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The Poverty Burden: A Measure of the Difficulty of Ending Extreme Poverty

  • John Quiggin

    ()

    (Department of Economics, University of Queensland)

  • Renuka Mahadevan

    ()

    (Department of Economics, University of Queensland)

In this paper, we consider an extension of the commonly used poverty gap measure that may be used to address he question of whether the elimination of poverty is a feasible objective, given sufficient political commitment. The resources potentially available to address poverty may be measured by the total amount by which the incomes of the non-poor exceed the same poverty line. The ratio of the poverty gap to the resources potentially available is equal to the proportional tax rate on incomes in excess of the poverty line that would be required to fund a transfer sufficient to raise the incomes of all poor people to the poverty line. We refer to this ratio as the ‘poverty burden’ (PB). We provide a formal definition of the poverty burden and an analysis of its properties as a poverty measure.

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Paper provided by Risk and Sustainable Management Group, University of Queensland in its series Australian Public Policy Program Working Papers with number WPP10_2.

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Date of creation: Dec 2010
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Handle: RePEc:rsm:pubpol:p10_2
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  1. Blakorby, Charles & Donaldson, David, 1980. "Ethical Indices for the Measurement of Poverty," Econometrica, Econometric Society, vol. 48(4), pages 1053-60, May.
  2. Vaughan, R N, 1987. "Welfare Approaches to the Measurement of Poverty," Economic Journal, Royal Economic Society, vol. 97(388a), pages 160-70, Supplemen.
  3. Collier, Paul & Dollar, David, 1999. "Aid allocation and poverty reduction," Policy Research Working Paper Series 2041, The World Bank.
  4. David Dollar & Craig Burnside, 2000. "Aid, Policies, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 847-868, September.
  5. Machina, Mark J, 1982. ""Expected Utility" Analysis without the Independence Axiom," Econometrica, Econometric Society, vol. 50(2), pages 277-323, March.
  6. Sen, Amartya K, 1976. "Poverty: An Ordinal Approach to Measurement," Econometrica, Econometric Society, vol. 44(2), pages 219-31, March.
  7. Carl-Johan Dalgaard & Henrik Hansen & Finn Tarp, 2004. "On The Empirics of Foreign Aid and Growth," Economic Journal, Royal Economic Society, vol. 114(496), pages F191-F216, 06.
  8. Raghuram Rajan & Arvind Subramanian, 2005. "Aid and Growth; What Does the Cross-Country Evidence Really Show?," IMF Working Papers 05/127, International Monetary Fund.
  9. Foster, James E, 1998. "Absolute versus Relative Poverty," American Economic Review, American Economic Association, vol. 88(2), pages 335-41, May.
  10. Oecd, 2002. "Aid volume, channels and allocations for poverty reduction," OECD Journal on Development, OECD Publishing, vol. 3(3), pages 33-46.
  11. Shorrocks, Anthony F & Foster, James E, 1987. "Transfer Sensitive Inequality Measures," Review of Economic Studies, Wiley Blackwell, vol. 54(3), pages 485-97, July.
  12. Ravallion, Martin, 1996. "Issues in measuring and modeling poverty," Policy Research Working Paper Series 1615, The World Bank.
  13. Beckerman, W, 1979. "The Impact of Income Maintenance Payments on Poverty in Britain, 1975," Economic Journal, Royal Economic Society, vol. 89(354), pages 261-79, June.
  14. Atkinson, Anthony B., 1970. "On the measurement of inequality," Journal of Economic Theory, Elsevier, vol. 2(3), pages 244-263, September.
  15. Anand, Sudhir, 1977. "Aspects of Poverty in Malaysia," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 23(1), pages 1-16, March.
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