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Inequality, Income and Poverty: Comparative Global Evidence

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  • Fosu, Augustin K.

Abstract

Analysing a large sample of 1980–2004 unbalanced panel data, the current study presents comparative global evidence on the role of (income) inequality in poverty reduction. The evidence involves both an indirect channel via the tendency of high inequality to decrease the rate at which income is transformed to poverty reduction and the tendency of rising inequality to increase poverty. Based on the basic needs approach, an analysis-of-covariance model is estimated, with the headcount measure of poverty as the dependent variable and the Gini coefficient and PPP-adjusted mean income as explanatory variables. The study finds that the responsiveness of poverty to income growth is a decreasing function of inequality and that the income elasticity of poverty is actually smaller than the inequality elasticity. Thus, income distribution can play a more important role than might be traditionally acknowledged. Found also is a large variation across regions (and countries) in the poverty effects of inequality.

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File URL: http://www.wider.unu.edu/stc/repec/pdfs/wp2010/wp2010-93.pdf
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Bibliographic Info

Paper provided by World Institute for Development Economic Research (UNU-WIDER) in its series Working Paper Series with number wp2010-93.

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Length: 19 pages
Date of creation: 2010
Date of revision:
Handle: RePEc:unu:wpaper:wp2010-93

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Keywords: inequality; income; poverty; comparative global evidence;

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Cited by:
  1. Augustin Kwasi Fosu, 2011. "Growth, Inequality, and Poverty Reduction in Developing Countries: Recent Global Evidence," CSAE Working Paper Series 2011-07, Centre for the Study of African Economies, University of Oxford.
  2. Alexander Cotte Poveda & Clara Inés Pardo Martínez, 2011. "Las tendencias de la pobreza y la desigualdad: una evidencia para los departamentos de Colombia," Ensayos Revista de Economia, Universidad Autonoma de Nuevo Leon, Facultad de Economia, vol. 0(2), pages 29-50, November.
  3. John Anyanwu, 2013. "Working Paper 181 - Determining the Correlates of Poverty for Inclusive Growth in Africa," Working Paper Series 979, African Development Bank.
  4. Tausch, Arno & Heshmati, Almas, 2011. "Migration, Openness and the Global Preconditions of 'Smart Development'," IZA Discussion Papers 6169, Institute for the Study of Labor (IZA).
  5. Muñoz Ocaña, Yolanda & Torres Jiménez, Mercedes, 2012. "Análisis de la ayuda oficial al desarrollo para servicios sociales básicos en el siglo XXI/Analysis of Official Development Aid for Basic Social Services in the 21st century," Estudios de Economía Aplicada, Estudios de Economía Aplicada, vol. 30, pages 1023-1048, Diciembre.
  6. Tausch, Arno, 2011. "Costa Rica, superstar? some reflections on the global drivers and bottlenecks of the happy planet index," MPRA Paper 33226, University Library of Munich, Germany.
  7. John R. Barner & David Okech & Meghan A. Camp, 2014. "Socio-Economic Inequality, Human Trafficking, and the Global Slave Trade," Societies, MDPI, Open Access Journal, vol. 4(2), pages 148-160, April.

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