Main Report 33802 VOL. 2 JORDAN POVERTY ASSESSMENT MAIN REpORT VOLUME 2 DECEMBER 2004 WORiLDBANK The Hashemite The World Bank Kingdom Of Jordan All rights reserved for the Hashemite Kingdom of Jordan and the World Bank © 2004 Cover Photo: © Bill Lyons 'MJRLDBANK J III ...... Jo:oo. -,.ro' This volume is a product of collaboration between the Hashemite Kingdom of Jordan and The World Bank. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of the Executive Directors of The World Bank or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. IV • CURRENCY AND EQUIV ALENTS US$l =O.709JD ABBREVIATIONS AND ACRONYMS BA Bachelor Of Art BIA Benefit Incidence Analysis BMR Bvasal Metabolic Rate BOP Balance Of Payments CBN Cost Of Basic Needs CPI Consumer Price Index DCI Direct Calorie Intake Method DHS Demographic And Health Service DOS Department Of Statistics DPT Diphtheria, Pertussis, And Tetanus EAV Expected Average Vulnerability ECE Early Childhood Education EDSTATS Educational Statistics EFA Education For All EUS Employment And Unemployment Survey FAO Food And Agriculture Organization FEI Food Energy Intake Method FGT Foster-Greer-Thorbecke FHH Female-Headed Household FIS Family Income Supplement GDP Gross Domestic Product GER Gross Enrollment HDI Human Development Index HEIS Household Expenditure and Income Survey ICT Information And Communication Technology lEA International Assessment Of Educational Progress IFAD International Fund For Agricultural Development IFRPI International Food Policy Research Institute ILO International Labor Organization Inactive LT Long-Term Inactive ST Short-Term JD Jordanian Dinar JFS Jordan Fertility Survey JPFHS Jordan Population And Family Health Survey KG Kilogram .. WORLOIlANK v XGs Kindergartens MD Medical Doctor MDGs Millennium Development Goals MENA Middle East And North Africa MHH Male-Headed Household MNFPL Average Per-Capita Non-Food Poverty Line MOH Ministry Of Health MOSD Ministry Of Social Development NAF National Aid Fund NCHS National Center For Health Statistics NER Net Enrollment Rate NFPL Non-Food Poverty Line NGO Non Profit Organization OECD Organization For Economic Co-operation And Development OLS Ordinary Least Squares PEGRs Poverty Equivalent Growth Rate PREM Poverty Reduction And Economic Management PSU Primary Sampling Units RLMS Russian Longitudinal Monitoring Survey RMS Royal Medical Services TIMSS Third International Mathematics And Science Study UNDP United Nations Development Programme UNESCO United Nations Educational, Scientific and Cultural Organization UNICEF United Nations Children's Fund UNRWA United Nations Relief And Works Agency US United States US$PPP United States Dollars (Purchasing Power Parity) WHO World Health Organization T vi JORDAN POVERTY ASSESSMENT TABLE OF CONTENTS FOREWORD: Mustapha K. Nabli, Chief Economist and Director, Middle East and North Africa Region, The World Bank ..................................................... xv FOREWORD : Bassem Awadallah, Minister of Planning and International Cooperation, Hashemi te Kingdom of Jordan ••••••.••....••.•.••••••••...••••••••.•.••........•.•••••••...... xvii PREFACE •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• xix CHAPTER 1. POVERTY IN JORDAN: METHODOLOGY, LEVELS, TRENDS •••••••••••••••••••••••• 1 POVERTY IS A KEy CONCERN FOR POLICY MAKERS IN JORDAN ............. .... ..... ........ ... .......... 2 NEW POVERTY LINE FOR JORDAN .. .. ....... ................. .... .............. ... ...... ...... ....................... .... 5 Calorie Requirements ................ ... .. .............. .................... ........ ....... .... ............ .... .... 5 Calorie Intake and Calorie Cost .... ................ ..... .. .. .............. ........... .... ... ..... ....... .... 8 Spatial Price Indices ..... ... .. .............. ...... ........... ...... ........... ... .. ... ........... ... ............. 11 Food Poverty Line ... .... .. .... ..... ............. .... ... .. ........ ................. ...... ... .......... .... ..... .... 13 Determination of the Non-Food Poverty Line .. ........ .. .......... .... ..... ............ .. ..... ... .. 15 Non-Food Poverty Line ....... .... .............................. .................. .. ... .......... ...... ... 17 GROWTH AND INEQUALITY IN PRIVATE CONSUMPTION ... .............. ... .. ................ .... ... .. ...... 23 Per-Capita Nominal and Real Consumption Expenditures ............................. .................. 23 Inequality of Per-Capita Real Consumption ... ... ....... .. .. ............ ...... ........ ..... .. .. ... .. 25 INCIDENCE OF POVERTY ........... .... ........ .... .. ........... ... .. .......................... .. ...................... ...... 28 CHAPTER 2. UNDERSTANDING CHANGES IN POVERTY IN JORDAN ............................... 91 GROWTH AND POVERTY REDUCTION IN JORDAN ... ............................... ... ... .................. ..... 92 The Strong Growth in Per-Capita Consumption Between 1997 and 2002 .... .... ... 92 The Roles of Growth and Redistribution in Poverty Reduction ...... ....... ............ ... 95 Has Growth in Jordan Been Pro-Poor ........... .. ................... ..... ......... ..... ......... .... . 96 Projection of Poverty in Medium Term ................................... .................. ........... 101 The Impact of Worker Remittance Inflows on Poverty .. .... .......................... ........ 101 DETERMINANTS OF POVERTY IN JORDAN .. ........................... .. ..................... ..................... 103 The Effects of Demographic Variables ........ ............... .......... .. ...................... 104 Education ... ............. .... ............. .................................................... .. ............... 104 Marital Status, Gender, and Work Status .... .......... ......... .... ................ .......... 105 Household Assets and Characteristics .... ............ .......................................... 105 Income Source ..... .. ........... ....................... .. ................................ .. ............. .. .. . 106 VtORLDBANK VII COPING STRATEGIES OF THE POOR - AN ANTHROPOLOGICAL PERSPECTIVE ....... ........... . 109 Strategies of Urban Poor ... ..... ..................................................... .... ................... 109 Augmenting Incomes .... ............ .......................................... ...... .. ..... .. ............ 109 Saving on Expenditures .. ................................................. .... .. .................. ...... 110 Borro'vving........... .. .. .... .. .... ........ .... .. ................................... ............ .. .. ............ 110 STRATEGIES OF RURAL POOR .. .... .... .. ....................................................... ........ ................ 110 Augmenting Incomes .. ....................................................... .. .. .... ............ ........ 110 Saving on Expenditures ... ... .... .. .. ...... .. ...... .. ...... ... .. ... .... ....................... .......... III Borrowing............................... .. .... ...................... ........... .. .. .. .. ........................ III Escaping Poverty: Lessons from Bedouin Communities Living in a Deep Pocket of Poverty - Wadi Araba ............ .. .... .................... .......... .. .. .. ...... .. .. ................ ..................... 112 A Story of Failure ................ ............................. .. .............. .. ...... ............ .................. ... 112 A Story of Success .. ........... ...... .. ...................................... .............. .. ................ .... ..... 113 CHAPTER 3. LABOR MARKET AND THE POOR .............................................................. 121 INTRODUCTION ......••••.•.•.•.•.•.•...•.•....................................•.•.••.•.••••••.••............................. 121 OVERVIEW OF THE LABOR MARKET ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 122 Characteristics o.lthe Labor Force .................. .. .. .. ............. ................................ 122 Labor Force Growth .................................................... .. .. .. ..... ............................ 126 Job Growth and Unemployment.. .. ............................ .... ...................................... 127 POVERTY INCIDENCE OF THE WORKING AGE POPULATION, By ECONOMIC ACTIVITY STATUS ••••.•••.•.•.••••••••••••••••.•.•..........•.....•••••••••.••..........••••••••••••••••••••................•...•.•.......... 129 THE UNEMPLOYED POOR ••.•.•.•.•.•.•.•.•.•.•.•.•.•.•••.•.•..•••••••••••••••••••••••.................•.••••••••••..••. 132 WHO ARE THE WORKING POOR AND WHY ARE THEY POOR? ................................... 135 CHAPTER 4. UNDERSTANDING EDUCATIONAL OUTCOMES FOR THE POOR ••••••••••••••• 141 INTRODUCTI ON •.••.•.•..........................................••.•.•.•.•.•.........................................•...•.•. 141 EDUCATION ATTAINMENTS •••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 143 Literacy....... ......................................... ........ ...... ......................................... ......... 143 ENROLLMENT RATES AND ACHIEVEMENT OF MILLENIUM DEVELOPMENT GOALS •• 145 EDUCATIONAL ATTAINMENTS AND POVERTy ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 149 EDUCATION EXPENDITURES .......................................................................................... 153 EDUCATION OUTCOMES •••.•...........................•.•.•.•.•••.•.•...............•..•.................•...•.•.•.•...• 156 Schooling Quality .. ................ .. .......... .. ........ ..... .... .. .... .. ................ .. ...... ......... .... .. 157 LABOR MARKET RETURNS ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• 160 CONCLUSION .•.•.•...........•.....•.•.•.•...•.•...........••••••••••••..•.•.•.•...•...•....•...............•...•••••••••••.•.. 161 CHAPTER 5. UNDERSTANDING HEALTH OUTCOMES FOR THE POOR ••••••••••••••••••••••••• 167 INTRODUCTION .....•.•.....•.•..•....•...............•.•.•.•.•.•.•.•...•.....••...•..•......................•.•.•.••••••..... 167 Health Outcome Indicators ............ .......... .......................................... .............. ... 169 Health Process Indicators ................ .. ................................................................. 171 VIII Underlying Risk Factors ...... .. ............... ............ ........................... .. ... ................ .. 174 Equity of Health Financing ................................................................................. 178 To WHAT DEGREE Do THE POOR BENEFIT FROM PUBLIC SECTOR HEALTH SPENDING IN JORDAN ...•......••••.•.•••••••••...........................................•.•.......•....................................... 179 Summary Observations And Interventions To Improve The Outcome Of The Poor ....................................... ~· ......... ............................................................. 182 CHAPTER 6. VULNERABILITY, SOCIAL PROTECTION AND DISADV ANTAGED GROUPS.. 185 VULNERABILITY To POVERTY ....................................................................................... 186 Empirical Analysis Of Vulnerability In Jordan .......... ...................... ... .. ..... ... 188 Profiles Of The Vulnerable Groups ........... .... ........ ................. ...................... 188 JORDAN'S SOCIAL SAFETY NET ASSESSMENT ............................................................... 192 NAF: An Overview Of Its Functions And Outreach. ........ .... ~ ........................ 193 Equity OfNAF Expenditures ........................................... ........ ...................... 195 Targeting Criteria Adopted By The NAF: An Assessment .................... ........ 199 GENDER AND POVERTY .•..•.•................................................•.•.•.•.••••••••.•.••••••••.••••••.•••••... 203 CHILDREN AND POVERTY ...............•.•.•.••••..................................••••••••.••••.•.•.•••••••••••••.••. 207 Situation Of Disadvantaged Children .................... ................ ................ .. ... ... ..... 209 REFERENCES .................................................••..••••....•.........•••••••••••••••••••••••••••••••••••......... 