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FGT Old-Age Poverty Measures and the Mortality Paradox: Theory and Evidence

Author

Listed:
  • Mathieu Lefebvre

    (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique)

  • Pierre Pestieau

    (CORE - Center of Operation Research and Econometrics [Louvain] - UCL - Université Catholique de Louvain, PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique)

  • Grégory Ponthière

    (PSE - Paris School of Economics, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Panthéon-Sorbonne - ENS Paris - École normale supérieure - Paris - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, ERUDITE - Equipe de Recherche sur l’Utilisation des Données Individuelles en lien avec la Théorie Economique - UPEM - Université Paris-Est Marne-la-Vallée - UPEC UP12 - Université Paris-Est Créteil Val-de-Marne - Paris 12)

Abstract

Income-differentiated mortality, by reducing the share of poor persons in the population, leads to the “Mortality Paradox”: the worse the survival conditions of the poor are, the lower is the measured poverty. We show that FGT measures (Foster et al., 1984) are, in general, not robust to variations in survival conditions. Then, following Kanbur and Mukherjee (2007), we propose to adjust FGT poverty measures by extending the income profiles of the prematurely dead, and we identify the condition under which so-adjusted FGT measures are robust to mortality changes. Finally, we show, on the basis of data from 2007 on old-age poverty in 11 European economies, that the effect of extending income profiles of the prematurely dead on poverty measurement varies with: (1) the fictitious income assigned to the prematurely dead; (2) the degree of poverty aversion; (3) the shape of the (unadjusted) income distribution; and (4) the strength of the income/mortality relationship.

Suggested Citation

  • Mathieu Lefebvre & Pierre Pestieau & Grégory Ponthière, 2017. "FGT Old-Age Poverty Measures and the Mortality Paradox: Theory and Evidence," Post-Print halshs-01630662, HAL.
  • Handle: RePEc:hal:journl:halshs-01630662
    DOI: 10.1111/roiw.12277
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01630662
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    Cited by:

    1. LEFEBVRE, Mathieu & PESTIEAU, Pierre & PONTHIERE, Gregory, 2017. "Missing poor and income mobility," CORE Discussion Papers 2017035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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