The pace of poverty reduction - A fractional response approach

Bluhm, Richard, De Crombrugghe, Denis and Szirmai, Adam (2013). The pace of poverty reduction - A fractional response approach. UNU-MERIT.

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  • Author Bluhm, Richard
    De Crombrugghe, Denis
    Szirmai, Adam
    Title The pace of poverty reduction - A fractional response approach
    Publication Date 2013
    Place of Publication Maastricht
    Publisher UNU-MERIT
    Pages 41
    Abstract The pace of poverty reduction through growth vs. redistribution is at the heart of current debates on equitable development. In this paper, we argue that empirical poverty decompositions should build in the inherent boundedness of the poverty headcount ratio directly. As a solution, we propose a fractional response approach to estimating poverty decompositions, and present extensions dealing with unobserved heterogeneity, measurement error and unbalancedness. Using a large new data set, we estimate income and inequality (semi-)elasticities of poverty for the 2$ a day and 1.25$ a day poverty lines. The models fit the data remarkably well over the entire data range. We highlight the relevance of focusing on semi-elasticities for policy purposes and, building on the improved accuracy of the fractional response results, we present poverty projections from 2010 through 2030. Finally, we discuss some implications of these results for the post-2015 development agenda.
    UNU Topics of Focus Poverty
    Keyword Poverty
    Inequality
    Fractional response models
    Income growth
    JEL I32
    C25
    O10
    O15
    Copyright Holder UNU-MERIT
    Copyright Year 2013
    Copyright type Creative commons
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    Created: Wed, 11 Dec 2013, 17:23:59 JST