Growth Elasticities of Poverty Reduction

Authors

  • Martin Ravallion Georgetown University

DOI:

https://doi.org/10.25071/1874-6322.40545

Keywords:

Poverty measures, growth, inequality, poverty lines

Abstract

Thirty years ago, Nanak Kakwani provided elegant nonparametric formulae
for the point elasticities of poverty measures with respect to changes in
the mean of the distribution, thus analytically linking those measures to
key macroeconomic aggregates. Numerous insights are found in Kakwani’s
elasticities. Rising inequality, measurement errors, discrepancies between
surveys and national accounts, and changing ideas about what ‘poverty’
means are all reasons why the impacts of growth on poverty observed in
practice can be substantially lower than suggested by Kakwani’s elasticities.
These elasticities should not be treated as structural parameters. Rather,
they can vary over time and place in systematic ways.

References

Adams, Richard 2004 “Economic Growth, Inequality and Poverty: Estimating the Growth Elasticity of Poverty”, World Development 32(12): 1989–2014.

Arndt, Channing, K. Mahrt, and C. Schimanski 2017 “On the Poverty-Growth Elasticity”, UNUWIDER Research Working Paper, No. 2017/149 Helsinki: The United Nations University World Institute for Development Economics Research.

Atkinson, Anthony B. 1987 “On the Measurement of Poverty”, Econometrica 55: 749–764.

Berardi, Nicoletta, and Federica Marzo 2017 “The Elasticity of Poverty with Respect to Sectoral Growth in Africa”, Review of Income and Wealth 63(1): 147–168.

Bergstrom, Katy 2020 “The Role of Inequality for Poverty Reduction”, Policy Research Working Paper 9409. World Bank, Washington DC.

Besley, Timothy, and Ravi Kanbur 1988 “Food Subsidies and Poverty Reduction”, The Economic Journal 98: 701–719.

Bourguignon, François 2003 “The Growth Elasticity of Poverty Reduction: Explaining Heterogeneity across Countries and Time Periods”, in T. Eicher and S. Turnovsky (eds)Inequality and Growth: Theory and Policy Implications. Cambridge: MIT Press.

—– 2004 “The Poverty-Growth-Inequality Triangle”, Working Paper No. 125. New Delhi: Indian Council for Research on International Economic Relations (ICRIER).

Bresson, Florent 2009 “On the Estimation of Growth and Inequality Elasticities of Poverty with Grouped Data”, Review of Income and Wealth 55(2): 266–302.

Chakravarty, S.R., N. Chattopadhyay, Z. Nissanov, and J. Silber 2015 “Reference Groups and the Poverty Line: An Axiomatic Approach with an Empirical Illustration”, UNU-WIDER Research Working Paper, No. 2015/002. Helsinki: The United Nations University World Institute for Development Economics Research.

Chen, Shaohua, and Martin Ravallion 2010 “The developing world is poorer than we thought, but no less successful in the fight against poverty”, Quarterly Journal of Economics 125(4): 1577–1625.

—– 2021 “Reconciling the Conflicting Narratives on Poverty in China”, Journal of Development Economics 153: 102711

Collier, Paul, and David Dollar 2002 “Aid Allocation and Poverty Reduction”, European Economic Review 46(8): 1475–1500.

Datt, Gaurav, and Martin Ravallion 1992 “Growth and Redistribution Components of Changes in Poverty Measures: A Decomposition with Applications to Brazil and India in the 1980s”, Journal of Development Economics 38: 275–295.

—–, Martin Ravallion and Rinku Murgai 2020 “Poverty and Growth in India over Six Decades”, American Journal of Agricultural Economics 102(1): 4–27.

Deaton, Angus 2005 “Measuring Poverty in a Growing World (or Measuring Growth in a Poor World)”, Review of Economics and Statistics 87(1): 1–19.

De Vreyer, Philippe, and Sylvie Lambert 2021 “Inequality, Poverty and the Intra-household Allocation of Consumption in Senegal”, World Bank Economic Review 35(2): 414–435.

Dollar, David, and Aart Kraay 2002 “Growth is Good for the Poor”, Journal of Economic Growth 7(3): 195–225.

