Consumption Poverty Research Articles

Welfare analysis when people are different

AbstractInequality and poverty estimation (indeed, all welfare analysis) must deal with the fact that people are heterogeneous. Equivalence scales and indifference scales are tools that may be used for this. An equivalence scale gives the relative costs faced by different people; an indifference scale gives the relative cost of living for people in different types of households. Equivalence scales and indifference scales can be estimated using off‐the‐shelf household‐level consumer expenditure data and standard econometric techniques for nonlinear equation systems. I offer a short introduction to the identification, estimation and use of equivalence scales and indifference scales and argue that these are complementary tools in the analysis of inequality and poverty. The methods are illustrated with Canadian household expenditure data from the Surveys of Household Spending 2004–2009. Estimated equivalence scales for disability are presented, along with estimated household model parameters and an analysis of consumption poverty.Résumé Analyse du niveau de bien‐être quand les gens sont différents. Les mesures d’inégalité et de pauvreté (en fait toutes les mesures et analyses du niveau de bien‐être) doivent prendre en compte le fait que les gens sont hétérogènes. Les échelles d’équivalence et les échelles d’indifférence sont des outils qu’on peut utiliser pour ce faire. Une échelle d’équivalence établit les coûts relatifs auxquels les différentes personnes doivent faire face; une échelle d’indifférence établit le coût relatif différent de gens qui font partie de différents types de ménages. Les échelles d’équivalence et les échelles d’indifférence peuvent être estimées à l’aide de données sur les dépenses de consommation des ménages pour les produits et services disponibles sur le marché, et des techniques économétriques conventionnelles pour calibrer les systèmes d’équations non‐linéaires. L’auteur présente une courte introduction aux problèmes d’identification, d’estimation, et d’usage des échelles d’équivalence et des échelles d’indifférence, et propose que ce sont des outils complémentaires dans l’analyse de l’inégalité et de la pauvreté. Les méthodes sont illustrées à l’aide de données sur les dépenses des ménages canadiens fournies par les Enquêtes sur les dépenses des ménages 2004‐2009. Les échelles d’équivalence sont estimées pour l’incapacité, ainsi que les paramètres estimés du modèle des ménages et une analyse de la pauvreté en termes de consommation.

Measuring Food Expenditure Poverty in SNAP Populations: Some Extensions with an Application to the American Recovery and Reinvestment Act

AbstractThe adequacy of the Supplemental Nutrition Assistance Program (SNAP) benefits is always an important concern. This article extends the most common measure for evaluating the adequacy of SNAP, food expenditures, and uses more comprehensive metrics to evaluate the impact of the American Recovery and Reinvestment Act (ARRA). These more comprehensive metrics are easy to implement with existing data, more closely tied to the purpose of the SNAP, and indicate a slightly larger impact of the ARRA.

Barriers to Labor Migration for the Rural Poor: Experimental Evidence from a Vocational Training Program in Bangladesh

Vocational training programs aimed at rapidly growing sectors have the potential to reduce skill gaps as well as improve income and employment possibilities. Such programs have often been unsuccessful because they are not driven by industry demand and market linkages. Also, they do not tackle other barriers faced by trainees, such as savings and credit constraints and the uncertainty of migration. We introduced a training plus'' program for the apparel sector jobs offered to the poor, rural households in northern Bangladesh, where we relaxed some of these constraints in a rigorous Randomized Control Trial (RCT) setting. Analyzing the program uptake demonstrated an interesting heterogeneity, where gender-specific social barriers, as well as risk and time preferences, play influential roles. Data from the follow-up surveys--six and eighteen months after the intervention -- showed a statistically significant, persistent, and a large effect of the training program on employment when combined with an apprenticeship [on-the-job training (OJT)] or stipend component. We also found substantial income and remittance impacts, especially during the time of a seasonal shock, as well as a reduction in income poverty, both for the stipend and OJT groups. However, the rural household estimates -- twelve months after the intervention--showed no impact on consumption poverty in the origin households.

Impact of the minimum wage policy on consumption expenditure and poverty in Egypt

Impact of the minimum wage policy on consumption expenditure and poverty in Egypt

Impact of the Minimum Wage Policy on Consumption Expenditure and Poverty in Egypt

Development has not yet achieved its goals in developing countries due to the increase in poverty rates. In October 2013, the Government of Egypt decided to implement the monthly minimum wage policy to allow citizens attain their needs of different expenditure groups thus reduce poverty. The research estimated the monthly wage that allows poor household individuals attain their daily needs of different expenditure groups after the latest increases in prices, and compared it with the monthly minimum wage to find if it helped them move out of poverty. Findings revealed that such policy shall help move 53% of the study households out of poverty, but the rest are threatened to fall in poverty as prices go higher. The research recommended revisiting the monthly minimum wage periodically to match the rising prices to help improve the economic conditions of vulnerable categories for better health and economic performance to achieve development goals.

