Measuring poverty dynammics and inequality in transition economies - disentangling real events from noisy data
AbstractThe author uses instrumental variable methods, and the decomposition of income into transitory and persistent components to distinguish underlying income inequality and changes in poverty from the effects attributable to measurement error or transitory shocks. He applies this methodology to household-level panel data for Russia and Poland in the mid-1990s. The author finds that: 1) Accounting for noise in the data reduces inequality (as measured by the Gini coefficient) by 10-45 percent. 2) Individuals in both countries face much economic insecurity. The median absolute annual change in income or spending is about fifty percent in Russia, and about 20 percent in Poland. But roughly half of these fluctuations reflect measurement error or transitory shocks, so underlying levels of income, and spending are much more stable than the data suggest. 3) The apparent high levels of economic mobility are driven largely by transitory events and noisy data. After transitory shocks are accounted for, about eighty percent of the poor in both Russia and Poland remain in poverty for at least one year. So there is a real risk of an entrenched underclass emerging in these transition economies.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 2549.
Date of creation: 28 Feb 2001
Date of revision:
Inequality; Governance Indicators; Economic Theory&Research; Poverty Diagnostics; Environmental Economics&Policies;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Rutkowski, J.J., 1998. "Welfare and the Labor Market in Poland: Social Policy during Economic Transition," Papers 417, World Bank - Technical Papers.
- Bob Baulch & John Hoddinott, 2000. "Economic mobility and poverty dynamics in developing countries," Journal of Development Studies, Taylor & Francis Journals, vol. 36(6), pages 1-24.
- Jalan, Jyotsna & Ravallion, Martin, 1998. "Transient Poverty in Postreform Rural China," Journal of Comparative Economics, Elsevier, vol. 26(2), pages 338-357, June.
- Simon Commander & Andrei Tolstopiatenko & Ruslan Yemtsov, 1999.
"Channels of redistribution: Inequality and poverty in the Russian transition,"
The Economics of Transition,
The European Bank for Reconstruction and Development, vol. 7(2), pages 411-447, July.
- Simon Commander & Andrei Tolstopiantenko & Ruslan Yemtsov, 1997. "Channels of Redistribution: Inequality and Poverty in the Russian Transition," William Davidson Institute Working Papers Series 42, William Davidson Institute at the University of Michigan.
- Shorrocks, Anthony, 1978. "Income inequality and income mobility," Journal of Economic Theory, Elsevier, vol. 19(2), pages 376-393, December.
- Okrasa,Wlodzimierz, 1999. "The dynamics of poverty and the effectiveness of Poland's safety net (1993-96)," Policy Research Working Paper Series 2221, The World Bank.
- Lipton, Michael & Ravallion, Martin, 1995.
"Poverty and policy,"
Handbook of Development Economics,
in: Hollis Chenery & T.N. Srinivasan (ed.), Handbook of Development Economics, edition 1, volume 3, chapter 41, pages 2551-2657
- Shorrocks, A F, 1976. "Income Mobility and the Markov Assumption," Economic Journal, Royal Economic Society, vol. 86(343), pages 566-78, September.
- Ravallion, Martin & Lokshin, Michael, 1999. "Subjective economic welfare," Policy Research Working Paper Series 2106, The World Bank.
- Konstantin Sonin, 2003.
"Why the Rich May Favor Poor Protection of Property Rights,"
w0022, Center for Economic and Financial Research (CEFIR).
- Sonin, Konstantin, 2003. "Why the rich may favor poor protection of property rights," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 715-731, December.
- Konstantin Sonin, 2002. "Why the Rich May Favor Poor Protection of Property Rights," William Davidson Institute Working Papers Series 544, William Davidson Institute at the University of Michigan.
- Almas Heshmati, 2006.
"Continental And Sub-Continental Income Inequality,"
The IUP Journal of Applied Economics,
IUP Publications, vol. 0(1), pages 7-52, January.
- Ayal Kimhi, 2004. "Growth, Inequality and Labor Markets in LDCs: A Survey," CESifo Working Paper Series 1281, CESifo Group Munich.
- Olga Cantó & Coral del Río & Carlos Gradín, .
"La Evolución De La Pobreza Estática Y Dinámica En España En El Periodo 1985.1995,"
24-02 Classification-JEL , Instituto de Estudios Fiscales.
- Olga Cantó & Coral del Río & Carlos Gradín, 2003. "La evolución de la pobreza estática y dinámica en España en el período 1985-1995," Hacienda Pública Española, IEF, vol. 167(4), pages 87-119, December.
- Patrick Webb, 2002. "The Dynamics of Food, Nutrition and Poverty in SE Asia," Working Papers in Food Policy and Nutrition 09, Friedman School of Nutrition Science and Policy.
- John Gibson & Bonggeun Kim, 2007. "Measurement Error in Long-term Retrospective Recall Surveys Of Earnings," Working Papers in Economics 07/03, University of Waikato, Department of Economics.
- Heshmati, Almas, 2004. "Regional Income Inequality in Selected Large Countries," IZA Discussion Papers 1307, Institute for the Study of Labor (IZA).
- Ksenia Yudaeva, 2002. "Globalization and Inequality in CIS Countries: Role of Institutions," Working Papers w0025, Center for Economic and Financial Research (CEFIR).
- Olga Cantó & Coral del Río & Carlos Gradín, 2002.
"What helps households with children in leaving poverty?: Evidence from Spain in contrast with other EU countries,"
0201, Universidade de Vigo, Departamento de Economía Aplicada.
- Olga Canto & Coral del Rio & Carlos Gradin, . "What helps households with children in leaving poverty?: Evidence from Spain in contrast with other EU Counries," Studies on the Spanish Economy 137, FEDEA.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.