79863 The World Bank Consumption Poverty in the Republic of Kosovo in 2011 March 2013 The World Bank Europe and Central Asia Region Kosovo Agency of Statistics Poverty Reduction and Economic Social Statistics Department Management Unit Living Standards Sector www.worldbank.org www.esk.rks-gov.net The World Consumption Poverty Bank in the Republic of Kosovo in 2011 2 Consumption Poverty in the Republic of Kosovo in 2011 INTRODUCTION This report focuses on absolute poverty, comparing living standards to a poverty threshold that is held fixed in real terms over time and space. The monetary value of the poverty line is updated annually to account for changes in prices. Consumption is used as the measure of individual well-being or welfare. Household consumption is calculated as the total value of a household’s expenditure on food and nonfood items as recorded in the Household Budget Survey (HBS), a nationally representative survey conducted each year), including imputed values of any home-produced food items that were consumed by the household. In keeping with past practices in Kosovo, expenditures on consumer durable items and rent are excluded from the consumption measure. The 2009, 2010 and 2011 HBS surveys used the new master sample that was developed in 2008 and other aspects of data collection and processing were largely unchanged, therefore data for the three years are comparable. The standard of living associated with a given value of total household consumption depends greatly on the size and demographic composition of the household. Therefore household consumption is divided by the number of adult equivalents in the household to arrive at the welfare measure, which is consumption per adult equivalent. Figure 1: Poverty and extreme poverty headcount by location (%) 2009-2011 Source: HBS 2009-2011 35.3 35 34.5 33.1 30.7 31.5 30 29.2 29.7 26.7 26.7 25 20 2009 2010 15 2011 13.2 12.5 12.1 10.7 10.2 10 9.4 8.5 8.2 7.8 5 0 Urban Rural Total Urban Rural Total Full Poverty Extreme Poverty Two poverty lines are used in this report, a poverty line that is considered adequate to meet basic needs and a lower extreme poverty line. After adjusting for inflation, the poverty line and extreme poverty lines are: • 2011: €1.72 and €1.20 per adult equivalent per day • 2010: €1.61 and €1.07 per adult equivalent per day • 2009: €1.55 and €1.02 per adult equivalent per day 3 The World Consumption Poverty Bank in the Republic of Kosovo in 2011 The poverty headcount ratio measures the percentage of the population whose consumption per adult equivalent is less than the applicable poverty line. Based on HBS 2011, it is estimated that 29.7 percent of Kosovo’s population lives below the poverty line, with 10.2 percent of the population living below the extreme poverty line (Figure 1). Comparing the three years, it can be noted that the poverty rate fell by about 5 percentage points from 2009 to 2010 and slightly increased from 2010 to 2011 by 0.5 percentage points. The apparent increase in poverty in 2011 is within the margin of sampling error for the HBS, meaning that the poverty rate is essentially unchanged from 2010 to 2011. Poverty rates in all three years are higher in rural areas except for the extreme poverty rate in 2009 being slightly higher in urban areas (Figure 1). Figure 2: Poverty gap index for full and extreme poverty line (%) 2009-2011 Source: HBS 2009-2011 12 10 8 6 4 2 0 Urban Full Rural Full Total Full Urban Extreme Rural Extreme Total Extreme Poverty Poverty Poverty Poverty Poverty Poverty 2009 9.8 9.5 9.6 3.0 2.7 2.8 2010 6.9 7.5 7.3 1.9 1.8 1.9 2011 7.1 7.8 7.5 2.1 2.1 2.1 The poverty gap measures the depth of poverty. It takes into account both the percentage of the population below the poverty line as well as the size of the gap between the poverty line and the average consumption of those below the poverty line. Compared to the poverty headcount, the poverty gap has the advantage of detecting changes in welfare that occur below the poverty line, such as households becoming less poor, but not enough to cross the poverty line. From 2009 to 2010 the depth of poverty based on the full poverty line declined whereas it slightly increased in 2011 (Figure 2). A similar trend characterizes changes of the extreme poverty gap. The depth of poverty is greater in rural area in 2010 and 2011 whereas the reverse is observed in 2009. The depth of extreme poverty is almost equal in urban and rural areas. 