Growth, Inequality, and Poverty: Prospects for Pro-Poor Economic Development

By Anthony Shorrocks; Rolph Van Der Hoeven | Go to book overview

APPENDIX: METHOD AND SOURCES
As shown in the text (see Table 7.1 and accompanying discussion), the percentage of households in poverty, with an absolute poverty line, can be estimated using two parameters, the poverty line as a percentage of per capita income, and the Gini coefficient. This estimate of poverty is not sufficient for carrying out the simulations. For the simulations, one must have an estimate of the distribution of income in the immediate range below the poverty line. This requires an estimate of the intraquintile distribution of income. For the vast majority of the countries, the poverty line fell in the first or second quintile. The procedure for estimation was the following:
(1) average income was calculated for the poverty quintile, and the quintile above and below (in the case in which the poverty quintile was the first, see below);
(2) within each quintile it was assumed that mean income equalled the median; 17 this assumption locates within each quintile the percentile for mean income; and
(3) between each mean income, income was assumed to rise at a constant rate.

For example, the rate of increase of income between mean income in quintile one (Pm1) and quintile two (Pm2) would be:

If Pm1 were at the fourteenth percentile, the income of the twentieth percentile would be P20 = (1 + r)6 (Pm1). If the poverty line lies within the first quintile, the value of r between the first and second quintile means it is used to calculate downwards to the first percentile. On the basis of this method, the percentile for the absolute poverty line for each country can be found by generating the income for each percentile until Pi = US$ 365 is reached (Table 7A.1).

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Growth, Inequality, and Poverty: Prospects for Pro-Poor Economic Development
Table of contents

Table of contents

  • Unu World Institute for Development Economics Research (Unu/Wider) ii
  • Growth, Inequality, and Poverty iii
  • Contents v
  • List of Figures vii
  • List of Tables ix
  • List of Acronyms and Abbreviations xi
  • List of Contributors xiii
  • Acknowledgements xvi
  • Introduction 1
  • References 12
  • 1: Economic Policy, Distribution, and Poverty 13
  • References 28
  • Appendix 57
  • References 59
  • 3: Growth, Inequality, and Poverty 62
  • 4: The Growth Elasticity of Poverty 81
  • Appendix 102
  • References 105
  • 6: Growth, Distribution, and Poverty Reduction 107
  • References 123
  • Appendix: Method and Sources 149
  • References 151
  • References 175
  • 9: Twin Peaks 176
  • 9.6 Conclusion 194
  • 10: A Decomposition of Inequality and Poverty Changes in the Context of Macroeconomic Adjustment 197
  • References 220
  • References 249
  • References 271
  • Index 277
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