Unique and multiple equilibria in a macroeconomic model with environmental quality: An analysis of local stability

This paper develops and analyzes an economic growth model which incorporates environmental quality into the production and utility functions. We solve our model for the balanced growth path and find that a unique low growth equilibrium is attained when environmental quality is given less weight in the utility function. Multiple equilibria exist if environment quality is given greater weight in the utility function. We also perform local stability analysis of our model. We conclude that an economy in which the environmental quality is given relatively less importance by the agents will be caught in low growth, high consumption poverty traps as is the case for many developing countries while other economies can potentially reach a relatively low consumption, high growth steady state if they place greater weight on environmental quality. Finally we look at how the gap between low and high growth equilibria shrinks when individuals place greater weight on environmental quality and how governmental policies can promote growth when societies give less weight to the environment.

Dynamics of poverty and wellbeing in Ethiopia: an introduction to a Special Issue of the Ethiopian Journal of Economics

Understanding change is critical to policy formulation. Who benefits, who loses from change, and what causes change are core policy questions. Panel data are central to understanding change, and this special issue of the journal is devoted to five papers examining change in wellbeing as measured by two waves of data from the Ethiopia Socioeconomic Survey (ESS). The papers cover changes in consumption poverty, multi-dimensional poverty, food security, malnutrition in the form of wasting and underweight status, and smoothing patterns of nonfarm enterprise activities. The ESS data is freely available for download and immediate use. While the papers in this issue draw from the first two waves of data (2011-12 and 2013-14), the third wave of the ESS (2015-16) is now also publicly available. The ESS is a collaborative effort of the Central Statistical Agency of Ethiopia and the World Bank’s Living Standards Measurement Study – Integrated Surveys of Agriculture program. Keywords: Ethiopia, LSMS-ISA, panel data, poverty, multi-dimensional poverty, food security, malnutrition, nonfarm enterprise

Does urbanization reduce rural poverty? Evidence from Vietnam

This paper uses data from household surveys to contribute to the urbanization-poverty nexus literature by assessing the effect of urbanization on income, expenditure, and poverty in rural households in Vietnam. We find that the urbanization process stimulates the transition from farm to non-farm activities in rural areas. More specifically, urbanization tends to reduce farm income and increase wages and non-farm income in rural households. This suggests that total income and consumption expenditure of rural households are more likely to increase with urbanization. Finally, we find also that urbanization helps decrease the expenditure poverty rate of rural households, albeit by a small magnitude.

Poverty in old age: evidence from Hong Kong

ABSTRACTThe Hong Kong population will age rapidly over the next three decades and the entailing problem of old-age poverty will put the Hong Kong government to test. While the government has been using a solely income-based measurement, the main purpose of this study is to assess poverty rates among Hong Kong's older population in terms of both income and consumption-based measurements by using both relative and absolute concepts of poverty. It also examines the association of socio-economic and household characteristics with elder poverty rates. A two-stage stratified sample design was adopted. A total of 4,306 older adults were personally interviewed in their homes, yielding a response rate of 66.2 per cent. This study contributes to the larger study on poverty in Hong Kong by revealing how income and consumption poverty rates may differ among older adults. Older adults who were both income and consumption poor were more likely to be female, widowed, living alone and to have received less than an elementary school-level education. They possessed very few assets and were most likely financially dependent on family support and welfare payments. To understand fully the economic wellbeing of older adults in Hong Kong, this study proposes that joint distribution of income and consumption poverty can better identify and explain the demographic characteristics of the poor older adults. Implications of the study are discussed based on the neo-liberalist approach that the Hong Kong government has taken in welfare provisions.

