Measuring the pro-poorness of income growth within an elasticity framework
AbstractPoverty reduction has become a fundamental objective of development, and therefore a metric for assessing the effectiveness of various interventions. Economic growth can be a powerful instrument of income poverty reduction. This creates a need for meaningful ways of assessing the poverty impact of growth. This paper follows the elasticity approach to propose a measure of pro-poorness defined as a weighted average of the deviation of a growth pattern from the benchmark case. The measure can help assess pro-poorness both in terms of aggregate poverty measures, which are members of the additively separable class, and at percentiles. It also lends itself to a decomposition procedure, whereby the overall pattern of income growth can be unbundled, and the contributions of income components to overall pro-poorness identified. An application to data for Indonesia in the 1990s reveals that the amount of poverty reduction achieved over that period remains far below what would have been achieved under distributional neutrality. This conclusion is robust to the choice of a poverty measure among members of the additively separable class, and can be tracked back to changes in expenditure components.
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Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 4035.
Date of creation: 01 Oct 2006
Date of revision:
Achieving Shared Growth; Population Policies; Services&Transfers to Poor; Inequality; Rural Poverty Reduction;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-10-21 (All new papers)
- NEP-DEV-2006-10-21 (Development)
- NEP-POL-2006-10-21 (Positive Political Economics)
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