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Premature mortality and poverty measurement in an OLG economy

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  • Mathieu Lefèbvre
  • Pierre Pestieau
  • Gregory Ponthiere

Abstract

Following Kanbur and Mukherjee (2007), a solution to the “missing poor” problem (i.e. selection bias in poverty measures due to income-differentiated mortality) consists in computing hypothetical poverty rates while assigning a fictitious income to the prematurely dead. However, in a dynamic general equilibrium economy, doing “as if” the prematurely dead were still alive is likely to affect wages, output and capital accumulation, with an uncertain effect on poverty. We develop a 3-period OLG model with income-differentiated mortality, and compare actual poverty rates with hypothetical poverty rates that would have prevailed if everyone faced the survival conditions of the top income class. Including the prematurely dead has an ambiguous impact on poverty, since it affects income distribution through capital dilution, composition effets and horizon effects. Our results are illustrated by quantifying the impact of income-differentiated mortality on poverty measures for France (1820-2010).
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Suggested Citation

  • Mathieu Lefèbvre & Pierre Pestieau & Gregory Ponthiere, 2019. "Premature mortality and poverty measurement in an OLG economy," LIDAM Reprints CORE 3013, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  • Handle: RePEc:cor:louvrp:3013
    Note: In : Journal of Population Economics, 32, 621-664, 2019
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    More about this item

    JEL classification:

    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty

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