Estimates of Poverty and Inequality in the Districts of India, 2011–2012

Though the Census of India and large-scale demographic surveys have bridged the data gap on key demographic and health parameters, estimates on poverty and inequality remain deficient for the districts of India. The estimates on poverty and inequality indices across the states of India conceal large variations among districts. We use an innovative approach to provide consumption-based estimates of poverty and inequality indices in the districts of India by pooling the 66th and 68th rounds of consumption expenditure carried out by the National Sample Survey. The new official poverty line of 2009–2010 and 2011–2012 as recommended by the Rangarajan Committee and adopted by the Government of India is used in the estimation of poverty. A set of poverty and inequality indices, the poverty head count ratio, poverty gap square, the Gini index, Theil index and mean log deviation (MLD) are used to estimate poverty and inequality indices for 623 of the 640 districts in India. Estimates of poverty are obtained by pooling the estimates of 2009-10 and 2011-12. Results suggest wide variations in the level, depth and incidence of poverty among the districts of India irrespective of size, stage and governance in the states. The pattern of inequality is different from that of poverty; it is higher in districts with a higher level of development. Estimates of poverty are consistently correlated with wealth index, agricultural labour and female literacy. Among various factors, the fertility level, wealth index and the proportion of agricultural worker are significant predictors of poverty. Based on the findings, we suggest to increase the sample size to estimate consumption poverty in every alternate quinquennial survey and undertake a special round of survey in multidimensional poverty. Districts ranked low in poverty head count ratio should be accorded high priority in planning and program implementation.

Multidimensional Poverty in Nicaragua: Are Female-Headed Households Better Off?

The recognition of poverty as a multidimensional concept has led to the development of more adequate tools for its identification. By allowing for subgroup and regional decompositions, those instruments are useful to allocate public action where most needed. This paper applies the Alkire and Foster (2011a) Multidimensional Poverty Index (MPI) to study single-mother and biparental families in Nicaragua, modifying its original structure to match more closely with the country’s current structural problems. Using Nicaragua’s last Demographic and Health Survey (DHS 2011/2012), our multidimensional poverty figures contrast with the government’s national poverty line estimates, suggesting that income poverty overestimates the number of poor people. Thus, our MPI can help as a complement for traditional consumption poverty and Basic Needs analysis; even extending the exploration by using other official household surveys. On the other hand, multidimensional poverty analysis found poverty dominance of male-headed families over single-mother and female-headed biparental families, which serves to contradict the notion of women being more vulnerable than men. Within the MPI, the most important contributor was the Living Standards dimension, composed by indicators directly related to housing conditions, and the second most deprived dimension was Education. A strong policy implication that arises from our findings is the reduction of the urban–rural poverty gap. Specifically, our findings exalt the need for governmental policies directed to reduce Nicaragua’s housing and educational deficits as a priority, particularly in rural areas.

Once Poor always Poor? Exploring Consumption- and Asset-based Poverty Dynamics in Ethiopia

This paper examines the dynamics of wellbeing in Ethiopia by assessing changes in poverty status based on consumption and asset ownership. Using panel data from the first two waves of the Ethiopia Socioeconomic Survey (ESS), we discover that although the cross-sectional poverty remains relatively unchanged (approximately 30% in both 2012 and 2014), the proportion of the population experiencing consumption poverty at some point during this period is 47%. An asset-based measure of poverty exhibits fewer transitions in and out of poverty. Examination of the direction and magnitude of change in consumption both at aggregate and subgroup levels indicates that despite a stagnant poverty rate, consumption patterns have changed significantly. The forward movers and non-poor households have increased their share of spending on nutrient-dense foods, while the chronic poor and backward movers have increased spending shares on staples (reduced on nutrient-dense foods). Our findings indicate that availability of longitudinal data at the household level provides additional insights on the dynamics of wellbeing that would be impossible to understand using cross sectional data only. Keywords: Wellbeing dynamics, Ethiopia, LSMS-ISA, consumption-based poverty, asset-based poverty

Profiles and Causes of Urban Poverty in Small Islands: A Case in Ambon City, Maluku Islands Indonesia

Poverty rate is still found to be around two times higher in rural areas. However, excesive urbanization, has increased the number of slums in urban areas. Thus, informal economic sectors and poverty will probably become more urbanized in the future. The main purpose of this article is to study the profiles, causes and livelihood strategies of urban poor households in small islands city. Mixed methods of survey, field observation and focus group discussions including in-depth interview by using questionnaire instruments were used to obtain data from 200 selected households. Findings suggest that the profiles of urban poor households have been identified in terms of social demographic, household economic expenditure and urban poverty rate and living standard indicators. Then, the significant causes of urban poverty have been examined as internal and external factors. Internal factors are cultural and structural-including the number of family members, women-headed household and poverty status. External factors are geographical poverty traps, including distance to city center, sanitation status and misused of government policy on rice for the poor program. Livelihood strategies of urban poor households are occupational multiplicity to reduce risks and uncertainty.