219 WCRLOBANK IX LIST OF FIGURES, TABLES AND BOXES FIGURES Figure 1.1: Real GDP Growth Rates In Jordan, 1988-2003 .... ...... ................................ 3 Figure 1.2: Per-Capita Daily Calorie Intake By Quintiles .... .. ..................................... 10 Figure 1.3: Calorie Cost Per 1000 Calories By Quintiles ...... ...... ............................... 11 Figure 1.4: Determination Of The Non-Food Poverty Line ........................................ 16 Figure 1.5: Household Size And Poverty Line, 2002 .. .. ........ .. ................................... 18 Figure 1.6: Annual Growth Rate Of Per-Capita Consumption .. .. ................................ 25 Figure 1.7: First-Order Dominance Test.. .................... .. ........ .............. ~ ....................... 31 Figure 1.8: Change in Headcount Ratio, 1997-2002 .................................................. . 33 Figure 1.9: Poverty Severity, 2002-2003 ......................... ..... .. .. ...... ....... ...... .... .. .... .. .... 35 Figure 2.1: Annual Growth In Per-Capita Private Consumption And Income (Percent) .............. ...................... .. .. ....... .............................. .. .. .... . 93 Figure 2.2: Decomposition of Change In The Proportion Of The Poor ............. ........ . 95 Figure 2.3: Growth Incidence Curve For Jordan, 1997-2002 ............................. .. .... .. . 99 Figure 2.4: The Ratio Of Worker Remittance Inflows To GDP (In Percent) .. .. ...... .. 102 Figure 3.1: Age And Participation Rates For Poor And Non-Poor By Gender, 2002 ........................................... ... .... .................................. .. ... .. 125 Figure 3.2: Population Structure Of The Poor And Non-Poor, 2002 ...................... .. 126 Figure 3.3: Poverty And Unemployment, Cross-Country Evidence .............. .... ... .... 130 Figure 3.4: Unemployment Rate And Participation For Youth (Age 15-24), 2002 ..... .......................................... ... ........ ............... .......... 133 Figure 3.5: Youth Unemployment Among The Poor And Non-Poor By Governorate, 2002 ......................... .... ........ ................................ .... .......... 134 Figure 3.6: Population Distribution By Employment Status And Poverty Detail, 1997-2002 ...................... ...... .......................................... ..... ........ 136 Figure 3.7: Workers As A Proportion Of Labor Force Of The Poor (Percent) .. .., .... 136 Figure 4.1: Adult Illiteracy Rates, 1970-1999 (Percent) ...................................... ..... 144 Figure 4.2: Educational Attainments OfIndividuals By Wealth Quintiles, 2002 .............. ...... ....... .. .. .. ............................................. ......... 145 Figure 4.3: Net Enrollment Ratio For Students 5 To 19 Years Old In Public And Private Schools, 1999 .... ............. .................. ................... .......... .. .. .. 146 Figure 4.4: Net Enrollment Rate By Wealth Quintile, 2002 ............... ........ .... .......... 147 Figure 4.5: NER At Different Levels Of Education, By Gender And Poverty Status OfIndividual, 2002 ................................................... .... ..... .......... 148 Figure 4.6: Educational Attainment Of Individuals 12 Years And Over, By Incidence Of Poverty, 2002 .. ...... ............................................... ...... .. 149 Figure 4.7: Educational Attainment Of Individuals 12 Years And Over In Rural And Urban Areas, By Incidence Of Poverty, 2002 ................................. 150 Figure 4.8: Regional Poverty Incidence By Individual Education Level (%), 2002 .......... .... .. ................................... .................................................... 151 Figure 4.9: Public Expenditure On Education As A Percent Of GDP In Selected Countries ... .... .. .. ...... ......... ........ ...... ........... .... ... ........ .... .. .. ......... 154 x Figure 4.10: Proportion Of Students In Public Institutions By Wealth Quintile, 2002 ... 155 Figure 4.11 : Distribution Of Subsidies For Education ................................. ..... ........ .. 156 Figure 5.1: Infant And Child Mortality Rates By Income Quintile .......... ................. 170 Figure 5.2: Prevalence Of Disability And Incidence Of Injury Per 1,000 Population ... ....... ................................. .................... .. ...... .... .... 172 Figure 5.3: Multi-Country Rich/Poor Ratios For Infant And Child Mortality Rates ............. ......... .................. ....... .................................................. .... 175 Figure 5.4: Multi-Country Rich/Poor Ratios For Health Service UselNutritional Indicators .......................................................... ........... ..... ..... .... ...... ........ 176 Figure 5.5 : School Completion Rates By Quintile and Gender. .... ...... ..... .. .. .... ......... 177 Figure 5.6: Incidence Of Injury And Prevalence Of Disability By Income Quintile And Gender .............................................................. ..... ..... ..... ... ............. 177 Figure 6.1: Vulnerability Profile By Rural-Urban Residence ................................... 189 Figure 6.2: Income Supplement Program (Recurring Cash Assistance): Families Assisted And Assistance Per Family 1996-2002 ... .... ..... .. ... ................... 194 Figure 6.3: Percentage Of Female Headed-Households Among Poor And Non-Poor .................................................................... ............................. 203 Figure 6.4: Source Of Income For Female And Male Headed Households .............. 206 Figure 6.5: Poverty Incidence And Number Of Kids In Household ......................... 206 Figure 6.6: Residence Of Poor Children In Jordan, 2002-03 ..... ............................... 208 TABLES Table 1.1: Average Weight Of The Jordanians ........... ...... ......... ....... ........................... 6 Table 1.2: Daily Calorie Requirements For Jordanian Population ............................... 7 Table 1.3: Per Capita Calorie Intake, Food Expense And Calorie Cost: 2002-03 .......................... ..... ........ ........... ..... ........ .... ........................... 9 Table 1.4: Spatial Price Indices By Governorates In 1997 ........................ ................ 12 Table 1.5: Spatial Price Indices By Governorates In 2002 1997 = 100 ..................... 13 Table 1.6: Calorie Cost By Governorate .. .... ..... ...... ................................................... 14 Table 1.7: Average Food Poverty Line By Governorate (JD Per Year) .......... .......... 14 Table 1.8: Average Non-Food Poverty Line By Governorate (JD Per Year) ............ 19 Table 1.9: Average Total Poverty Line By Governorate (JD Per Year) .............. ...... 20 Table 1.10: Construction Of Poverty Lines: A Comparison Of Methods Used In Recent Poverty Assessments ... .................................................................. 21 Table 1.11: Per Capita Consumption: JD Per Person Per Y ear.. .................................. 23 Table 1.12: Per Capita Real Consumption: 1997 And 2002-03 (JD, Per Year In 1997 Prices) ............ ..... ....... .................................................................. 24 Table 1.13: Annual Growth Rates Of Per Capita Real Consumption .......................... 25 Table 1.14: Inequality Of Per Capita Real Consumption ............................................. 26 Table 1.15: Theil's Inequality Measure Of Real Per-Capita Consumption By Governorates ................... .......................................................................... 27 Table 1.16: Poverty In Jordan, 1997 And 2002 ............................................................ 30 Table 1.17: Change In Poverty Measure By Governorates, 1997 And 2002 ............... 32 YIClRLDBANK J XI . .....,. Table 1.18: Pockets Of Poverty In Jordan .................................................................... 36 Table 2.1: Comparison Of Survey And National Accounts Estimates Of Private Consumption (Annual, Per-Capita, JO) ........................................ 93 Table 2.2: Per-Capita Consumption Growth Across Oeciles ..................................... 94 Table 2.3: Growth Rates 1997-2002 (Growth Rate In The Mean = 3.1 Percent Per year) ......................... ........ 98 Table 2.4: Kakwani Pro-Poor Growth Index By Headcount Ratio .......................... 100 Table 2.5: Poverty Elasticities And Pro-Poor Growth ...... .. .. .... ............................... 100 Table 2.6: Projection Of Poverty To 2006 ............................................................... 101 Table 2.7: Impact Of Worker Remittances On Poverty .. .... ................................. .. .. 103 Table 2.8: The Impact Of Education On Poverty ..................................................... 105 Table 2.9: Regression Of Consumption Welfare ..................................................... 107 Table 3.1: 10rdanian Labor Force, By Level Of Education Completed 2003 .......... 123 Table 3.2: 10rdan Participation Rates By Governorate And Gender, 2002 ...... .. ..... 124 Table 3.3: Age Composition Of The 10rdanian Labor Force, 2003 ................... .... .. 124 Table 3.4: 10rdanian Job Creation 2000-2002, By Industry ............... ...................... 128 Table 3.5: Unemployment Rates By Sex And Educational Attainment Of Head Of Household, 2002-03 ................................... .......................................... ... 129 Table 3.6: Poverty Rates Of The Population, By Economic Activity Status 1997 And 2002 ........................................................................................ 132 Table 3.7: Poverty Incidence Of The Unemployed By Educational Attainment.. .. . 135 Table 3.8: Mean Per-Capita Income By Source For The Poor And Non-Poor, 2002 (10) .. .. .. .................................................................................. ......... 135 Table 3.9: Distribution Of Working Poor By Governorate And Rural Urban Groups ........ ..... .................................... ..... .................................... .......... 137 Table 3.10: Level Of Education Of Employed Persons Across Poor And Non-Poor .................................................................................. ... .... ........ 138 Table 3.11: Share Of Employed By Industrial Sector, 2002 ...................................... 139 Table 4.1: Determinants Of Poverty In 1ordan, 1997 And 2002 .............................. 152 Table 4.2: Household Expenditure At Public Higher Education Institutions By Wealth Quintile, 2002 ............................................................ .. .......... :.... 153 Table 4.3: Returns To Education For Poor And Non-Poor, 1997 And 2002 ........... 160 Table 4.4: Change In Returns To Education For The Poor And Non-Poor Between 1997 And 2002 ...................................... .. ................................................ 161 Table 5.1: Childhood Morbidity And Fertility Indicators By Income Quintile ....... 171 Table 5.2: Health Process Indicators By Income Quintile ................. ...................... 173 Table 5.3: Out-Of-Pocket Expenditures On Out-Patient Care As Percent Of Household Income ............................... .. .................................................. 179 Table 5.4: Quintile Share Of Public Sector Outpatient Utilization .......................... 180 Table 5.5: Quintile Share Of Public Sector Inpatient Utilization .... .. ...... .. ............... 181 Table 5.6: Preliminary Estimation Of Unit Costs .......................... .... ...................... 181 Table 6.1: Incidence Of Poverty And Vulnerability (Percent Of Total Population) .. .......................... ..... ............................................. ................ 188 Table 6.2: Poverty And Vulnerability By Governorate, 2002 .................... ........... ... 190 Table 6.3: Profile Of Poor And Vulnerable Groups ............................ .. ......... .......... 192 Table 6.4: NAF Budget And Its Components, 1996-2002 ............ .. .. .. .. .... ............... 194 XII Table 6.5: NAF Transfers Per Beneficiary Household By Governorates ................ 195 Table 6.6: Incidence Of Poverty And NAF Transfers By Governorate ................... 