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Levels and Trends in Absolute Poverty in the World: What we know and what we don’t

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Abstract

This paper critically reviews the recent changes to the Global Poverty numbers generated by the World Bank in 2008. While they have little impact on observed poverty trends and while there are good reasons to believe that the previous numbers were on weak foundations, the new numbers on levels of poverty in the developing world create new uncertainties und questions. In particular, there are conceptual issues involved in using one ICP round to update all poverty numbers and more empirical issues related to the particular results of the 2005 ICP round. This paper reviews these issues and finds that we cannot be very certain about levels of absolute poverty in the world and that the current method for generating these absolute poverty numbers is problematic and should possibly be abandoned. At the same time, poverty trends are much less affected by these methodological issues. The paper also discusses potential alternatives to the current methods and highlights their strengths and weaknesses. Unfortunately, there is no readily available alternative to the current method, though with some difficulty, such an alternative could be developed.

Suggested Citation

  • Stephan Klasen, 2009. "Levels and Trends in Absolute Poverty in the World: What we know and what we don’t," Courant Research Centre: Poverty, Equity and Growth - Discussion Papers 11, Courant Research Centre PEG.
  • Handle: RePEc:got:gotcrc:011
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    File URL: http://www2.vwl.wiso.uni-goettingen.de/courant-papers/CRC-PEG_DP_11.pdf
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    References listed on IDEAS

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    1. Theo S Eicher & Cecilia Garcia Penalosa, "undated". "Inequality and Growth," Working Papers 0083, University of Washington, Department of Economics.
    2. Sanjay G. Reddy & Sujata Visaria & Muhammad Asali, 2006. "Inter-country Comparisons of Poverty Based on a Capability Approach: An Empirical Exercise," Working Papers 27, International Policy Centre for Inclusive Growth.
    3. Haddad, Lawrence & Kanbur, Ravi, 1990. "How Serious Is the Neglect of Intra-Household Inequality?," Economic Journal, Royal Economic Society, vol. 100(402), pages 866-881, September.
    4. Klasen, Stephan, 2000. "Measuring Poverty and Deprivation in South Africa," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 46(1), pages 33-58, March.
    5. Misselhorn, Mark & Klasen, Stephan, 2006. "Determinants of the Growth Semi-Elasticity of Poverty Reduction," Proceedings of the German Development Economics Conference, Berlin 2006 15, Verein für Socialpolitik, Research Committee Development Economics.
    6. Chen, Shaohua & Ravallion, Martin, 2007. "Absolute poverty measures for the developing world, 1981-2004," Policy Research Working Paper Series 4211, The World Bank.
    7. Shaohua Chen & Martin Ravallion, 2010. "The Developing World is Poorer than We Thought, But No Less Successful in the Fight Against Poverty," The Quarterly Journal of Economics, Oxford University Press, vol. 125(4), pages 1577-1625.
    8. Surjit S. Bhalla, 2004. "Poor Results and Poorer Policy: A Comparative Analysis of Estimates of Global Inequality and Poverty," CESifo Economic Studies, CESifo, vol. 50(1), pages 85-132.
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    Cited by:

    1. Crombrugghe, D.P.I. de & Szirmai, A. & Bluhm, R., 2014. "Poor trends: The pace of poverty reduction after the Millennium Development Agenda," MERIT Working Papers 006, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    2. Dhongde, Shatakshee & Minoiu, Camelia, 2013. "Global Poverty Estimates: A Sensitivity Analysis," World Development, Elsevier, vol. 44(C), pages 1-13.

    More about this item

    Keywords

    International Comparison of Prices; Purchasing Power Parity; World Poverty;

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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