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The Impact of the Financial Crisis on Poverty and Income Distribution: Insights from Simulations in Selected Countries

Author

Listed:
  • Habib, Bilal

    () (World Bank)

  • Narayan, Ambar

    () (World Bank)

  • Olivieri, Sergio

    () (World Bank)

  • Sanchez, Carolina

    () (World Bank)

Abstract

As the financial crisis has spread through the world, the lack of real-time data has made it difficult to track its impact in developing countries. We use a microsimulation approach to assess the poverty and distributional effects of the crisis. In Bangladesh, Mexico, and the Philippines, we find increases in both the level and the depth of aggregate poverty. Income shocks are relatively large in the middle (and, in Mexico, the bottom) parts of the income distribution. We also find that characteristics of people who become poor because of the crisis are different from those of both chronically poor people and the general population. Our findings will be useful for policy makers wishing to identify leading monitoring indicators to track the impact of macroeconomic shocks and to design policies that protect vulnerable groups.

Suggested Citation

  • Habib, Bilal & Narayan, Ambar & Olivieri, Sergio & Sanchez, Carolina, 2010. "The Impact of the Financial Crisis on Poverty and Income Distribution: Insights from Simulations in Selected Countries," World Bank - Economic Premise, The World Bank, issue 7, pages 1-4, March.
  • Handle: RePEc:wbk:prmecp:ep7
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    References listed on IDEAS

    as
    1. François Bourguignon & Maurizio Bussolo & Luiz A. Pereira da Silva, 2008. "The Impact of Macroeconomic Policies on Poverty and Income Distribution : Macro-Micro Evaluation Techniques and Tools," World Bank Publications, The World Bank, number 6586.
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    Cited by:

    1. Jürgen Faik, 2012. "Income inequality and poverty in front of and during the economic crisis - An empirical investigation for Germany 2002-2010," Working Papers 255, ECINEQ, Society for the Study of Economic Inequality.
    2. Kiendrebeogo, Youssouf & Assimaidou, Kossi & Tall, Abdoulaye, 2017. "Social protection for poverty reduction in times of crisis," Journal of Policy Modeling, Elsevier, vol. 39(6), pages 1163-1183.
    3. Karl Aiginger & Alois Guger, 2014. "Stylized Facts on the Interaction between Income Distribution and the Great Recession," Research in Applied Economics, Macrothink Institute, vol. 6(3), pages 157-178, September.
    4. Ajwad, Mohamed Ihsan & Haimovich, Francisco & Azam, Mehtabul, 2012. "Simulating the impact of the 2009 financial crisis on welfare in Latvia," Policy Research Working Paper Series 5960, The World Bank.
    5. Karl Aiginger, 2016. "Political Rebound Effects as Stumbling Blocks for Socio-ecological Transition," WIFO Working Papers 519, WIFO.
    6. Jean Pierre Sabourin & Thomas M. Hoenig & Jonathan L. Fiechter & Michael J. Zamorski & Karl Frederick Rauscher & Didier Verstichel & Dr. Zeti Akhtar Aziz, 2016. "SEACEN Financial Stability Journal Volume 6 2016," SEACEN Financial Stability Journal, South East Asian Central Banks (SEACEN) Research and Training Centre, number sfv6.
    7. Thomas Roca & Hélène Ferrer, 2016. "Resilience to crisis through social protection: Can we build the case?," WIDER Working Paper Series 096, World Institute for Development Economic Research (UNU-WIDER).

    More about this item

    Keywords

    Financial crisis; poverty; income; income distribution; developing countries; Bangladesh; Mexico; Philippines; macroeconomic shocks; poor;

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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