196 Table 6.7: A verage Transfer Per Beneficiary Household By Expenditure Deciles ..................................................................................................... 196 Table 6.8: Distribution OfNAF Benefits Across Vulnerable Population Groups ..................................................................................................... 197 Table 6.9: Average NAF Transfer Per Beneficiary Household As A Percent Of Poverty Line By Lowest Expenditure Deciles ...................... 198 Table 6.10: Counterfactual Scenario For HCR And Poverty Gap Ratio .................... 199 Table 6.11: Poverty Measures For Female And Male Headed Households, 2002-03 .................................................................................................... 204 Table 6.12: Poverty Incidence Among FHH And MHH By Marital Status .............. 205 Table 6.13: Poverty Indices For Children, 2002-03 ................................................... 207 BOXES: Box 1.1: Jordan Excels In Human Development.. ..................................................... 4 Box 1.2: Poverty Measures ...................................................................... 29 Box 2.1: Decomposition Of Change In Poverty Into Growth And Redistribution Components ....................................................................... 96 Box 2.2: Why Did Poverty Increase In Zarqa Governorate? ................................... 97 Box 2.3: Measuring Pro-Poor Growth ..................................................................... 98 Box 3.1: The Relationship Between Unemployment And Poverty ....................... 130 Box 3.2: Deciding Activity Status Of An Individual Over 15 ............................... 131 Box 4.1: Education Sector In Jordan .................................................................... 142 Box 4.2: Factors Affecting Dropout In Jordanian Schools .................................... 149 Box 4.3: Education Lowers Fertility Rates ............................................................ 157 Box 4.4: Factors Affecting Educational Achievement .......................................... 159 Box 5.1: Health Services For Poor Jordanians ...................................................... 168 Box 6.1: Definition Of Vulnerability .................................................................... 187 Box 6.2: Good Practice Examples Of Designing Safety Nets During A Period Of Crisis: Mexico And Korea ................................................................ 201 \M)RLDBANK \. xiii ,..;; , ...~ ANNEXES: Annex 1.1: Methodological Issues In Construction Of Poverty Lines ..................... ... 37 Annex 1.2: Sample Design Of The Household Expenditures And Income Survey 2002/2003 ........................ ........................... .................................. 49 Annex 1.3: Income And Expenditure Surveys (1992, 1997, 2002/2003) Comparison .... ........ ....... .................. ..... ........ .... ...... ..... ................ .............. 57 Annex 1.4: The Administrative Divisions Of Jordan ............ .... ............................... ... 67 Annex 1.5: Standard Errors For Household Consumption Estimates ..................... ..... 71 Annex 1.6: Food Calorie Conversion Factors .................... ... ... .................................... 73 Annex 1.7: Proof That Calorie Is A Monotonically Increasing Function Of Welfare ... ... .. .... ................................... .. ....... ................................... .. ... . 81 Annex 1.8: Sources For Comparison Table 1.10 ............. .... ..... .. ................................. 85 Annex 1.9: Percentage of Poor, 1997 .................................. ............................... ..... 87 Percentage of Poor, 2002-03 ................................................................ ..... 88 Annex 1.10: Severity Of Poverty By Sub-Districts, 2002-03 ................................... ..... 89 Annex 2.1: How Can We Calculate The Impact On Poverty Of Increasing One Year Of Schooling? ............................... ..................................... 115 Annex 2.2: How Good Is The Model In Predicting Welfare At The Governorate Level? .............. ........................................................................................ 119 Annex 4.1: Estimating Returns To Education ........................................................... 165 Annex 6.1: Method for Estimating Vulnerability .. :.. ........ ...................................... ... 213 v.oRLDBANK xv Foreword Our central mission at the Bank is to fight poverty and improve the living standards of people in the developing world. Successful poverty alleviation is contingent on sound and contextual analysis of the nature of poverty and the impact of public choices made globally, nationally and locally. With great pleasure I present this report entitled Jordan Poverty Assessment accomplished as a collaborative, analytical report written with the Government of Jordan. Jordan's recent growth performance has been noteworthy. Since 1999, GDP growth has consistently stayed above population growth, despite repeated negative shocks emanating from the region. This resilience is a hard-won achievement of conscious policy choices. Jordan is better in human development than comparators worldwide at similar levels of GDP. In 2003, Jordan was second best in the Human Development Index (HDI) among non-oil Arab countries. Jordanians are keen that the fruits of development and reform reach the poor. Concerned about the perceived slow pace of poverty reduction, authorities announced the new strategy for poverty alleviation in 2002. Key policy initiatives were to increase and extend the National Aid Fund, support sustainable micro financing, and increase employment opportunities in rural areas and small towns through Cluster Village Development. In addition, social safety net policy changes under the new strategy have been rapidly implemented. The new program, now rechristened the Family Income Supplement program, which began in May 2002, was designed to bridge the gap between a family's real income and the poverty line. Jordan's National Social and Economic Plan (2004-06) reflects the continued concern of national planners, and puts "relatively high levels of poverty and unemployment" at the top of the list of current challenges facing Jordan. This report fills the knowledge gaps identified in the new strategy for poverty alleviation by utilizing the newly available results of the Household Expenditure and Income Survey. This report assesses poverty in Jordan in 2002-03, and examines the changes that have occurred since 1997 as a result of economic growth and the income distribution policies of the Government of Jordan. By assessing the social protection policy implemented under the N~tional Strategy for Poverty Alleviation (2002), and drawing implications for poverty alleviation outcomes in the areas of social protection, health, and education, the study aims to aid the efforts of government, civil society, and development partners to address the needs of the poor in a more effective manner, and accelerate the pace of poverty reduction. The main conclusion of the study is that poverty declined in Jordan unambiguously between 1997 and 2002-03. The study estimates that the percentage of poor in Jordan fell by a third from 21.3 percent in 1997 to 14.2 percent in 2002. This remarkable reduction in poverty has been made possible with an equally remarkable growth in per-capita private consumption, in which the poor participated, at about 3.5 percent a year. This XVI growth in consumption outpaced per-capita income growth at about 0.8 percent a year. This fast rise in private consumption appears to be due to a recovery in consumption trends that is mainly policy driven. Private consumption is rising in response to supportive macroeconomic environment and greater confidence in economic prospects. The poor gained in non-income dimensions as well. Illiteracy among the poor has declined by 41 % on the strength of government's literacy campaigns targeting the poor and Education for All strategy. In the health dimension, the infant and child mortality for the poor may have declined nearly bya third. However, there are some important concerns about the sustainability of the current pace of poverty reduction efforts in Jordan that have some important policy implications. First, sustainability of the current pace of reduction in poverty would require acceleration in GDP growth to at least 6 percent. Second, long-term policy needs to focus more on regional imbalances in development, improve the access of the poor in education, health and jobs for sustained reduction in poverty. Third, in the transition, there is an urgent need to plug the leakage in government's cash transfer program two-thirds of which is collected by the non-poor and institute poverty monitoring systems for timely remedial action instead of waiting for results from surveys at five-yearly intervals as at present. The process through which it was initiated, prepared, and discussed is a key strength of this collaborative work between the World Bank and the Government of Jordan. I believe the report will enable a constructive debate and further the cause of poverty alleviation efforts in Jordan. /~L. -e... Mustapha K. Nabli Chief Economist and Director Social and Economic Development Group Middle East and North Africa Region YoORLD BANK XVll Foreword Poverty alleviation and combating unemployment are central pillars in Jordan's development process. During the past five years, the government has focused on devising and implementing measures to propel economic growth to higher and sustainable levels, while laying the foundation for building a new Jordanian model that is resilient to external factors and is commensurate with the evolving global trends. This new model is based on the premise of transforming Jordan into a knowledge- based economy, built on the vast potential of its people and enabled by a competitive and export-oriented business environment. We have adopted an aggressive and comprehensive approach to development that relies on the active partfcipation of the private sector. Our commitment to attract private investments to facilitate the transfer of capital and know-how is also demonstrated through focusing on improving the key parameters that derive the selection of an investment environment. Creating this environment also necessitates an investment in our young people. To this end, our investment in human capital has begun to take a new course in recent years, with the focus being not only on the size of the investment, but also on its quality. The ultimate goal is to equip graduates with the quality education and skills that are required by today's highly competitive global labor market. Additional steps are also being taken to enhance research and development as a stepping stone in raising Jordan's competitive capacity, as a means of accelerating its development. Moreover, Jordan has adopted a sweeping fiscal, legislative, judicial, and administrative reform agenda. For one, fiscal reforms focus on creating a self-sustaining budget and reducing dependence on foreign aid in the medium- and long-term. A rigorous public sector reform process aimed at producing an efficient government with minimal bureaucracy was also introduced to achieve greater government efficiency, transparency, and accountability. The process also seeks to improve the quality of civil servants through training and education as well as the introduction of ICT into every facet of government work. The translation of the primary prize of all developmental efforts - a sustainable improvement in the welfare of citizens - has as its most basic manifestation alleviating poverty through providing opportunity. All along, these efforts must be vetted through monitoring and evaluation. And it is, therefore, that this report constitutes an integral part of the current efforts. This report is the result of a comprehensive analysis conducted in close cooperation between the World Bank and national institutions including the Ministry of Planning and International Cooperation, the Ministry of Social Development, and the Department of Statistics. This report's findings are inline with those presented by other national reports, including the Millennium Development Goals Report, and the Jordan National Human Development Report, all of which demonstrate that Jordan is on the right path towards building a strong and robust economy and delivering the benefits of development to its citizens. In addition to pointing to the fact that poverty incidence has been reduced from 21.3% in 1997 to 14.2% in 2002-2003, the report indicates that illiteracy has also declined by 41 % to reach 13% in 2002-2003 compared to 22% in 1997, while infant and XVlll child mortality rates among the poor have been reduced by one third within the same period. Despite the positive indications reflected in the report, the government is astutely aware of the challenge still facing Jordan, including still high budget deficit (before grants) and public debt levels, dependence on foreign aid, as well as the high levels of poverty and unemployment. The government, therefore, will continue to aggressively pursue refonn efforts aimed, first and foremost, at ensuring a better future for all. Sincerely, Bassem I. Awadallah Minister of Planning and International Cooperation 'oM:ALD BANK j XIX ;"' ,..