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Clarifying Poverty Decomposition

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  • Müller, Adrian

Abstract

I discuss how poverty decomposition methods relate to integral approximation, which ultimately is the foundation of every decomposition of the temporal change of a quantity into key drivers. This offers a common framework for the different decomposition methods used in the literature, clarifies their often somewhat unclear theoretical underpinning and identifies the methods’ shortcomings. In light of integral approximation, many methods actually lack a sound theoretical basis and they usually have an ad-hoc character in assigning the residual terms to the different key effects. I illustrate these claims for the Shapley-value decomposition and methods related to the Datt-Ravaillon approach and point out difficulties in axiomatic approaches to poverty decomposition. Recent developments in energy and pollutant decomposition offer some improved methods, but ultimately, a further development of poverty decomposition should account for the basis in integral approximation. --

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Paper provided by Verein für Socialpolitik, Research Committee Development Economics in its series Proceedings of the German Development Economics Conference, Zurich 2008 with number 30.

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Date of creation: 2008
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Handle: RePEc:zbw:gdec08:30

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Keywords: poverty analysis; poverty measures; decomposition; Shapley-value; inequality;

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Cited by:
  1. Muller, Adrian & Åsa, Löfgren & Thomas, Sterner, 2011. "Decoupling: Is there a Separate Contribution from Environmental Taxation," Working Papers in Economics 486, University of Gothenburg, Department of Economics.
  2. Masato Okamoto, 2011. "Source decomposition of changes in income inequality: the integral-based approach and its approximation by the chained Shapley-value approach," Journal of Economic Inequality, Springer, Springer, vol. 9(2), pages 145-181, June.
  3. Gutierrez, Catalina & Orecchia, Carlo & Paci, Pierella & Serneels, Pieter, 2007. "Does employment generation really matter for poverty reduction ?," Policy Research Working Paper Series 4432, The World Bank.
  4. G. Toniolo & G. Vecchi, 2007. "Italian children at work, 1881-1961," UCW Working Paper 35, Understanding Children's Work (UCW Programme).
  5. Negre, Mario, 2010. "Concepts and Operationalization of Pro-Poor Growth," Working Paper Series, World Institute for Development Economic Research (UNU-WIDER) wp2010-47, World Institute for Development Economic Research (UNU-WIDER).
  6. Åsa Löfgren & Adrian Muller, 2010. "Swedish CO 2 Emissions 1993–2006: An Application of Decomposition Analysis and Some Methodological Insights," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 47(2), pages 221-239, October.
  7. 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.
  8. Löfgren, Åsa & Muller, Adrian, 2008. "Swedish CO2-Emissions 1993 - 2006 – An Application of Decomposition Analysis and Some Methodological Insights," Working Papers in Economics 311, University of Gothenburg, Department of Economics, revised 01 Jan 2010.

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