Ferreira, Francisco, and Martin Ravallion 2009 “Poverty and Inequality: The Global Context”, in Wiemer Salverda, Brian Nolan, and Tim Smeeding (eds) The Oxford Handbook of Economic Inequality Oxford: Oxford University Press, pp. 599-636.

Foster, James, Joel Greer, and Erik Thorbecke 1984 “A Class of Decomposable Poverty Measures”, Econometrica 52: 761–765.

Fosu, Augustin Kwasi 2017 “Growth, Inequality, and Poverty Reduction in Developing Countries: Recent Global Evidence”, Research in Economics 71(2): 316–336.

Galbraith, John Kenneth 1958 The affluent society Cambridge, MA: The Riverside Press / Boston: Houghton Mifflin Company.

Haddad, Lawrence, and Ravi Kanbur 1990 “How Serious is the Neglect of Intra-Household Inequality?”, Economic Journal 100: 866–881.

Heltberg R. 2004 “The Growth Elasticity of Poverty”, in A. Shorrocks and R. van der Hoeven (eds). Growth, Inequality, and Poverty: Prospects for Pro-Poor Economic Development WIDER Studies in Development Economics. Oxford: Oxford University Press for UNU-WIDER, pp.

-91.

Jolliffe, Dean, and Espen B. Prydz 2017. “Global Societal Poverty: a Relative and Relevant Measure,” Policy Research Working Paper 8073, Washington, D.C.: World Bank.

Kakwani, Nanak 1986 Analyzing Redistribution Policies: A Study using Australian Data Cambridge: Cambridge University Press.

Kakwani, Nanak 1990 “Poverty and Economic Growth with Application to Côte d’Ivoire”, World Bank Living Standards Measurement Study, Working Paper 63. Washington, D.C.: World Bank.

—– 1993 “Poverty and Economic Growth with Application to Côte d’Ivoire”, Review of Income and Wealth 39(2): 121–139.

—–, and Ernesto Pernia 2000 “What is Pro-Poor Growth?”, Asian Development Review 16(1): 1–22.

Kanbur, Ravi 1987 “Measurement and Alleviation of Poverty”, IMF Staff Papers 36: 60–85.

Klasen, Stephan, and Mark Misselhorn 2008 “Determinants of the Growth Semi-Elasticity of Poverty Reduction”, Ibero America Institute for Economic Research Discussion Paper 176. Göttingen: Georg-August-Universität Göttingen.

Kraay, Aart 2006 “When is Growth Pro-poor? Evidence from a Panel of Countries”, Journal of Development Economics 80: 198–227.

Lakner, Christoph, and Branko Milanovic 2016 “Global Income Distribution: From the Fall of the Berlin Wall to the Great Recession”, World Bank Economic Review 30(2): 203–232.

Lampman, Robert 1965 “Approaches to the Reduction of Poverty”, American Economic Review 55(1/2): 521–529

Lenagala, Chakrangi, and Rati Ram 2010 “Growth Elasticity of Poverty: Estimates from New Data”, International Journal of Social Economics 37(12): 923–932.

Lipton, Michael, and Martin Ravallion 1995 “Poverty and Policy”, in Jere Behrman and T.N. Srinivasan (eds) Handbook of Development Economics Volume 3, Part B Amsterdam: NorthHolland, pp 2551–2657.

Loayza, Norman V., and Claudio Raddatz 2010 “The Composition of Growth Matters for Poverty Alleviation”, Journal of Development Economics 93(1): 137–151.

Margitic, Juan, and Martin Ravallion 2019 “Lifting the floor? Economic Development, Social Protection and the Developing World’s Poorest”, Journal of Development Economics 139(June): 97–108.

McKay, Andrew 2007 “Introduction to Methods for Analyzing the Distributional Pattern of Growth”, in Michael Grimm, Stephen Klasen, and Andrew McKay (eds) Determinants of Pro-Poor Growth New York: Palgrave Macmillan, pp.

Montalvo, Jose, and Martin Ravallion 2010 “The Pattern of Growth and Poverty Reduction in China”, Journal of Comparative Economics 38: 2–16.

Ram, Rati 2011 “Growth Elasticity of Poverty: Direct Estimates from Recent Data”, Applied Economics 43(19): 2433–2440.

Ravallion, Martin 1995 “Growth and Poverty: Evidence for Developing Countries in the 1980s”, Economics Letters 48: 411–417.

—– 1997 “Can High Inequality Developing Countries Escape Absolute Poverty?”, Economics Letters 56: 51–57.

—– 2001 ‘Growth, Inequality and Poverty: Looking Beyond Averages”, World Development 29(11): 1803–1815.

—– 2003 “Measuring Aggregate Economic Welfare in Developing Countries: How Well do National Accounts and Surveys Agree?”, Review of Economics and Statistics 85: 645–652.

—– 2005 “A Poverty-Inequality Trade-Off?”, Journal of Economic Inequality 3(2): 169–182.

—– 2007a “China’s (Uneven) Progress Against Poverty”, The Journal of Development Economics 82(1): 1–42.

—– 2007b “Inequality is Bad for the Poor” in J. Micklewright and S. Jenkins (eds) Inequality and Poverty Re-Examined Oxford: Oxford University Press, pp. 37-61.

—– 2011 “Weakly Relative Poverty”, Review of Economics and Statistics 93(4): 1251–1261.

—– 2011 “A Comparative Perspective on Poverty Reduction in Brazil, China and India”, World Bank Research Observer 26(1): 71–104.

—– 2012 “Why Don’t we See Poverty Convergence?”, American Economic Review 102(1): 504–523.

—– 2016a Economics of Poverty: History, Measurement and Policy New York: Oxford University Press.

—– 2016b “Are the World’s Poorest Being Left Behind?”, Journal of Economic Growth 21(2): 139–164.

—— 2018 “Inequality and Globalization: A Review Essay”, Journal of Economic Literature 56(2): 1–23.

—– 2020 “On Measuring Global Poverty”, Annual Review of Economics 12: 167–188.

—– 2020 “On the Origins of the Idea of Ending Poverty”, NBER Working Paper 27808.

—– 2021 “What Might Explain Today’s Conflicting Narratives on Global Inequality?”, in Carlos Gradín, Murray Leibbrandt, and Finn Tarp (eds) Inequality in the Developing World Oxford: Oxford University Press, pp. 17-48

—– 2022 “Missing Top Income Recipients”, The Journal of Economic Inequality 20: 205-222.

—–, and Shaohua Chen 2003 “Measuring Pro-Poor Growth”, Economics Letters 7 8(1): 93–99.

—–, and Gaurav Datt 1996 “How Important to India’s Poor is the Sectoral Composition of Economic Growth?”, World Bank Economic Review 10: 1–26.

—–, Gaurav Datt, and Dominique van de Walle 1991 “Quantifying Absolute Poverty in the Developing World”, Review of Income and Wealth 37: 345–361.

—–, and Monika Huppi 1991 “Measuring Changes in Poverty: A Methodological Case Study of Indonesia during an Adjustment Period”, World Bank Economic Review 5(1): 57–82.

Rawls, John 1971 A Theory of Justice Cambridge, MA: Harvard University Press.

Sen, Amartya 1976 “Poverty: An Ordinal Approach to Measurement”, Econometrica 46: 437–446.

Son, Hyun H., and Nanak Kakwani 2004 “Economic Growth and Poverty Reduction: Initial Conditions Matter”, International Poverty Centre, UNDP Working Paper No. 2.

United Nations 2017 The Sustainable Development Goals Report New York: United Nations.

Watts, Harold W. 1968 “An Economic Definition of Poverty”, in Daniel P. Moynihan (ed.) On Understanding Poverty New York: Basic Books, pp. 316-329.

Wieser, Christina 2011 “Determinants of the Growth Elasticity of Poverty Reduction Why the Impact on Poverty Reduction is Large in Some Developing Countries and Small in Others”, WIFO Working Paper 406.

World Bank 1990 World Development Report: Poverty New York: Oxford University Press.

World Bank and the International Monetary Fund 2016 Global Monitoring Report 2015/2016: Development Goals in an Era of Demographic Change. Washington, D.C.: World Bank/International Monetary Fund.

Published

2022-10-02

How to Cite

Ravallion, M. (2022). Growth Elasticities of Poverty Reduction. Journal of Income Distribution®, 31(3-4). https://doi.org/10.25071/1874-6322.40545