~ PREFACE This report reflects the results of close collaborative work between the Government of Jordan (Department of Statistics, Ministry of Planning and International Cooperation, Ministry of Social Development) and the World Bank. The main audience consists of policymakers, researchers, development partners, and civil society. The study is a diagnostic that aims to establish, on a sound methodological basis, a set of new poverty lines for Jordan, drawing mainly on the newly completed Household Expenditure and Income Survey 2002-03. This report estimates the incidence of poverty across administrative units (sub-districts at the lowest level) and ca1culat~ the changes in poverty between 1997 and 2002-03. Combined with a new Statistics Law that allows dissemination of detailed survey data, this report will also serve as a knowledge base for future poverty studies and the country's large operational agenda. Recommended follow- up measures include setting up a poverty impact monitoring system; improving poverty alleviation schemes, particularly the social safety net; and better targeting of education, health, and other interventions. The Jordanian counterpart team was led by Dr: Hmoud Olimat, Secretary General, Ministry of Social Development; and comprised Dr. Hussein Shakatreh, Director General, Department of Statistics; Hala Bsiso, Secretary General, Ministry of Administrative Refonns; Dr. Mohammad Refai, Adnan Badran, and Hind Diab, from the Department of Statistics; Mohammad Khasawneh and Dr. Ibrahim Hejoj, from the Ministry of Planning and International Cooperation; Omar Hamzeh, from the Ministry of Social Development; and Abd AI-Rahman Khawaldeh and Hassan al-Rousan, from the National Aid Fund. Other Jordanian contributions came from Dr. Mohammed Tarawneh, development anthropologist, Yannouk University; and Abdel Salam AI-Naimat, Royal Scientific Society. The World Bank team comprised Srinivasan Thirumalai (team leader) and the following specialists: Ayesha Vawda (education); Firas Raad (health); Jennifer Keller (labor market), Iqbal Kaur (vulnerable and disadvantaged children); G.V. Rao (research assistance, STATA statistical software); Isabelle Chaal-Dabi and Angela Hawkins (team assistance). The team benefited from external consultants. Professor Nanak Kakwani, currently the Director and Chief Economist of International Poverty Center of UNDP in Brasilia, prepared, participated in, and guided the process of constructing new poverty lines and poverty estimates. Dr. K. Subbarao, contributed his expert analysis of social safety nets. The team wishes to thank peer-reviews by Arup Banerji and Linda Van Gelder. While in progress, the work was discussed at several workshops and meetings in the fall of 2003 and winter of 2003-2004. On February 18, 2004, the National Development Committee approved the methodology of the study in a special session, under the guidance of His Excellency Dr. Bassem Awadallah, the Minister of Planning and International Cooperation. At the World Bank, the report was written under the general guidance of Mustapha Kamel Nabli, Chief Economist and Director, Middle East and North Africa Region; Joseph Saba, Country Director; and Dipak Dasgupta, Sector Manager. Comments on gender issues from Randa Akeel and Waafas Ofosu-Amaah are gratefully acknowledged. There are many in Jordan whom the team cannot thank enough. Tayseer AI-Smadi, Secretary General, Ministry of Planning and International Cooperation, facilitated and guided the process, despite ·his many other responsibilities. Mohammad Khasawneh, a poverty researcher at Ministry of Planning and International Cooperation, coordinated the work of the Jordan team. Khadija Yousef at the Department of Statistics tirelessly prepared several data sets that the team requested. Tayseer Anees at the Department of Statistics and Cern Alkan at the World Bank prepared the geographic poverty maps. Khamees Raddad at Department of Statistics clarified key aspects of the sample design. A special thank you to Bill Lyons for providing the cover picture. 1 CHAPTER! POVERTYINJORDAN:~ETHODOLOGY,LEVELS,TRENDS "No one knows exactly how many Jordanians are poor today, where they live, or what their demographic characteristics are .... Current estimates indicate that up to one third of the Jordanian population live beneath the poverty line. " Poverty Alleviation for a Stronger Jordan - A Comprehensive National Strategy, May 2002. 1.1. This study draws extensively on the newly completed Household Expenditure and Income Survey (HEIS) for Jordan (2002-03) to propose new household specific poverty lines and measure poverty. The consumption approach to the identification and measurement of poverty is the main focus of this chapter. The deprivation of the poor in other dimensions such as education and health are taken up for analysis in the subsequent chapters. Section A of this chapter presents an overview of GDP growth in the 1990s to serve as a backdrop for what follows about the evolution of poverty in Jordan. Section B details different stages in Jordan specific empirical implementation of the preferred methodological approach such as calorie requirements, calorie costs, spatial price indices, food and non-food poverty lines. The next Section C reviews the trends in the growth rates of private consumption per-capita - the preferred welfare measure - at the governorate levels based on the HEIS (2002-03) and examines the inequality patterns and trends between 1997 and 2002. Concluding Section D computes the incidence of poverty in Jordan using the new poverty lines and shows how it changed over time at different levels of geographic areas and administrative units to discern differences between rural versus urban, governorates and sub-districts. 1.2. Key messages from this chapter are: • Poverty in Jordan declined significantly between 1997 and 2002. This conclusion about the direction of change in poverty is robust to the choice of poverty lines and alternative poverty measures that use consumption as a measure of welfare. The proportion of poor, for example, declined from 21 percent in 1997 to 14 percent in 2002, using a consistent poverty line. The depth of poverty - the proportionate deficit of actual consumption of the poor from the poverty line - declinedfrom 5 percent to 3 percent. • Rural-Urban differences in poverty accentuated between 1997 and 2002 in continuation of the previous trend. Rural areas have 50 percent more poverty than urban and the rate of decline in poverty is slower compared to the urban. • Though poverty declined significantly at the national level, in one governorate - Zarqa (15 percent of population) - poverty actually increased (from 16 to 22, in 2 terms of the percentage of the poor}, reversing the trend observed earlier in the decade. The increase in unemployment registered in Zarqa from J J percent to J4 percent, the steep rise in NAF claimants corroborate that living conditions must have worsened in Zarqa. Some significant factors such as relocation of military establishments could be at work here. • Within Jordan there are pockets of intense poverty (J 2 out of 73 sub-districts). In these pockets, the incidence ofpoverty is extreme reaching up to 75 percent of the population. The sub-districts identified as pockets of poverty tend to be mostly located in the desert areas of the country that are thinly populated posing special challenges for spreadingfruils of development. POVERTY IS A KEY CONCERN FOR POLICY MAKERS IN JORDAN 1.3. Jordanians are very sensitive to poverty and unemployment. It is useful to remember that Jordan had little poverty or unemployment prior to the economic collapse in 1989. The inevitable economic collapse dumped 17 percent of the Jordanians into poverty and rendered 20 percent of the labor force unemployed. Following successful macroeconomic stabilization in the early 1990s, GDP growth peaked to near 19 percent in 1992 (Figure 1.1) helped in part by the housing boom fed by the savings brought in by the Gulf returnees. However, growth proved to be transient as the housing boom ran its course and expectations of peace dividends from 1994 peace accord did not materialize. Active redistribution policies reduced consumption inequality and reduced the proportion of poor by 2.6 to 2.7 percentage points between 1992 and 1997 despite the 1.5 percent decline in per-capita consumption in that period]' I World Bank (2001). Using Survey per-capita consumption expenditures deflated by CPl, Table 1.11 on page 23. WCJRLD BANK 3 ., ... ,. ,. ~ "," , Figure 1.1: Real GDP Growth Rates In Jordan, 1988-2003 Post Gulf War Boom King Abdullah II accession 0- Economic collapse -10 I -20 -t---,------,r----r---.---r-------rl---;---"'1'"""1-,...-------, 1984 1988 1992 1996 2000 2004 Source: World Bank (2001), updated. 1.4. After sputtering at a GDP growth rate just below population growth, the economy responded resiliently since 1999 overcoming the adverse neighborhood effects. This revival is not an accident. Upon ascending the throne in that year, His Majesty King Abdullah II consciously promoted an accelerated pace of structural refonns which, among other things, had the net effect of bringing down weighted average import tariffs to 10 percent and achieving a privatization record amounting to 11 percent of GDP. Jordan has achieved acceleration in Human Development Index (Box 1.1) particularly since 1999 even as it made rapid strides in structural reforms. 1.5. Despite impressive policy changes, concerns about the impact of these policies on the lives of ordinary Jordanians remain. Though GDP growth revived to an average of 4 4 percent since 1999, the unemployment rate estimated by official agencies remained at around 14 percent. Prompted by the concern towards the disadvantaged, the government announced a comprehensive national strategy for poverty alleviation in Jordan in May 2002. The ceiling for assistance to families covered by Jordan's social safety nets was increased 75 percent to JO 156 in 2002. Jordan's National Social and Economic Plan (2004-06) reflects the continued concern on the part of national planners and identifies "relatively high levels of poverty and unemployment" at the top among the list of current challenges faced by Jordan. The new plan targets reduction in the proportion of poor by a third over 2004-06 to 8 percent. This is sought to be implemented in the plan by selecting investment projects with explicit weight for potential to reduce unemployment and poverty in rural and remote parts of the country. 