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Poverty Growth in Scandinavian Countries: A Sen Multi-decomposition

  • Stéphane Mussard
  • Maria Noel Pi Alperin

We show in this paper that the growth rate of the Sen index is multi-decomposable, that is, decomposable simultaneously by groups and income sources. The multi-decomposition of the poverty growth yields respectively: the growth rate of the poverty incidence (poverty rate) decomposed by groups, the growth rate of the poverty depth (poverty gap ratios) decomposed by sources and groups, and the growth rate of inequality decomposed by sources and groups. We demonstrate that the multi-decomposition is not unique. It is mainly dependent on poverty lines defined on the space of income sources. An application to Scandinavian countries shows that poverty lines based on non-correlation between the sources of incomes imply serious underestimation of the contribution levels of the different components of the global poverty growth. The main contribution of our paper is to pay a particular attention to the poverty growth and its source components in order to avoid underestimation of poverty growth.

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File URL: http://www.lameta.univ-montp1.fr/Documents/DR2010-10.pdf
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Paper provided by LAMETA, Universtiy of Montpellier in its series Working Papers with number 10-10.

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Length: 32 pages
Date of creation: Sep 2010
Date of revision: Sep 2010
Handle: RePEc:lam:wpaper:10-10
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  1. Yitzhaki, Shlomo & Lerman, Robert I, 1991. "Income Stratification and Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 37(3), pages 313-29, September.
  2. FUSCO Alessio & GUIO Anne-Catherine & MARLIER Eric, 2011. "Income poverty and material deprivation in European countries," LISER Working Paper Series 2011-04, LISER.
  3. Stéphane Mussard & Patrick Richard, 2008. "Linking Yitzhaki’s and Dagum’s Gini Decompositions," Cahiers de recherche 08-21, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
  4. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-31, March.
  5. Pyatt, Graham, 1976. "On the Interpretation and Disaggregation of Gini Coefficients," Economic Journal, Royal Economic Society, vol. 86(342), pages 243-55, June.
  6. Stéphane Mussard & Luc Savard, 2012. "The Gini multi-decomposition and the role of Gini's transvariation: application to partial trade liberalization in the Philippines," Applied Economics, Taylor & Francis Journals, vol. 44(10), pages 1235-1249, April.
  7. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-66, May.
  8. PI ALPERIN Maria Noel, 2010. "Comparing non-monetary deprivation and inequality levels in the EU countries," LISER Working Paper Series 2010-27, LISER.
  9. Shorrocks, Anthony F, 1984. "Inequality Decomposition by Population Subgroups," Econometrica, Econometric Society, vol. 52(6), pages 1369-85, November.
  10. Shorrocks, A F, 1980. "The Class of Additively Decomposable Inequality Measures," Econometrica, Econometric Society, vol. 48(3), pages 613-25, April.
  11. Silber, Jacques, 1989. "Factor Components, Population Subgroups and the Computation of the Gini Index of Inequality," The Review of Economics and Statistics, MIT Press, vol. 71(1), pages 107-15, February.
  12. Shorrocks, A F, 1982. "Inequality Decomposition by Factor Components," Econometrica, Econometric Society, vol. 50(1), pages 193-211, January.
  13. Bourguignon, Francois, 1979. "Decomposable Income Inequality Measures," Econometrica, Econometric Society, vol. 47(4), pages 901-20, July.
  14. Stephane Mussard, 2004. "The bidimensional decomposition of the Gini ratio. A case study: Italy," Applied Economics Letters, Taylor & Francis Journals, vol. 11(8), pages 503-505.
  15. Yitzhaki, Shlomo, 2002. "Do we need a separate poverty measurement?," European Journal of Political Economy, Elsevier, vol. 18(1), pages 61-85, March.
  16. Dagum, Camilo, 1997. "A New Approach to the Decomposition of the Gini Income Inequality Ratio," Empirical Economics, Springer, vol. 22(4), pages 515-31.
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