4 Consumption Poverty in the Republic of Kosovo in 2011 Table 1: Distribution of the poor by location (%) 2010-2011 Source: HBS 2010-2011 Distribution of the Extreme Distribution of Population Distribution of the Poor Poor Area 2010 2011 Change 2010 2011 Change 2010 2011 Change Urban 37.4 37.2 -0.2 34.2 33.4 -0.8 35.4 34.4 -1.0 Rural 62.6 62.8 0.2 65.8 66.6 0.8 64.6 65.6 1.0 Overall 100.0 100.0 0.0 100.0 100.0 0.0 100.0 100.0 0.0 In 2011 about two-thirds of poor and extremely poor people reside in rural areas. The share of poor people living in rural areas is higher in 2011 by about 1 percentage point. Table 2: Gini coefficient (%) 2009-2011 Source: HBS 2009-2011 Area 2009 2010 2011 Urban 33.9 31.1 29.6 Rural 27.2 27.1 25.8 Overall 30.2 29.0 27.6 The Gini coefficient is the most widely used summary statistic of inequality. A Gini coefficient equal to one (100%) means that the total consumption belongs to one person whereas as it approaches zero it means that the consumption is equally shared among people, i.e., consumption levels are equal across the population. Data in Table 2 show that inequality has declined over time. It is evident that over a three year period urban inequality remained higher than that observed in rural areas. The decrease in inequality between 2010 and 2011 occurred because of a decline in consumption among the top half of the distribution, while consumption among the poorer half remained more or less constant. Figure 3: Poverty incidence by household size (%) 2011 Source: HBS 2011 50 Povery headcount ratio (%) 40 38 32 31 30 30 30 28 28 27 21 23 20 10 0 1 2 3 4 5 6 7 8 9 10 Number of people in household As in previous years, large households tend to be poorer in 2011: the highest poverty rate is found among households with eight members whereas the lowest for three member households (Figure 3). Nearly one third of average size households (comprising of six members) are poor in Kosovo. 5 The World Consumption Poverty Bank in the Republic of Kosovo in 2011 Figure 4: Poverty incidence and distribution of poverty by household size (%) 2011 Source: HBS 2011 25 20 15 10 5 0 1 2 3 4 5 6 7 8 9 10+ PROPORTION OF POOR POPULATION % 0.3 2.2 2.8 7.7 15.4 19.6 14.0 12.2 7.0 17.8 Proportion of total population % 0.3 2.2 3.8 9.9 15.2 18.3 14.6 9.5 6.2 19.8 As shown in Figure 4, a substantial share of poor people live in households with five to eight members and those with ten and more members. Table 3: Poverty headcount rate and distribution of the poor by main income source of household (%) 2010- 2011 Source: HBS 2010-2011 Main income source Poverty Headcount Rate Distribution of the Poor Distribution of Population   2010 2011 2010 2011 2010 2011 Public sector wages and 19.7 19.8 17.5 16.4 25.2 24.5 salaries Private sector wages and 28.5 26.2 21.9 21.0 19.6 23.8 salaries Farming 38.5 36.2 9.8 9.5 7.7 7.8 Per diem work 43.5 33.7 13.5 11.0 10.9 9.7 Other household business 16.1 20.6 8.5 9.8 14.5 14.1 Pensions 43.6 44.1 8.6 8.2 6.1 5.5 Remittances from abroad 24.2 30.2 6.5 7.4 8.6 7.3 Other remittances 38.3 51.1 0.6 0.3 0.3 0.1 Social assistance 73.0 79.0 10.9 14.6 5.2 5.5 Other 46.8 35.0 2.2 1.9 1.7 1.6 Overall 29.2 29.7 100.0 100.0 100.0 100.0 In 2011 poverty rates are lowest among households that primarily depend on public sector wage employment, household businesses (self-employment) and private sector wages (Table 3). Comparing data between years the poverty rate has increased for households where the main source of income comes from household businesses, 6 Consumption Poverty in the Republic of Kosovo in 2011 remittances, social assistance and pensions. Compared to 2010, better prospects in 2011 are noted for households whose main source of income is from per diem work. With regard to distribution of the poor in both years nearly 40 percent of the poor live in households that primarily depend on public and private sector wages. The prevalence of poverty among those with wage employment may be attributed to low wages, a large number of dependents, or both. Figure 5: Poverty by sex of head of household (%) 2009-2011 Source: HBS 2009-2011 40 Male 39.8 Female 30 34.3 37.2 29.1 30.6 29 20 10 0 2009 2010 2011 The poverty rate is higher among female-headed households (Figure 5). From 2009 to 2010, the poverty rate of female-headed households declined and then increased by nine percentage points from 2010 to 2011. The large apparent changes in the poverty rates of female-headed households should be treated with caution, because the sample of female-headed households is very small, totaling only approximately 200 households each year. Figure 6: Poverty by sex of individual (%) 2009-2011 Source: HBS 2009-2011 40 Male Female 30 33.9 35.0 29.2 30.3 20 28.5 29.9 10 0 2009 2010 2011 Figure 6 presents the relationship between poverty and gender of individuals. In 2011, 30.3 percent of females in Kosovo live in poverty in comparison to 29.2 percent of males, a one percentage point difference. From 2009 to 2010 poverty rate declined slightly more for males than females. However, the reverse was experienced from 2010 in 2011 when poverty increased more for male than female individuals, albeit by a small difference. 