Abstract
In this paper, we analyze, in a novel way, the nature of economic growth in Spain after the Great Recession, in relation to its effect on poverty reduction. We use a statistical test to analyze the pro-poorness nature of economic growth using a stochastic dominance approach, not used in this context so far. We decompose changes in the difference in generalized Lorenz ordinates into a growth effect and an inequality effect and apply this to formal Spanish income data statistical tests based on dominance methods. We found that growth was pro-poor in Spain as a whole between 2013 and 2017. As regards regional growth effects, we conclude that growth was weakly pro-poor in seven of Spain’s 17 regions, it was neither pro-poor nor anti-poor in nine regions, and only weakly anti-poor in one region.
Highlights
In recent years, analyzing the relationship between economic growth, income distribution, and poverty has come to the fore in the economics research agenda
This paper investigates the following research questions: (1) Was economic growth pro-poor in Spain and its regions, between 2013 and 2017? and (2) was the impact of growth on poverty different across Spanish regions? Both questions are addressed, in a novel way, using an approach based on the generalized Lorenz curves, which allows growth, poverty, and inequality to be dealt with jointly
In order to analyze to what extent Spanish economic growth has been pro-poor, we use Survey on Income and Living Conditions (SILC) data, with the waves of 2014 and 2017 referring to 2013 and 2017, respectively
Summary
In recent years, analyzing the relationship between economic growth, income distribution, and poverty has come to the fore in the economics research agenda. From the works of [1,2,3,4,5], new lines of research into the effects of economic growth on poverty have contributed to a better understanding of the relationships between these two variables, with such works having been applied to different economic sectors and countries [6,7]. Spanish economic growth appears to have been accompanied by a slight decrease in poverty, measured with headcount ratio. Some authors, such as [8,9,10], in short, the Kakwani-Pernia-Son approach, consider growth to be pro-poor if it benefits the poor proportionally more than the non-poor, and consider a lower headcount and a lower level of inequality to be necessary
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