Understanding Changes in Poverty
Free

Understanding Changes in Poverty

By Gabriela Inchauste
Free
Book Description

Understanding Changes in Poverty brings
together different methods to decompose the contributions to
poverty reduction. A simple approach quantifies the
contribution of changes in demographics, employment,
earnings, public transfers, and remittances to poverty
reduction. A more complex approach quantifies the
contributions to poverty reduction from changes in
individual and household characteristics, including changes
in the sectoral, occupational, and educational structure of
the workforce, as well as changes in the returns to
individual and household characteristics. Understanding
Changes in Poverty implements these approaches and finds
that labor income growth that is, growth in income per
worker rather than an increase in the number of employed
workers was the largest contributor to moderate poverty
reduction in 21 countries experiencing substantial
reductions in poverty over the past decade. Changes in
demographics, public transfers, and remittances helped, but
made relatively smaller contributions to poverty reduction.
Further decompositions in three countries find that labor
income grew mainly because of higher returns to human
capital endowments, signaling increases in productivity,
higher relative price of labor, or both. Understanding
Changes in Poverty will be of particular relevance to
development practitioners interested in better understanding
distributional changes over time. The methods and tools
presented in this book can also be applied to better
understand changes in inequality or any other distributional change.

From the Open Knowledge Repository at the World Bank.

