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Poverty Equivalent Growth Rate

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  • Nanak Kakwani
  • Hyun H. Son

Abstract

This paper proposes a new type of growth rate, called the "poverty equivalent growth rate" (PEGR), which takes into account both the growth rate in mean income and how the benefits of growth are distributed between the poor and the non-poor. The proposed measure satisfies a basic requirement that the proportional reduction in poverty is a monotonically increasing function of the PEGR. Thus, maximizing the PEGR implies a maximum reduction in poverty. The paper demonstrates that the magnitude of PEGR determines the pattern of growth: whether growth is pro-poor in relative or absolute sense or is "poverty reducing" pro-poor. The pattern of growth has been analyzed for Brazil using the National Household Survey (PNAD) covering the period 1995-2005. Copyright 2008 The Authors. Journal compilation 2008 International Association for Research in Income and Wealth Published by Blackwell Publishing.

Suggested Citation

  • Nanak Kakwani & Hyun H. Son, 2008. "Poverty Equivalent Growth Rate," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(4), pages 643-655, December.
  • Handle: RePEc:bla:revinw:v:54:y:2008:i:4:p:643-655
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