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Accounting for Regional Poverty Differences in Croatia: Exploring the Role of Disparities in Average Income and Inequality

  • Ivica Rubil

    ()

    (The Institute of Economics, Zagreb)

The prevalence of poverty in a given population is determined by both the level of average income and the shape of income distribution. Accordingly, the difference in poverty between two populations can be attributed to disparities in their average incomes and in the levels of income inequality. In this paper, we decompose the differences in relative poverty between each of the twenty-one Croatian counties and Croatia as a whole into the contributions of the mean income and income inequality, using the Household Budget Survey data for 2010. The decomposition framework that we utilize here is one usually applied for decompositions of intertemporal poverty changes, and is based on the concept of Shapley value from cooperative game theory. Poverty is measured by three conventional measures – the headcount ratio, the poverty gap, and the squared poverty gap – and robustness of the results to switching from one measure to another is discussed. The results of decompositions show that in most cases both the mean income and inequality differences contribute to poverty variation across the counties, relative to poverty in Croatia as a whole. When poverty is measured by the headcount ratio, the income contribution dominates the inequality contribution, while when we switch to the other two measures, which give more weight to the poorer among the poor, the inequality contribution starts to dominate.

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Paper provided by The Institute of Economics, Zagreb in its series Working Papers with number 1301.

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Length: 36 pages
Date of creation: Jan 2013
Date of revision:
Handle: RePEc:iez:wpaper:1301
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  1. Florent Bresson, 2008. "Erratum to ``The estimation of the growth and redistribution components of changes in poverty: a reassessment'''," Economics Bulletin, AccessEcon, vol. 9(19), pages 1-2.
  2. repec:ebl:ecbull:v:9:y:2008:i:19:p:1-2 is not listed on IDEAS
  3. Kelly LABAR & Florent BRESSON, 2007. "“Leftist”, “Rightist” and Intermediate Decompositions of Poverty Variations with an Application to China from 1990 to 2003," Working Papers 200727, CERDI.
  4. Kolenikov, Stanislav & Shorrocks, Anthony, 2003. "A Decomposition Analysis of Regional Poverty in Russia," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  5. Francis Menjo Baye, 2006. "Growth, Redistribution and Poverty Changes in Cameroon: A Shapley Decomposition Analysis," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 15(4), pages 543-570, December.
  6. Deutsch, Joseph & Silber, Jacques, 2011. "On various ways of measuring pro-poor growth," Economics Discussion Papers 2011-13, Kiel Institute for the World Economy.
  7. repec:ebl:ecbull:v:9:y:2008:i:14:p:1-7 is not listed on IDEAS
  8. Florent Bresson, 2008. "The estimation of the growth and redistribution components of changes in poverty: a reassessment," Economics Bulletin, AccessEcon, vol. 9(14), pages 1-7.
  9. Paolo Verme, 2006. "Pro-poor Growth during Exceptional Growth. Evidence from a Transition Economy," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 3(1), pages 3-14, June.
  10. Sergiu Hart, 2006. "Shapley Value," Discussion Paper Series dp421, The Federmann Center for the Study of Rationality, the Hebrew University, Jerusalem.
  11. Datt, Gaurav & Ravallion, Martin, 1992. "Growth and redistribution components of changes in poverty measures : A decomposition with applications to Brazil and India in the 1980s," Journal of Development Economics, Elsevier, vol. 38(2), pages 275-295, April.
  12. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  13. L. R. Jain & Suresh D. Tendulkar, 1990. "Role of Growth and Distribution in the Observed Change in Headcount Ratio Measure of Poverty: A Decomposition Exercise for India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 25(2), pages 165-205, July.
  14. Zhang, Yin & Wan, Guanghua, 2006. "The impact of growth and inequality on rural poverty in China," Journal of Comparative Economics, Elsevier, vol. 34(4), pages 694-712, December.
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