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International Evidence on the Impact of Transfers and Taxes on Alternative Poverty Indexes


  • Kishor Thanawala


  • Robert DeFina



Changes in the headcount rate are the standard metric for gauging how public transfers and taxes affect poverty. An alternative strategy, one theoretically more appealing and complete, is to rely on distribution-sensitive indexes [Sen (1976, 1981)]. How would policies measured impacts change if such an approach were to be used? This study provides new empirical evidence based on Luxembourg Income Study data for seventeen countries covering various years between 1969 and 1997. Poverty is measured using three indexes from the class developed by Foster, Greer, and Thorbecke (1984), one of which is the headcount rate. Estimates of the policy impacts are obtained by computing index values with before- and after-policy income. Evidence is also provided on the determinants of cross-country differences in index values and policy effectiveness, and on the extent to which variations in the different indexes are correlated with those in the United Nations Human Development Index.

Suggested Citation

  • Kishor Thanawala & Robert DeFina, 2002. "International Evidence on the Impact of Transfers and Taxes on Alternative Poverty Indexes," LIS Working papers 325, LIS Cross-National Data Center in Luxembourg.
  • Handle: RePEc:lis:liswps:325

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    References listed on IDEAS

    1. Robert K. Triest, 1998. "Has Poverty Gotten Worse?," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 97-114, Winter.
    2. Robert Defina & Kishor Thanawala, 2001. "The Impact of Transfers and Taxes on Alternative Poverty Indexes," Review of Social Economy, Taylor & Francis Journals, vol. 59(4), pages 395-416.
    3. -, 1992. "Women in development bibliography," Sede Subregional de la CEPAL para el Caribe (Estudios e Investigaciones) 27411, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    4. K.K.S. Dadzie, 1992. "Trade and Development Report, 1992 An Overview," Foreign Trade Review, , vol. 27(1), pages 85-94, April.
    5. Danziger, Sheldon & Haveman, Robert & Plotnick, Robert, 1981. "How Income Transfer Programs Affect Work, Savings, and the Income Distribution: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 19(3), pages 975-1028, September.
    6. Undp, 1992. "HDR 1992 - Global Dimensions of Human Development," Human Development Report (1990 to present), Human Development Report Office (HDRO), United Nations Development Programme (UNDP), number hdr1992, December.
    7. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-231, March.
    8. Thon, Dominique, 1979. "On Measuring Poverty," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 25(4), pages 429-439, December.
    9. Andrea Brandolini & Anthony B. Atkinson, 2001. "Promise and Pitfalls in the Use of "Secondary" Data-Sets: Income Inequality in OECD Countries As a Case Study," Journal of Economic Literature, American Economic Association, vol. 39(3), pages 771-799, September.
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    Cited by:

    1. Heikki Hiilamo & Reijo Sund & Seppo Sallila, 2004. "Rethinking the Measures of Poverty," LIS Working papers 368, LIS Cross-National Data Center in Luxembourg.
    2. Hamid Abrishami & Mohsen Mehrara & Ali Sadeghein, 2010. "Assessment of the Role of Inequality and Income Distribution Factors in the Third Economic Development Plan (with Emphasis on Direct Taxes)," Iranian Economic Review, Economics faculty of Tehran university, vol. 15(2), pages 105-123, spring.

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