1.6. Amidst this rising concern for the poor, the current poverty assessment seeks to build a consensus on a new poverty line for Jordan, to derive new estimates of poverty, and to understand the profile of the poor using the results of the Household Expenditure and Income Survey 2002-03 . Box 1.1: Jordan Excels In Human Development Jordan's achievements in Human Jordan HOI 1980-2001 Development exceeds comparators at similar levels of GDP. The 0.74 ... UNDP's Human Development 0.72 /' Index (HDI) is a composite indicator 0.7 /' of welfare that combines a weighted ~ sum of three indices related to life 0.68 ~ expectancy at birth, educational 0.66 attainment, and per-capita income 0.64 ~ (the higher score the better). 0.62 '" According to the HDI classification, 1980 1985 1990 1995 2001 UNDP classifies Jordan a medium human development country. Its overall human development ranking Source: Jordan Human Development Report, UNDP, 2000 is 90 (among 175 countries) and the HDI value is 0.743. The accompanying chart shows the steady improvement in human development for Jordan over the last two decades. Jordan's life expectancy has improved from 67 years in 1990 to 70.6 in 2003. Over the same period adult literacy rate has grown from 75% to 90.3% and real GDP per-capita (US$ PPP) has increased from 3161 to 3870. Jordan ' s Human Development achievements compares favorably with other Arab and non-Arab comparators. Lebanon is the only non-oil producing Arab country that ranks higher than Jordan. In terms · of life expectancy, Jordan is just behind Lebanon and Tunisia among its Arab comparators. '" ' I, '\ 5 NEW POVERTY LINE FOR JORDAN 1.7. The official poverty line for Jordan dates back to 1987 (Al-Saqour et al 1989). In calculating that poverty line the committee essentially used a normative basket (food and non-food) for a typical Jordanian household and calculated the cost of the items. The two World Bank studies on poverty in Jordan since that time (World Bank 1994 and 2001) updated the original poverty line derived for 1987 with the consumer price index. Thus, for example, the World Bank (2001) used JD 313.5 as the "absolute" poverty line per- capita per year for 1997. A good summary of the past poverty studies in Jordan including the poverty lines used in them (ranged from JD 252 to JD 478 in 1997 prices) is available in the last poverty study for Jordan by the World Bank (2001) and not reproduced here for economy. No significant new studies have become available since then. 1.8. Estimating a set of new poverty lines for Jordan that are specific to household demographic characteristics, -allow for spatial price differences and economies of scale, and anchored in the current, revealed that the expenditure pattern of households is expected to improve the quality of the estimated poverty line and poverty measures following current best practices. A comprehensive discussion of critical methodological issues in constructing poverty lines such as the concept of poverty, different approaches to poverty hnes, the criteria to be met by absolute poverty lines, choices in setting food poverty lines and non-food poverty lines is provided in Annex 1.1. 1.9. Much of the calculations for the new poverty lines and poverty measures rely on the newly available HEIS (2002). This survey was done in four quarterly Rounds between March 2002 and February 2003. For the first time, a large sample of 12,792 households were surveyed using a two-stage stratified cluster sampling technique designed to give reliable estimates of consumption and income at the sub-district level. A detailed note on the sample design is placed in Annex 1.2. The previous household survey for 1997 was done on a much smaller scale of 6000 households. Most of the common questions between the two surveys were considered comparable for the purposes of calculation of consumption aggregate. A detailed comparison of the two surveys is presented in Annex 1.3. Standard errors for household consumption expenditure estimates for all the sub-districts in Jordan are placed in Annex 1.4 to help judge the reliability for the estimate. HEIS (2002) had special questions on disability, receipts of transfer payments, environment, etc, which add scope for more detailed analysis of poverty. Calorie requirements 1.10. The food poverty line may be constructed using the calorie requirements (norms) of individuals. This is a very common approach that is used in many countries to construct food poverty line. 1.11. Since the calorie norms vary from country to country depending on factors such as age, sex, body weight and activity levels, it is important that we adopt norms 6 appropriate for the country being studied. In the construction of Jordanian poverty line, we should use the caloric norms that are appropriate for the Jordanian population. We followed the following procedure to construct the caloric norms, which are appropriate for the Jordanian population. 1.12. First we obtained the average weight of the Jordanian population that is 10 years old and over. The weights obtained from James and Schofield (1990) together with recent update on Jordanian adult body weights obtained from a module to Employment Unemployment Survey in May 2002 served as the basis as presented in Table 1.1 . Table 1.1: Average Weight Of The Jordanians Age Male Female 10 26.7 25.2 11 29.7 28.3 12 33.4 31.7 -- 13 43.8 41.2 14 50.1 45.0 15 56.5 51.9 16 62.0 56.4 17 18-29 30-59 -~ -- -f 66.0 71.5 77.6 59.1 60. 1 71.2 60+ [ 76.7 73.7 Source: Staff Estimates Note: Age groups 18 and up from Jordan Ministry of Health special "Behavioral Risk" module added to May 2002 Employment, Unemployment Survey. For ages 10 through 17, information was obtained from James and Schofield (1990) and then the weight of the teens (13 to 17) were adjusted to match the ratio of the weight of the 18-29 age group in the Behavioral Risk study and James and Schofield (1990) . 1.13. Given the average weight of the population by age and sex, one can use the following standard formulae to estimate the basal metabolic rate (BMR) caloric or energy requirements of individuals while at rest. Male by age Equation for calorie per day 10-17 years 17.5*W+651 18-29 years 15.3*W+679 30-59 years 11.6*W+879 60+ years 13.5*W+487 'MJALOBANK ' .. ~ 7 Female by age 10-17 years 12.2*W+746 18-29 years 14.7*W+496 30-59 years 8.7*W+829 60+ years 10.5*W+596 1.14. Individual BMR requirements calculated by these formulae need to be mUltiplied by a factor to reflect an individual's activity level. The average BMR multipliers for current activity level are given as follows: Males with light activity;:= 1.55 Female with light activity = 1.56 Male with moderate activity = 1.78 Female with moderate activity = 1.64 Male with heavy activity = 2.10 Female with heavy activity = 1.82 1.15. Since we did not have the activity levels of each individual in the household, we decided to use the moderate activity multipliers for both male and female. Thus, we multiplied BMR requirements for male individuals by 1.78 and female individuals by 1.64. , 1.16. The calorie requirements so calculated for the population aged 10 years and older are presented in Table 1.2. Table 1.2: Daily Calorie Requirements For Jordanian Population Age Male Female <2 years 791 740 2-5 1618 1480 6-9 1924 1689 10 1990 1728 -- II 2084 1790 12 2199 1858 13 2522 2048 14 2720 2124 15 2917 2262 16 3092 .2353 17 3216 2406 8 Age Male Female 18-29 3156 2262 30-59 3167 2375 60+ 2710 2247 Average: 1997 2314 Average 2002-03 2309 Source: Staff Estimates based on HEIS (2002). 1.17. The calorie requirements for children under 10 years of age by sex were obtained directly from F AO Nutrition Technical Assistance (F ANT A) project. They are based on National Center for Health Statistics (NCHS, USA) median weights at mid-point of age range. For the younger children, less than two years old, an allowance was made for likely infection. 1.18. It can be seen that calorie requirements vary substantially with age and sex. Children require fewer calories than the adults. Also, males require considerably more calories than females. Most studies on poverty specify a single calorie requirement for everyone in the population (for instance 2000 calories per person per day) . This would, obviously, bias the estimates of poverty incidence. The incidence of poverty among the families with children will likely be overestimated and the families with proportionally more adults would be underestimated. 1.19. To obtain the average nutritional requirements of the popUlation, one needs to aggregate the per person calorie requirement of each individual in the sample households in the survey. This aggregation was performed by means of the weighted average method with the weight equal to population weight given to each sample household.2 1.20. It is noted Table 1.2 that the Jordanian population in 1997 required an average of 2314 calories per person per day. This average decreased slightly to 2309 in 2002-03, which is attributed to the change in the population composition that occurred between 1997 and 2002-03 . Calorie intake and calorie cost 1.21. Having decided upon the calorie requirements, the next step is to convert required calories into a food poverty line, which is the expenditure on food that is required to meet the exogenously determined calorie requirements. If we know the cost of buying the calories, then the food poverty line will be equal to calorie requirements mUltiplied by the cost of calories. Thus, the next step will be to determine the cost of calories. 2 Population weights were detennined by multiplying sample weights by household size WOALDBANK I 9 1.22. Jordan's HEIS provides infonnation on quantities of food consumed by the households. These food quantities can be converted into calories by means of food calorie conversion factors, which are generally available from the country's nutritional departments. Unfortunately, the detailed calorie conversion factors are not available in Jordan. Jordan's health department provided us with calorie conversion factors for some commodities, which we supplemented with conversion factors obtained from the FAO web site. Annex 1.5 presents the calorie conversion factors constructed for this study. 1.23. Given the quantities of food consumed by each sample household, we could compute the actual calorie intake of each sample household by multiplying the quantities by the calorie conversion factors. Dividing the calorie intake of each household by its size gave us each household's per-capita calories intake. 1.24. Do the richer households have a greater per-capita calorie intake than the poorer households? To answer this question, we constructed quintiles on the basis of per-capita total household expenditure. 1.25. Figure 1.2 presents the per-capita calorie intake by quintiles. It is noted that the bottom quintile consumes 1857 calories per person per day whereas the top quintile consumes 5030 calories per person per day. Thus, there exists a huge difference in calorie consumption between the rich and the poor. This huge difference may partly be due to the fact that the richer households have greater wastage of food than the poorer households. Table 1.3: Per-Capita Calorie Intake, Food Expense And Calorie Cost: 2002-03 Per-capita Calorie intake Calorie cost Quintiles Food exp Per person Per 1000 cal Quintile 1 JD 150 1857 0.2217 Quintile 2 JD242 2522 -. 0.2627 Quintile 3 JD324 3007 0.2953 Quintile 4 JD436 3671 0.3251 Quintile 5 JD754 5030 0.4139 All persons JD 383 3217 0.3265 Note: The numbers in the last coilimn appear approximate due to the rounding off to the nearest numbers in the earlier columns. Source: StqffEstimates based on HEIS (2002). 10 • Figure 1.2: Per-Capita Daily Calorie Intake By Quintiles Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5 All persons Source: Staff Estimates based on HEIS (2002) . 1.26. Table 1.3 presents the per-capita food expenditure by quintiles along with calorie intake and calorie costs. In the first quintile, the per-capita food expenditure is only JD 150 per annum whereas in the fifth quintile, it is JD 754. 1.27. Given the per-capita food expenditure and per-capita calorie intake, we can calculate the calorie cost for each quintile by dividing the food expenditure by the calorie intake. The last column in Table 1.3 presents the calorie cost in JD per 1000 calories. It can be seen that the population in the bottom quintile spends JD .2217 in order to be able to consume 1000 calories whereas the population in the top quintile spends JD .4139 in order to be able to consume the same 1000 calories. This huge difference in calorie costs is due to the fact that richer households tend to consume rich food, which is more expensIve. 1.28. It is obvious that in the determination of food poverty line, we cannot take account of expensive tastes of the rich households. If we did, then the poverty line will be so high that most of the population will be poor. When the government adopts a poverty line, it agrees on a minimum standard of living to which everyone in the society should be entitled. If the poverty line is too high, then the government would not be able to fulfill its commitment to maintain the minimum standard of living of its population. The poverty hne should not be so low that almost everyone in the society is non-poor. In such a situation, the government may not be motivated enough to raise the standard of living of those who are unable meet the absolute basic needs. These absolute basic needs are not completely absolute. They are relative to the society's overall standard of living. So in It determining the poverty Iline, we have to decide upon a reference group, whose consumption pattern (or calorie cost) we should use in order to build on the poverty line. 1.29. The calorie cost is an important determinant of the standard of living of a household. Technical proof that calorie cost adjusted for regional food prices is a monotonically increasing function of the society's minimum standard of living is provided in Annex 1.6. The calorie cost increases as we move from a lower quintile to a higher quintile, which implies that the calorie cost increases more or less monotonically with the household's per-capita consumption expenditure. It is obvious that the reference group should contain the population that can generally be regarded as poor. This suggests that the population belonging to the bottom quintile may be a good reference group, which on average spends JD .2217 in order to consume 1000 calories (Figure 1.3). So we have decided to determine the food poverty line using the calorie cost of JD .2217 (per 1000 calories). Figure 1.3: Calorie Cost Per 1000 Calories By Quintiles 0.5 0.4 0.3 0.2 0.1 o Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5 All persons Source: Staff Estimates based on HEIS (2002). Spatial price indices 1.30. Spatial price indices measure the relative costs of living in different regions and communities. These indices are essential for poverty measurement because they allow one to take into account regional cost of living differences. 1.31. To compute the spatial price indices, we need to know the average prices for food and non-food items of consumption in each region. Jordan has 12 governorates, which are like provinces in other countries. Until 1997, Jordan's Department of Statistics (DOS) collected these prices for each governorate. Utilizing a national basket and average prices, the DOS computed the spatial price indices for each governorate. These indices computed separately for food and non-food items of consumption are presented in Table 12 1.4. The index for Jordan is 100. The relative cost of living in each governorate can be compared with respect to the average cost of living in Jordan. Table 1.4: Spatial Price Indices By Governorates In 1997 Food Non-food Total Amman 101.31 108.09 105.09 Balqa 97.76 84.45 93.00 Zarqa 99.89 95.17 98.15 Madaba T 97.17 90.44 ---- 95.98 Irbid 97.4 90.45 95.38 ---------+------ Mafraq 96.44 84.89 92.91 Jarash 97.4 90.81 95 .38 ---- Ajloun 96.2 84.64 92.78 Karak 98.83 88.8_ _ _ _ 1 1 94.69 Tafeela 99.46 89.99 96.82 ~-- Maan - - - 101.78 90.67 97.84 Aqaba 102.78 97.06 99.81 Jordan 100.00 100.00 100.00 Source: Staff Estimates based on HEIS (2002). 1.32. Given the spatial price indices in 1997, one could obtain the spatial price indices for 2002-03 by means of consumer price indices computed separately for each governorate. Unfortunately, in the late 1990s, the DOS stopped collecting the price data in each governorate so we cannot know how the prices have changed in each governorate between 1997 and 2002-03. However, price indices at three regional levels (North, Center and South) are available, which we assume to hold good for aU the governorates in the same region. Thus, we computed the spatial prices indices in 2002-03 given in Table 1.5 by applying uniformly the national food, non-food and total price changes to each governorate. VtORLDBANK 13 Table 1.5: Spatial Price Indices By Governorates In 2002 1997 = 100 Food Non-food Total Amman 101.9 120.2 111.9 --r- Ba1qa 98.3 93.9 99.0 Zarqa 100.S lOS.8 104.S --I--- Madaba Irbid -+ 97.7 96.6 100.6 100.4 -- 102.2 100.4 Mafraq 9S.6 94.3 97.8 ~----- ----- Jarash 96.6 100.8 100.4 Aj10un 9S.4 94.0 97.7 +- Karak 97.1 94.S 97.0 Tafee1a 97.7 9S.8 99.2 Maan 100.0 96.S 100.2 Aqaba 101.0 103.3 102.3 Jordan 100.1 110.8 106.0 Source: Staf/Estimates based on HEIS (2002). Food poverty line 1.33. As pointed out, once we know the calorie requirements, we can compute the food poverty line by multiplying the calorie requirements by the costs of the calories. The cost of calories is determined by the food baskets that different sections of the popUlation consume. The average calorie cost incurred by the households in the first quinti1e was calculated to be equal to JD 0.2217 per 1000 calories. We would use this as a benchmark to compute the food poverty line. 1.34. Since the cost of buying food varies across the governorates and over time, the calorie cost needs to be accordingly adjusted. This adjustment can be done using the spatial price indices for food given in Tables 1.4 and 1.5. Table 1.6 represents the calorie cost per lOOO calories in 1997 and 2002-03 for each governorate. The differences in calorie costs across governorates are attributed to the differences in food prices. 14 • Table 1.6: Calorie Cost By Governorate 1st Quintile 1997 2002-03 Amman 0.2246 0.2230 Balqa 0.2167 0.2230 Zarqa 0.2214 0.2230 Madaba 0.2154 0.2230 Irbid 0.2159 0.2198 Mafraq 0.2138 0.2198 Jarash 0.2159 0.2198 Ajloun 0.2132 0.2198 Karak 0.2191 0.2178 Tafeela 0.2205 0.2178 Maan 0.2256 0.2178 Aqaba 0.2278 0.2178 Jordan 0.2217 0.2219 Source: Staff Estimates based on HEIS (2002). 1.35. Multiplying the calorie requirements by calorie costs gave the food poverty line for each sample household in the survey. Using the method of weighted averages, we computed the average food poverty line for each governorate and for Jordan. These results are presented in Table 1.7. Table 1.7: Average Food Poverty Line By Governorate (JD Per Year) Food Poverty Line 1997 2002-03 Amman 193 190 Balqa 180 187 Zarqa 187 187 Madaba 181 186 Irbid 182 185 Mafraq 175 182 Jarash 177 182 Ajloun 174 182 Karak 185 185 Tafeela 181 182 Maan 185 182 Aqaba 188 179 Jordan r 186 187 Source: Staff Estimates based on HEIS (2002) . V\CIALO BANK 15 ...;'''''''' ... . .. I Determination of the non-food poverty line 1.36. The detennination of the non-food poverty line is more difficult than the food poverty line. It is obvious that we should include only those non-food items that are deemed absolutely essential. 1.37. One approach is to specify some non-food items of consumption that are deemed essential, for instance, adequate clothing, shelter, education and medical services. Given the market prices of these items, we can get an amount for minimum non-food expenditure. However, this approach may be viewed as arbitrary and can be subject to controversy. Thus, this approach is generally not used. Although the concept of poverty is subjective, we should try to measure it as objectively as possible so that we can make poverty comparisons over time and across various socioeconomic and demographic groups. We propose to use the standard consumer theory to detennine the non-food poverty line. 1.38. In the standard consumer theory, a consumer maximizes a utility function u (q) by choosing a bundle of goods and services q to satisfy the budget constraint pq =x, p being the price vector and x is the total available income to spend. From this theory, we can derive the expenditure function for each commodity, which is the minimum expenditure on the commodity that will be required to obtain a u level of utility at a given price vector p. If we add the expenditure functions of all commodities, we obtain the total income or expenditure function. Thus, the total expenditure function is the minimum total expenditure that will be required by a consumer to enjoy a u level of utility. 1.39. Suppose we have obtained the food poverty line F on the basis of nutritional requirements. Substituting F into the food expenditure function (derived from the consumer theory), we can solve it for the utility level uz, which will be implied by the food poverty line at the given price vector p. Using uz into the total expenditure function, we can obtain the total poverty line, z, which will be consistent with the utility level uz. The non-food poverty line will be equal to z-F. We describe this procedure using a simple diagram. 1.40. In Figure 1.4, the horizontal axis represents the utility level and the vertical axis represents the expenditures. The figure depicts the food and the total expenditure function, both of which are the increasing functions of the utility level. C is the point that corresponds to the food poverty line (JD 187) on the food expenditure function. Corresponding to point C, we obtain B on the x-axis, which gives the utility level uz that is consistent with the food poverty line. 16 Figure 1.4: Determination of The Non-Food Poverty Line Total expenditure function Total Poverty Line Food E JD 187 poverty line I I I I ............!.......... . ................................ ................ I ~ JD 103 I I I A : B I o Utility U * u Z z Source: Stal/Estimates based on HEfS (2002). 1.41. Corresponding to point B on the x-axis, we obtain point D on the total expenditure function, which gives BD as the total poverty line (JD 392) that is consistent with the utility level uz. Obviously then, CO will be the non-food poverty line (JO 205). The non-food poverty line so obtained will be consistent with the standard consumer theory. 1.42. Ravallion (1998) suggested estimating the non-food poverty line using the idea that if a person's total income is just enough to reach the food threshold, anything that a person spends on non-food items will be considered, as basic non-food needs. According to this idea, the non-food poverty line is the household's non-food expenditure at which the household's total expenditure is equal to the food poverty line. At this point, the household's income is just sufficient to buy only the nutritionally adequate food basket so that any expenditure a household incurs on non-food will be absolutely essential. 1.43. In the figure, E is the point at which the total expenditure is equal to the food poverty line. At this point, FE will be the non-food poverty line (JD 84), which will always be less than CD. The non-food poverty line will correspond to the utility level u*z, whereas the food poverty line corresponds to the utility level uz. Thus, the food and non-food poverty lines do not imply the same level of consumer utility. We use CD as the WORLD BANK j 17 . ...... non-food poverty line to keep consistency with the utility level attained by the households that incurred food expenditures equal to the food poverty line. 1.44. How can we make the above methodology operational when our proposed food poverty line varies across households depending on the household composition and also in which governorate the household is located? Thus there is no single food poverty line. We used the following regression model to calculate the average non-food poverty line. Non-Food Poverty Line 1.45. In the measurement of poverty, our concern should be more with individuals rather than households. We should measure the percentage of poor individuals rather than the percentage of households. To measure the percentage of individuals in poverty, we have to make an assumption that if a household is identified as poor then all its members are also poor. The validity of this assumption is difficult to establish because information on how household members share their common resources is generally not available from the Households Expenditure and Income Surveys. The common practice is to make this assumption and estimate the incidence of poverty by the percentage of individuals who are poor. This is exactly what we have done. 1.46. Step 1. Calculate the ratio of a household's per-capita food expenditure to the household's per-capita food poverty line multiplied by 100. This ratio will be equal to 100, when the household's per-capita food expenditure is equal to the household's per-capita food poverty line. Take the logarithm of this variable, which is denoted by Ifwell. Step 2. Generate logarithm of per-capita expenditure, which is denoted by Ipc_exp. Step 3. Regress Ifwell on lpe_exp. This regression model based on HEIS 2002-03 was computed to be equal to lfwetl = - .1806 + .80 17*lpc_exp, R2 = .62 (-8.99) (267.4) where figures in brackets are t values . Step 4. Calculate Ipc_ exp at the point where fwell = 100. This gave the average total poverty line for Jordan as equal to JD 392. Given the average food line of JD 187 for Jordan, we obtained the average non-food poverty line for Jordan in 2002- 03 as equal JD 205 (per person per year). Step 5. The average non-food poverty line for 1997 was computed using the average non-food poverty line for 2002-03 but adjusting it for the changes in CPI between 1997 and 2002-02. Thus, average non-food poverty line in 1997 was computed to be equal to JD 179 per person per year. 18 1.47. The above procedure provides the non-food poverty line at the national level. To achieve consistency of the non-food poverty line across the governorates, we have to ensure that the real non-food poverty line is the same across all governorates. Since the spatial non-food prices indices are given in Tables 1.4 and 1.5, we can easily make adjustment to the non-food poverty line for differences in non-food prices across governorates. We made this adjustment such a way that the average non-food poverty line in Jordan is the same. 1.48. Finally, we made an adjustment for economies of scale. Using a model proposed by Kakwani (2000), we estimated the economies of scale parameter for non-food as equal to 0.92. In the estimation of this parameter, we assumed that there are no economies of scale in the food consumption. Figure 1.5 shows the effect of economies of scale on per- capita poverty lines implicitly including demographic characteristics of households as household size increases. While the estimated average poverty line is 10 392, among households it can vary between 10330 to 10 450. Figure 1.5: Household Size And Poverty Line, 2002 500 N o 450 o N Q) 400 C ..J 350 > o c.. 300 ~ ~ ~ ~ m ~ ~ ~ ~ m ~ ~ ~ ~ ~ ~ ~ ~ N N N Household Size Source: SlajjEslimales based on HEIS (2002) . 1.49. Suppose (MNFPL) is the average per-capita non-food poverty line and 8 is the economies of scale parameter, then the adjustment for economies of scale can be made using the fonnula (NFPL)j = k (MNFPL) nj (8 -I) where k is the constant of proportionality. If 8 is equal to 1, then every household will be allocated the same per-capita non-food expenditure of (MNFPL) implying no economies of scale. If 8 is equal to 0, the ith household will be allocated the per-capita expenditure of (MNFPL)/nj. The parameter k is detennined so that the mean of (NFPL)j across all households is equal to (MNFPL), which ensures that the adjustment for economies of scale does not change the population mean of the per-capita non-food expenditure. In our calculations, we have assumed that 8 to be equal to 0.92. WORt..OBANK i 19 "0,; , ,,.. 1.50. Having determined the per-capita non-food poverty line for each sample household, we computed the average non-food poverty line for each governorate and Jordan using the weighted average method with weight proportional to population weight. The results are presented in Table 1.8. Table 1.8: Average Non-Food Poverty Line By Governorate (JD Per Year) Poverty Line 1997 2002-03 Amman 201 230 Balqa 155 178 -- ---- Zarqa 176 201 Madaba 166 191 --- Irbid 166 190 Mafraq 155 178 Jarash 167 --- 190 Ajloun 156 178 Karak 164 179 Tafeela 165 181 l= Maan 167 182 Aqaba ---- 179 -\------ 196 Jordan 179 205 Source: Staff Estimates based on HEIS (2002), 20 1.51. Table 1.9 presents the average per-capita total poverty line for each governorate and Jordan, which is the sum of per-capita food and non-food poverty lines 3 . Table 1.9: Average Total Poverty Line By Governorate (JD Per Year) Poverty Line 1997 2002-03 Amman 393 419 Balqa 336 365 -- Zarqa 363 388 Madaba 347 377 Irbid 348 375 Mafraq 330 360 Jarash 344 373 Ajloun 330 ----- 360 Karak Tafeela 349 346 1- 364 363 Maan 352 364 T -----t- Aqaba ~ 366 375 Jordan 366 392 Source: Staff Estimates based on HEIS (2002). 1.52. Key assumptions in building Jordan's poverty line compares well with other countries for which poverty assessments have been completed recently (Table 1.10). Calorie requirement computed for Jordanians at 2309 is within the range of comparators, almost the same as that for Egyptians. Like most other comparators, in Jordan also economies of scale, regional price differences, and equivalent scales (for food) are taken into account. The reference group for calorie cost reflects a wide choice across countries. 3 Ifwe used the Ravallion (1998) suggestion for non-food poverty line (allowing the actual non-food expenditure of those households whose per capita expenditure just equals food poverty line), the estimated total poverty line for 2002 would have been JD 270. Table 1.10: Construction Of Poverty Lines: A Comparison Of Methods Used In Recent Poverty Assessments , - I -,- Country Year GDP Average Are Are Ref ence Are Observed or Ratio of Non-food to food Method I of Per Calorie equivalent Economies Gr~ for regional arbitrary poverty line for Study capita I requirement scales of Scale calo cost cost consumption non-food 1995 (per capita per day) considered? 'on"d.....? I to s. food differences pove rty li. : . LalioWed? patterns poverty line I - USS I MEN A Jordan - 2002 f166I - 2309 - - Yes Yes ~we Yes Observed Poverty Line: 1.09 D (implicitly (estimated quintl for food by 0.92 for non- age, sex food) specificity) Yemen 2002 314 2200 -- Yes, reports Median Yes Observed Lower Poverty Line: 0.53 A,B sensitivity Upper Poverty Line: 1.25 analysis Egypt 2002 1250 2310 Yes Yes, Second Yes Observed A (implicitly assumed 0.85 quintile for food by age, sex . I specificity) - - I Iran 2003 2209 .. Yes, reports Not kn01 wn Yes Observed Rural : 0.75 E sensitivity I Urban: 1.32 ~-.. I I ~~s Morocco 2001 1476 2000 Yes Yes, reports Second Lower Poverty Line: 0.40 A,B sensitivity quintile I Upper Poverty Line: 0.77 analysis • Tunisia 2003 2580 Rural-2165 Not explicit Not explicit House holds Yes Observed Lower Upper A,B Urban-2179 with per- Poverty Poverty Metro-2143 cap ta Line Line RUra~.43 I I cons un ption of20( -250 Urban 0.44 0.85 0.96 I - - -- '------- - - 19901 D per ~ ~\ r • o : ~ I j \ " . ~ .... N - Country Year GDP Average Are Are Reference Are Observed or Ratio of Non-food to food Method of Per Calorie equivalent Economi ~s Group for regional arbitrary poverty line for Study capita requirement scales of Scale calorie cost cost consumption non-food (per capita considered? considere J? to set food differences patterns poverty 1995 USS per day) poverty line allowed? I line 1 --t I Metro 0.45 1.05 1990 TO po. month Other Regions r- ·1 - - - - - - I -" - Pakistan 2002 527 Rural-2250 Yes Yes 1990-91 Yes Subjective . Upper Poverty Line: C Urban-1950 basic needs Rural: 0.97 poverty line 1" Urban: 1.07 L is updated using 1 consumer ~ceindices Philippines 200 11 " I 2000 Yes Bottom 30% . ofpopul,,'o, nationally fixed I Yes Observed -- A - Dominican 2001 2129 r 2161 First quartile No I Observed Lower Poverty Line: 1.19 A - Republic Panama 2000 3839 2280 Yes Bottom 4 Observed Lower Poverty Line: 0.74 A Notes: f. GDP Per capitafigures are expressed in f995 US$. 2. Construction of non-food poverty line: Method A refers to estimating the non-food allowance by identifying the share of non-food expenditure for households whose total expenditure was equivalent to the food poverty line. Method B refers to estimating the same by considering those households whose food expenditure is equal to the food poverty line. The level of non-food spending in this method is found amongst those who actually reach the food poverty line (rather than those who can merely afford to do so, if they cut all non-food spending). Method C refers to a subjective construction of a bundle of goods that is conceived to be the minimum ~ requirement to cross the total poverty line. Method D refers to estimating a regression of log offood welfare measure (defined as a ratio offood expenditure to food poverty line) on per-capita expenditure and setting non-food poverty line at a point where food welfare measure is unity. Method E uses the share of non-food expenditure of the reference group. ("l ("l ~LD8ANK C. GROWTH AND INEQUALITY IN PRIVATE CONSUMPTION Per-capita nominal and real consumption expenditures 1.53. The welfare measure used in the present study is the per-capita consumption expenditure. It is now widely accepted that consumption is a better measure of welfare than income. It is subject to fewer fluctuations since households generally tend to smooth their consumption by saving or dissaving. Moreover, income is generally subject to large measurement errors. 1.54. Per-capita consumption expenditure includes expenditures on food and non-food items of consumption. It includes both cash and in-kind consumption. The households impute the value of home produced goods, which is then included in the total expenditure. The total expenditure also includes the imputed rental value of owner occupied houses. Table 1.11: Per Capita Consumption: JD Per Person Per Year 1997 2002-03 Food Non-food Total Food Non-food Total Amman 354 540 895 445 817 1262 Balqa 337 316 653 367 463 831 Zarqa 349 400 748 304 402 706 Madaba 328 406 735 385 478 864 Irbid 302 324 626 360 472 832 Mafraq 292 231 523 292 317 609 Jarash 362 330 692 347 431 778 Ajloun 366 288 653 384 339 722 Karak 462 331 792 398 474 871 Tafileh 324 272 597 370 383 753 --+- Maan 278 243 521 322 354 676 Aqaba 420 383 803 340 509 849 Jordan 343 412 756 383 579 963 Source: Staff Estimates based on HEIS (2002). 1.55. Table 1.11 gives the per-capita nominal consumption expenditures. To compare welfare across governorates and over time, we need to calculate per-capita real consumption expenditures. The real consumption expenditures are determined by 24 • deflating nominal expenditures by the price indices presented in Table 1.4 and 1.5. Table 1.12 presents the real per-capita expenditures in the 1997 average Jordan prices. Table 1.13 presents the annual growth rates of real per-capita consumption expenditures between 1997 and 2002-03. Table 1.12: Per-Capita Real Consumption, 1997 And 2002-03 (JO, Per Year In 1997 Prices) 1997 2002-03 Food Non-food Total Food Non-food Total Amman 352 500 852 437 680 1117 .. 374 493 867 Balqa 335 375 709 Zarqa Madaba 347 326 1 420 449 767 776 303 394 380 476 682 870 Irbid 305 358 663 373 470 843 Mafraq 294 273 567 305 336 641 Jarash 365 364 729 359 428 787 Ajloun 369 340 709 402 360 762 Karak 470 372 . 842 410 501 911 Tafeela 330 303 633 379 399 778 Maan 283 268 551 322 367 689 Aqaba 427 395 822 337 493 830 Jordan 343 419 762 385 528 913 Source: Staff Estimates based on HEIS (2002) and price statistics from Department o/Statistics, Jordan. 1.56. Figure 1.6 clearly shows that Amman has the highest standard of living as measured by the per-capita real consumption expenditure. It is also the region that has the highest growth rate of per-capita consumption expenditure. In Jordan, the per-capita consumption expenditure increased at an annual rate of 3.5 percent between 1997 and 2002-03, whereas in Amman, it increased at an annual rate of about 5 percent. 