Table of Contents
  • Front Cover
  • Contents
  • Acknowledgments
  • About the Authors
  • Abbreviations
  • Chapter 1 Opportunity Knocks: Deepening Our Understanding of Poverty Reduction
    • Introduction
    • Decomposing Poverty Reduction
    • Contributions of This Volume
    • Decompositions Can Inform Policy Priorities
    • Notes
    • Bibliography
  • Chapter 2 A Simple Approach to Understanding Changes in Poverty and Inequality
    • Introduction
    • The Size and Redistribution Effects
    • Accounting for the Contribution of Demographics and Income Components
    • Summary and Conclusions
    • Notes
    • Bibliography
  • Chapter 3 What Accounts for Changes in Poverty over the Past Decade?
    • Introduction
    • Growth and Poverty Reduction
    • Forces behind Poverty Reduction
    • Results
    • Summary and Conclusions
    • Annex 3A: Data Sources
    • Annex 3B: Complementary Tables
    • Notes
    • Bibliography
  • Chapter 4 Counterfactual Decomposition of Changes in Poverty Outcomes
    • Introduction
    • The Composition and Structural Effects
    • Accounting for Behavior
    • Concluding Summary and Remarks
    • Notes
    • Bibliography
  • Chapter 5 Why Has Labor Income Increased? An In-Depth Approach to Understanding Poverty Reduction
    • Introduction
    • Modeling Strategy
    • Decomposition Approach
    • Final Remarks
    • Annex 5A: Estimating the Residual Term in Multinomial Logit
    • Annex 5B: The Cumulative Decomposition Technique
    • Notes
    • Bibliography
  • Chapter 6 Understanding Poverty Reduction in Bangladesh, Peru, and Thailand
    • Introduction
    • Country Context
    • The Decomposition Approach
    • Decomposition Results
    • Final Remarks
    • Annex 6A: Regression and Simulation Results
    • Notes
    • Bibliography
  • Figures
    • Figure 1.1 Decomposition of Changes in Moderate Poverty, by Income Level, in Selected Developing Countries, 2000s
    • Figure 1.2 Cumulative Contributions to Moderate Poverty Reduction in Bangladesh, Peru, and Thailand, 2000s
    • Figure 2.1 Determinants of Consumption per Capita
    • Figure 3.1 Average Real GDP Growth in Selected Developing Countries, 2000s
    • Figure 3.2 Contribution of Growth and Redistribution to Poverty Reduction in Selected Developing Countries, by Poverty Line, 2000s
    • Figure 3.3 Change in Age-Dependency Ratio of Selected Developing Countries, 2000s
    • Figure 3.4 Change in Subsidies and Other Social Transfers in Selected Developing Countries, 2000s
    • Figure 3.5 Change in International Remittances to Selected Developing Countries, 2000s
    • Figure 3.6 Decomposition of Changes in Moderate Poverty, by Level, in Selected Developing Countries, 2000s
    • Figure 5.1 Model of Contributors to Poverty Reduction, by Stage Sequence
    • Figure 6.1 Change in Moderate Poverty Rates in Bangladesh, Peru, and Thailand, 2000s
    • Figure 6.2 GDP in Bangladesh, Peru, and Thailand, 2000–10
    • Figure 6.3 Population Growth in Bangladesh, Peru, and Thailand, 2000–10
    • Figure 6.4 Growth Incidence Curves of Labor Income in Bangladesh, Peru, and Thailand, 2000s
    • Figure 6.5 Nonlabor Income Growth, by Source, in Bangladesh, Peru, and Thailand, 2000s
    • Figure 6.6 Change in Household Consumption-to-Income Ratio in Bangladesh, Peru, and Thailand, 2000s
  • Tables
    • Table 2.1 Shapley Allocations for a Three-Player Game
    • Table 2.2 Application of Barros Methodology to Measure Contributions of Variables to Change in Poverty
    • Table 2.3 Proposed Methodology to Decompose Change in Poverty along One Possible Path
    • Table 3.1 Poverty Headcount Rates, by Benchmark, in Selected Developing Countries, 2000s
    • Table 3.2 Share of Adults per Household, by Poverty Level, Selected Developing Countries, 2000s
    • Table 3.3 Share of Working Adults per Household, by Poverty Level, in Selected Developing Countries, 2000s
    • Table 3.4 Share of Transfers in Total Household Income, by Poverty Level, in Selected Developing Countries, 2000s
    • Table 3.5 Change in Household Consumption-to-Income Ratio in Selected Developing Countries, 2000s
    • Table 3.6 Contributions to Declines in Moderate Poverty, by Level, in Selected Developing Countries, 2000s
    • Table 3A.1 Survey Sources of Data for Poverty Reduction Analysis in Selected Developing Countries, 2000
    • Table 3B.1 Contributions to the Decline in the $1.25-a-Day (PPP) Poverty Headcount in Selected Developing Countries, 2000s
    • Table 3B.2 Contributions to the Decline in the $2.50-a-Day (PPP) Poverty Headcount in Selected Developing Countries, 2000s
    • Table 3B.3 Contributions to the Decline in the $4.00–$5.00-a-Day (PPP) Poverty Headcount in Selected Developing Countries, 2000s
    • Table 6.1 Change in Poverty Rates, by Level, in Bangladesh, Peru, and Thailand, 2000s
    • Table 6.2 Growth and Redistribution Decomposition of Moderate Poverty Rate Changes in Bangladesh, Peru, and Thailand, 2000s
    • Table 6.3 Population and Labor Force Characteristics in Bangladesh, Peru, and Thailand, 2000s
    • Table 6.4 Household Consumption-to-Income Ratio, by Income Decile, in Bangladesh, Peru, and Thailand, 2000s
    • Table 6.5 Marginal Contributions to Poverty Reduction in Bangladesh, Peru, and Thailand, 2000s
    • Table 6.6 Contributions to Poverty Reduction by Returns to Endowments in Bangladesh, Peru, and Thailand, 2000s
    • Table 6.7 Cumulative Contributions to Poverty Reduction in Bangladesh, Peru, and Thailand, 2000s
    • Table 6A.1 Simulating the Changing Characteristics of Households in Bangladesh, 2000–10
    • Table 6A.2 Simulating the Changing Characteristics of Households in Peru, 2005–09
    • Table 6A.3 Simulating the Changing Characteristics of Households in Thailand, 2000–09
    • Table 6A.4 Multinomial Logit on Occupational Choice of Working-Age Population, by Household Status, in Bangladesh, 2000 and 2010
    • Table 6A.5 Multinomial Logit on Occupational Choice of Working-Age Population, by Household Status, in Peru, 2004 and 2010
    • Table 6A.6 Multinomial Logit on Occupational Choice of Working-Age Population, by Household Status, in Thailand, 2000 and 2009
    • Table 6A.7 Earnings Regressions for Nonfarm Working-Age Population in Bangladesh, 2000 and 2010
    • Table 6A.8 Earnings Regressions for Nonfarm Working-Age Population in Peru, 2004 and 2010
    • Table 6A.9 Earnings Regressions for Nonfarm Working-Age Population in Thailand, 2000 and 2009
    • Table 6A.10 Net Revenue Regressions for Farm Households in Bangladesh, 2000 and 2010
    • Table 6A.11 Net Revenue Regressions for Farm Households in Peru, 2004 and 2010
    • Table 6A.12 Net Revenue Regressions for Farm Households in Thailand, 2000 and 2009
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