7 The World Consumption Poverty Bank in the Republic of Kosovo in 2011 Figure 7: Poverty headcount rate and distribution of the poor by highest level of education completed (aged 15 and above) (%) 2011 Source: HBS 2011 50 44.0 45 38.7 40 37.6 36.4 35 32.6 30 32.5 25 24.8 20 19.9 15 15.7 Poverty headcount rate 12.1 10 Distribution of the poor Distribution of the population 8.0 5 3.4 0 Didn’t complete primary Primary Secondary of vocational Tertiary Less educated individuals tend to be poorer than more educated ones (Figure 7). More than one third of individuals who did not complete primary education live in poor households, compared to 12 percent of individuals with university degrees. Almost two thirds the poor possess less than secondary education. Table 4, on the next page, presents information at the individual level on the relationship between poverty and a person’s main activity, limited to persons 15 years of age or older. In 2011 the highest rates of poverty are found among unemployed and retired or disabled people. With regard to the composition of the poor population it can be noted that nearly 30 percent of poor adults are unemployed. From 2010 to 2011, the poverty rate declined by 11 percentage points for per diem workers. The poverty rate has increased the most for self-employed and unpaid family workers by six and three percentage points, respectively. 8 Consumption Poverty in the Republic of Kosovo in 2011 Table 4: Poverty incidence and distribution of the poor by main activity of individuals (15 years and above) (%), 2010-2011 Source: HBS 2010-2011 Poverty Headcount  Main activity Distribution of the Poor Distribution of Population Rate   2010 2011 2010 2011 2010 2011 Employer 7.6 8.5 0.2 0.2 0.6 0.5 Employed with salary 17.0 17.3 10.6 8.6 17.6 14.4 Subsistence farmer 31.5 29.4 3.3 2.8 3.0 2.8 Per diem worker 40.4 29.3 4.4 3.3 3.1 3.2 Other self-employed 15.6 21.9 2.2 2.4 4.0 3.1 Unpaid family worker 22.7 20.1 0.7 0.5 0.8 0.7 Pupil/student 28.9 30.4 16.8 28.8 16.4 27.5 Retired or disabled 28.1 29.6 11.7 10.7 11.7 10.4 Unemployed 33.9 36.1 29.0 25.1 24.1 20.2 Housekeeper 31.4 29.5 20.5 17.0 18.4 16.7 Other 66.4 63.4 0.6 0.8 0.2 0.4 Overall 28.2 29.7 100.0 100.0 100.0 100.0 Figure 8: Poverty headcount by location by overall population and children aged 0-18 years (%) 2009-2011 Source: HBS 2009-2011 39.6 38.6 40 36.8 35.3 34.1 34.0 34.5 35 33.1 32.8 32.5 31.5 30.7 30.3 29.8 29.7 29.2 30 26.7 26.7 25 20 15 10 5 0 Urban Rural Total Urban Rural Total All population 2009 2010 2011 Children aged 0-18 9 The World Consumption Poverty Bank in the Republic of Kosovo in 2011 Figure 8 presents information on the relationship between poverty whether person is a child. For these results a child is defined as any person aged between 0 (a baby of less than one year) and up to and including 18 years of age. Children are more likely than others to be in poverty. Their overall poverty rate in 2011 was 32.8 compared to 29.7 for the whole population. Figure 9: Extreme poverty headcount by location by overall population and children aged 0-18 years (%) 2009-2011 Source: HBS 2009-2011 16 14.7 13.9 13.5 14 13.2 12.5 12.1 11.6 11.6 11.6 12 10.7 10.2 9.9 9.7 9.5 10 9.4 8.5 8.2 8 7.8 6 4 2 0 Urban Rural Total Urban Rural Total All population 2009 2010 2011 Children aged 0-18 Figure 9 presents information on the relationship between extreme poverty and whether person is a child. The definition of child is the same as that used above for Figure 8. Children are slightly more likely than others to be in extreme poverty. Their overall poverty rate in 2011 was 11.6 compared to 10.2 for the whole population. Over time there has been virtually no change in the extreme poverty rates for children. 10 Consumption Poverty in the Republic of Kosovo in 2011 Table 5: Poverty rate by household type (%) 2009-2011 Source: HBS 2009-2011 Household type 2009 2010 2011 With no children 28.7 19.4 19.7 With children 35.7 30.9 31.3 With four or more children 42.7 36.2 34.2 Overall 34.5 29.2 29.7 Table 6: Extreme poverty rate by household type (%) 2009-2011 Source: HBS 2009-2011 Household type 2009 2010 2011 With no children 10.8 4.0 7.7 With children 12.9 8.9 10.6 With four or more children 16.9 9.6 14.0 Overall 12.5 8.2 10.2 Tables 5 and 6 present poverty and extreme poverty rates for different household types. Having children increases the rate of extreme poverty. Having four or more children increases the likelihood of being in poverty and extreme poverty even further. For further information please contact: T: +381 38 200 31 143 E: infoask@rks-gov.net Publisher: Agency for Statistics of Kosovo Zenel Salihu Str., No. 4 Prishtina, Kosovo When using the data please state the source 11 Consumption The World Poverty in the Bank Republic of Kosovo in 2011 March 2013 Design by: