Pro-Poor Growth and the Lognormal Distribution
A widely accepted criterion for the pro-poorness of an income growth pattern is that it should reduce a (chosen) measure of poverty by more than if all incomes were growing equi-proportionately. Inequality reduction is not generally seen as either necessary or sufficient for pro-poorness. As empirical income distributions fit well to the lognormal form, lognormality has sometimes been assumed in order to determine analytically the poverty effects of income growth. We show that in a lognormal world, growth is pro-poor in the above sense, if and only if it is inequality-reducing. It follows that lognormality may not be a good paradigm by means of which to examine pro-poorness issues. In contrast, some popular 3-parameter forms offer the ability to conduct nuanced investigation of the pro-poorness growth-inequality nexus.
Volume (Year): 19 (2010)
Issue (Month): 3-4 (September-December)
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