A Two-Factor Model to Investigate the Effect of Time and Location to the Total Consumption Poverty Lines (TCPL) in Zimbabwe

Poverty is rampant throughout the entire country of Zimbabwe and is smelt everywhere as its wave penetrates every sector of the economy. Zimbabwe’s poverty is directly linked to its extremely high unemployment rate. Men, women, and youth are all affected by unemployment, including university graduates, as a number of industries and businesses have closed over the years, due to decline in tobacco exports, and the loss of revenue from the mining and farming sectors. Geographical location has a significant role in determining the income one has to spend to earn a living as there is some disparity in total consumption poverty lines with different provinces. Financial assistance or aids also varies in volume with the nature of province. In this paper, we seek to investigate whether Total consumption poverty line in Zimbabwe varies with time (type of month) and or with geographical location (the type of province into which one lives). We further seek to investigate which provinces share the same TCPL and which ones are most affected. We apply an ordinary Two–Factor Factorial Design to conclude our investigation.

Consistent tests for poverty dominance relations

This paper considers methods for comparing poverty in two income distributions. We first discuss the concept and usefulness of the Poverty Gap Profile (PGP) for comparing poverty in two populations. Dominance of one PGP over another suggests poverty dominance for a wide class of indices which may be expressed as functionals of the PGP. We then discuss hypotheses that can be used to test poverty dominance in terms of the PGP and introduce and justify a test statistic based on empirical PGP’s where we allow for the poverty line to be estimated. A method for obtaining critical values by simulation is proposed that takes account of estimation of the poverty line. The finite sample properties of the methods are examined in the context of a Monte Carlo simulation study and the methods are illustrated in an assessment of relative consumption poverty in Australia over the period 1988/1989–2009/2010.

Vulnerability to Multidimensional Poverty: Findings from Households in Melanesia

This paper examines vulnerability in two Melanesian small island developing states: Solomon Islands and Vanuatu. With large proportions of the population living semi-subsistence lifestyles in rural areas, consumption poverty is notoriously difficult to measure. The paper therefore departs from the standard approach and assesses household vulnerability to multidimensional poverty. The paper employs cross-sectional data from a household survey. Results indicate that vulnerability is more widespread than poverty and that vulnerability stems more from excess volatility in expected wellbeing than a particularly low expected level of wellbeing, per se. Results point to a pressing need for formal social protection policies to be implemented.

Poverty and Housing Among Older People: Comparing Australia and Japan

This article presents estimates of poverty among older people in two countries—Australia and Japan—that are long‐standing members of the OECD with unique social policy approaches. The focus is on understanding whether and why older person poverty rates differ, and on the role that housing costs play in explaining observed differences. Poverty is estimated using a conventional income metric and an alternative based on total expenditure, with allowance made in both cases for the impact of housing by deducting costs or including imputed rent, respectively, with poverty lines tied to the median of the appropriate metric. The overlap between income‐ and expenditure‐based poverty rates is also examined and compared. The estimates reflect country differences in housing status (specifically, the rate of home ownership) and living arrangements (including how many older people live with others). They show that taking account of housing has a large impact on poverty in both countries, that expenditure poverty exceeds income poverty in Australia but not in Japan, and that while poverty is always lower in Japan than in Australia, the gap narrows when the expenditure metric is used.

Ukrainian

Ukrainian

Multidimensional Poverty in Indonesia: Trend Over the Last Decade (2003-2013).

The notion of poverty as an experience of multiple deprivation has been widely acknowledged. In Indonesia, however, poverty assessment has almost exclusively been conducted within the monetary space; even when multidimensionality is admitted, it has always been computed using variants of marginal method that are indifferent to joint deprivation. Applying a novel measurement method that is sensitive to both the incidence and the intensity of multiple deprivation to data from the National Socio-economic Survey (Susenas), this paper investigates the extent and the patterns of multidimensional poverty in Indonesia from 2003 to 2013 (N=7{,}148{,}964). An Indonesian version of the multidimensional poverty index is constructed by augmenting the existing consumption poverty measure with information on health and education. Results suggest that there was an unambiguous poverty reduction over the last decade at both national and sub-national levels. The data also reveal that progress has been inclusive across population subgroups, although spatial variation remains notable. The new poverty measurement method proves to be easily adaptable to the Indonesian context and could complement the methods currently employed by the Indonesian Statistical Bureau.

Income Poverty, MDG1 and the Post‐2015 Agenda: Goals and Targets that Work

AbstractThis paper reviews the evidence on income and consumption poverty trends since the 1990s at the level of first countries and then individuals and considers how well the current Millennium Development Goals offer the right incentives and monitoring framework to reflect the trajectories and drivers of progress. It then discusses different proposals for the post‐2015 agenda in the light of recent trends and current thinking. Copyright © 2015 John Wiley & Sons, Ltd.