon, vol. 9(14), pages 1-7.
    2. Hyun Son, 2003. "A New Poverty Decomposition," Journal of Economic Inequality, Springer, vol. 1(2), pages 181-187, August.
    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. Zhang, Yin & Wan, Guanghua, 2006. "The impact of growth and inequality on rural poverty in China," Journal of Comparative Economics, Elsevier, vol. 34(4), pages 694-712, December.
    5. 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.
    6. Whelan, Christopher T. & Layte, Richard & Maitre, Bertrand & Gannon, Brenda & Nolan, Brian & Watson, Dorothy & Williams, James, 2003. "Monitoring Poverty trends in Ireland: Results from the 2001 Living in Ireland Survey," Research Series, Economic and Social Research Institute (ESRI), number PRS51.
    7. Callan, Tim & Keeney, Mary J. & Nolan, Brian & Maitre, Bertrand, 2004. "Why is Relative Income Poverty so High in Ireland?," Research Series, Economic and Social Research Institute (ESRI), number PRS53.
    8. Madden, D, 2008. "Health and Income Poverty in Ireland, 2003-2006," Health, Econometrics and Data Group (HEDG) Working Papers 08/14, HEDG, c/o Department of Economics, University of York.
    9. Callan, Tim & Nolan, Brian, 1991. " Concepts of Poverty and the Poverty Line," Journal of Economic Surveys, Wiley Blackwell, vol. 5(3), pages 243-61.
    10. Barrett, Alan & FitzGerald, John & Nolan, Brian, 2000. "Earnings Inequality, Returns to Education and Immigration into Ireland," IZA Discussion Papers 167, Institute for the Study of Labor (IZA).
    11. Brendan Walsh, 2004. "The Transformation of the Irish Labour Market - 1980-2003," Working Papers 200412, School Of Economics, University College Dublin.
    12. Cathal Clancy & David Madden, 2005. "Growth and Inequality in Ireland, 1987 - 1999," Working Papers 200516, School Of Economics, University College Dublin.
    13. Madden, D. & Smith, F., 2000. "Poverty in Ireland, 1987-1994: a Stochastic Dominance Approach," Papers 00/13, College Dublin, Department of Political Economy-.
    14. Paolo Verme, 2006. "Pro-poor Growth during Exceptional Growth. Evidence from a Transition Economy," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 3(1), pages 3-14, June.
    15. Francis Menjo Baye, 2006. "Growth, Redistribution and Poverty Changes in Cameroon: A Shapley Decomposition Analysis," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(4), pages 543-570, December.
    16. repec:ebl:ecbull:v:9:y:2008:i:19:p:1-2 is not listed on IDEAS
    17. repec:ebl:ecbull:v:9:y:2008:i:14:p:1-7 is not listed on IDEAS
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