'oI'ti()ALDBANK Table 1.13: Annual Growth Rates Of Per Capita Real Consumption Food Non-food Total Amman 4.3 6.1 5.4 Balqa 2.2 5.5 4.0 Zarqa -2.6 -1.9 -2.2 Madaba 3.7 1.1 2.2 Irbid 4.0 5.4 4.8 Mafraq 0.7 4.2 2.4 Jarash -0.3 3.2 1.5 Ajloun 1.7 1.1 1.4 Karak -2.6 5.9 1.5 Tafeela 2.7 5.5 4.1 Maan 2.6 6.2 4.4 Aqaba -4.5 4.4 0.2 Jordan 2.2 4.6 3.5 Source: Staff Estimates based on HEIS (2002) and price statistics from Department of Statistics, Jordan. Figure 1.6: Annual Growth Rate Of Per-Capita Consumption 6 ~--------------------------------------------------~ 5 4 3 2 O ~~~~~~~~~~~~~~~~--~~~--~~~-r~~ -1 +-E-~~--~--~--~--~--~---~--~--~--~--~~ -2 +-~----------~--------------~----------------~ -3~--------------------------------------------------~1 Source: Staff Estimates based on HEIS (2002). Inequality of per-capita real consumption 1.57. The analysis in the previous section showed that there has been an impressive improvement in the average standard of living in Jordan. The per-capita consumption expenditure increased at an annual rate of 3.5 percent between 1997 and 2002-03. Has 26 this impressive growth performance increased or decreased inequality? To answer this question, we computed the Gini index of the per-capita real consumption expenditure. The Gini index is the most widely used measure of inequality. It is a single measure of inequality. To get a better insight into the change in the distribution, we also computed the quintile shares. The empirical results are presented in Table 1.14. 1.58. It can be noted that the Gini index has slightly decreased from 37.86 percent points in 1997 to 37.60 percent points. This decrease is very small and statistically insignificant. Looking at the quintile shares, we note that the consumption shares of the first, second and fifth quintiles have declined whereas the shares of the third and fourth quintiles increased. The share of the fourth quintile has increased the most. Since the changes in the Gini index and the shares of quintiles are so small that it is difficult to infer that the inequality has increased in Jordan between 1997 and 2002-03 . Table 1.14: Inequality of per capita real consumption 1997 2002-03 Change Gini index 37.86 37.60 -0.26 (0.0057) _ (0.0065) Quintile Shares Quintile 1 7.00 6.92 - -0.08 Quintile 2 11.l9 11.l3 -0.07 Quintile 3 15.12 15.25 0.13 - -- ~uintile4 21.10 21.53 0.43 Quintile 5 45.58 45.16 -0.42 Source: Stal/Estimates based on HEIS (2002). Note: Bootstrap standard errors in brackets. 1.59. It was noted in the previous section that the growth rate of per-capita consumption expenditure was the highest in Amman, which is also the richest governorate. This suggests that inequality in Jordan would have increased but the Gini index did not show much increase. To explain this contradiction, we computed Theil's4 inequality measure, which can be decomposed into within group and between group inequalities. We calculated the inequality within each of the 12 governorates and also inequality between governorates. The empirical results are presented in Table 1.15. 4 Theil's inequality measure is given by GE(J) = ~ ±~ n 2=1 Y log ~i Y where, Yi is the consumption of an individual, n is the number of persons. WOALDBAN.K 27 Table 1.15: Theil's Inequality Measure Of Real Per-Capita Consumption By Governorates 1997 2002-03 Change Amman 27.0 24.9 -2.1 --- Balqa 21.8 24.0 2.3 -- Zarqa 19.7 18.0 -1.6 Madaba 28.2 17.7 -10.5 Irbid 20.9 19.6 -1.3 -- --.Mafraq_ _ + 20.4 16.9 -3.6 Jarash 20.8 ' 21.8 1.0 Ajloun 18.3 12.2 -6.0 Karak 19.0 21.6 2.6 Tafeela 17.3 14.3 -3.0 ----+ Maan 20.8 19.8 -1.0 Aqaba 18.2 20.5 2.4 Kingdom ~ 23.7 23.3 -0.4 Within Gov. inequality 23.0 21.4 -1.5 Between Gov. inequality 0.8 1.9 1.1 Source: Staff Estimates based on HEIS (2002). 1.60. Theil's inequality measure for Jordan decreased from 23.7 percent points in 1997 to 23.3 percent points in 2002-03. This change is so small that we infer that the overall inequality in Jordan has not changed significantly between 1997 and 2002-03. It is interesting to note that there have been huge changes in inequality within and between governorates. In governorates such as Madaba, Ajloun, Tafeela and Mafraq, there has been a large decline in inequality. The overall within inequality in governorates has declined by 1.5 percent points. Since the between governorate inequality has increased by about 1.1 percent points, the overall change in inequality in Jordan has been negligible .. 1.61. Thus, although overall inequality has not change between 1997 and 2002-03, but there have been large changes in patterns of inequality. The inequality between governorates has become more important. This clearly calls for more emphasis on policies that reduce regional inequality. 28 • INCIDENCE OF POVERTY 1.62. At the national level, poverty reduced in Jordan significantly between 1997 and 2002. This conclusion is robust to the choice of poverty lines and poverty measures. Definition and properties of the poverty measures used are provided in Box 1.2. The proportion of poor fell by 7 percentage points from 21.3 percent in 1997 5 to 14.2 percent in 2002 (Table 1.16). This implies that about 42,000 Jordanians moved above poverty line per year. The poverty gap - the deficit of per-capita consumption from poverty line - fell from 5.3 percent in 1997 to 3.3 percent in 2002. Since this is the average for all Jordanians, it is estimated that about US $ 91 million or one percent of GDP at market prices is all that it would take to eradicate poverty in Jordan, if perfect, costless targeting were possible. 5 World Bank (200 I) estimated the percentage of poor at 11. 7 percent for 1997 using the household survey of 1997, but with a different poverty line of JD 313.5 per-capita per year against JD 366 newly derived for 1997 with the new methodology! of this study. There are several reasons for the higher poverty estimate for 1997, though the underlying database is the same with the estimate mean consumption only JD 7 less than the old estimate. The new line is household specific not national, corrects for spatial price differences, allows economies of scale, and allows for new calorie requirements for the Jordanian population. An additional difference in use of 1997 data is that all the households that report food and non-food consumption for any of the four rounds are included in the current study, unlike only a common set in the previous ~LDBAHK Box 1.2: POVERTY MEASURES 1. Headcount ratio H=q/n Where q = number of people deemed poor and n = population size. This index is widely used and easily understood. However, the headcount ratio is insensitive to distribution below the poverty line. If a poor person becomes poorer, H remains unchanged. 2. Poverty gap index 1 q z- y. PG=-L,-' n ;=1 Z Where y is income/consumption, z is the poverty line, q is the number of poor and n is the population size. Though PG reflects depth of poverty, It IS msensltIve to severity of poverty. This can be interpreted as the potential saving to the poverty alleviation budget from targeting because it is equal to the ratio of minimum cost of eliminating poverty (z-mean income of the poor)*q to the maximum cost of eliminating poverty z*q. 3. Squared poverty gap index 2 1 z- y . SPG=-t - ' n ;=1 ( Z J SPG is sensitive to differences in both depth and severity of poverty. This can be stated"as the poverty gap with weights to each poor person equal to hislher poverty gap. 3. Watts index 1 n W= - L,ln(z / y) n ;=1 Watts index satisfies all the desirable properties for poverty measures: focus (is not concerned with the changes in income/consumption of the non-poor), monotonicity (an increase in income/consumption of poor reduces the index), transfer (a transfer from a poor person to a poorer person worsens the index) and additive decomposability (weighted aggregation over sub- populations is possible). 30 Table 1.16: Poverty In Jordan, 1997 And 2002 Poverty Measure 1997 2002 Test for diff. Total 95%ci 95%ci t values Percentage of Poor 21.3 19.8-22.8 14.2 13.4-15 -8.08 Poverty Gap 5.3 4.8-5.8 3.3 3-3.5 -7.15 Severity of Poverty 2.0 1.8-2.2 1.1 1-1.2 -6.58 Watt's Index 6.8 6.1-7.5 4.1 3.8-4.4 -7.04 Rural Percentage of Poor 27.0 23 .8 - 30.3 18.7 17 - 20.4 2.77 Poverty Gap 7.2 6-8.3 4.7 4.2 - 5.3 2.65 Severity of Poverty 2.8 2.2 - 3.4 1.7 1.5 - 2 2.57 Watt's Index 9.4 7.7 - 11 6.0 5.3 - 6.7 2.60 Urban Percentage of Poor 19.7 18-21.5 12.9 12 - 13.8 -6.86 Poverty Gap 4.8 4.3 - 5.4 2.9 2.6 - 3.1 -6.21 Severity of Poverty 1.8 1.5 -2 0.1 1.1 - 6.8 -1.98 Watt's Index 5.4 - 6.9 3.6 3.2 - 3.9 -6.09 Source: Staj! Estimates based on REfS (2002). Note I. Average poverty lines for Jordan as a whole (per-capita, per year) are JO 366 for 1997 and JO 392 for 2002. Corresponding averages for rural are: m 348 and JO 375. For urban the averages are: JO 370 and m396. 1.63. Rural-urban inequalities in terms of poverty accentuated between 1997 and 2002, continuing the past trend. Not only is the rural poverty in Jordan substantially higher than the urban, it also tends decline at a slower rate compared to the urban. In the urban areas, where nearly 80 percent of the Jordanian population resides, poverty (head-count ratio) in 2002 was 12.6 percent compared to 18.5 percent in the rural areas. Rural poverty declined by 27 percent as against the urban poverty decline by 32 percent between 1997 and 2002. 1.64. The direction of change in poverty measures between 1997 and 2002 can be rigorously examined using the first order dominance test of the two underlying distributions. In Figure 1.7, the X- axis has alternative poverty lines with the current one set to 100. On the Y-axis we measure the cumulative percentage of people who would become poor at any poverty line read off the X-axis. This clearly shows that the distribution for 2002 is everywhere below and to the right of the distribution for 1997.Since the two lines do not intersect, higher order dominance tests hold implying that in terms of other poverty measures - poverty gap, severity and Watts index - 2002 will show unambiguously an irriprovement over 1997. \MJRLDBANK 31 .l \. ,,,,,, ,,,,,, ,.:t' Figure 1.7: First-Order Dominance Test 120 100 80 .., 60 - 40 - 20 ~ 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Q) L() 0 .,.... L() .,.... 0 L() 0 L() 0 L() 0 L() 0 Q) N N ('I) ('I) ":' (FREKEH) CEREAL III KG 366 3660 ~~ GRONTS 112 KG 362 3620 ~ - ~/a:.J.fo... MACARONI 113 KG 362 3620 Kaeak 114 KG 367 3670 ~ BISCUIT 115 KG 367 3670 ..::..~ BISCUIT FOR INFANTS 116 No. 457 90 JLibI..::..~ Starch 117 No. 480 96 L!.j CHILD FOOD (CERELAC .. ) 118 No. 480 2400 JLibI.I~ PANCAKE (KA TA YEF) 119 KG 342 3420 Wi;u..:& CUSTARD 120 KG 364 364 .)jLUS COST OF RNDING CEREALS & ..,..~I~4.US" FOOD PRODUCTS 121 ~1.:wl .)1.,.11J OTHERS 122 .s~1 2. MEATS & POULTRY 200 . ~1j~1j ~.,....ul 2 MUTTON, LOCAL 201 KG 267 2670 ~~ut..:..~ GOAT, LOCAL 202 KG 123 1230 ~~jLl..~ VEAL, LOCAL 203 KG 240 2400 ~~~~ MUTTON, IMPORTED 204 KG 267 2670 .)~ut..:..~ VEAL, IMPORTED 205 KG 225 2250 .)~~~ 74 CAMEL 206 KG 193 1930 ~~ MUTTON, FROZEN 207 KG 267 2670 ~0~~ VEAL, FROZEN 208 KG 240 2400 ~~~ MEA T CHOPS (VEAL, &L...:.I('uJu~ 209 KG 203 2030 MUTTON) (0~ '~) PLUCK 210 KG 315 3150 J)l.... CANNED MEAT 211 KG 233 2330 ~('~ LUNCHEON MEAT 212 KG 233 2330 ~'1('~ FRESH CHICKEN 213 KG 149 1490 tr~~~ FRESH CHlCKEN/sLAUGIITERY 214 KG 122 1220 LY.~ ~jlk ~~~ FROZEN CHICKEN 215 KG 120 1200 ~~~~ LIVERS, GIZZARDS 216 KG 130 1300 ~~..ul .~1-, ~1.,4l1 OTHERS 217 .s~1 3. FISH 300 .aL.-\'1 3 FISH, FRESH 301 KG 149 1490 ~jlk~L.,....1 FISH, FROZEN 302 KG 225 2250 ;;~~L.,....I SMOKED FISH 303 KG 225 2250 ':p-..l.A~ SARDINE 304 KG 238 2380 0:!~~ TUNA FISH 305 KG 238 2380 4:.,:> OTHERS 306 .s~i 4. DAIRY & EGGS 400 ~IJ lfJ~J 041~t 4 FRESH MILK 401 Liter 61 610 ~J "lk ........b. "_ FRESH MILK (KG) 402 KG 64 640 ~4~jlk~ CANNED MILK, LIQUID 403 KG 317 3170 ..,..l...o~L...~ <- POWDERED MILK 404 KG 500 5000 ;;J.ly'~ INFANT POWDERED MILK 405 KG 496 4960 ~JW.I~ YOGURT (CANNED) 406 KG 59 590 ..,..l...o'":-':lIJ~ YOGURT (ZABADI) 407 KG 61 610 \p4j~ YOGURT (KG) 408 KG 61 610 ~4'":-':1IJ~ YOGURT, PASTEURIZED, MAKHrD 409 Liter 82 820 ~~~ YOGURT (MAKHID) 410 KG 82 820 ,:€.Ik~~ LABBANEH(CANNED) 411 KG 154 1540 ...,..k.4 LABBANEH (KG) 412 KG 154 1540 ~44 OTHER KINDS OF YOGURT 413 154 1540 ~I w-- w.>1 t1yl WHITE CHEESE 414 KG 289 2890 .~~ t CHEESE (PACKED) 415 KG 242 2420 -=..~4~ ¥«JALD BANK l 75 .• "'.... . . CANNED CHEESE 416 KG 289 2890 ~~ KASHKA WAN CHEESE 417 KG 404 4040 01~~ YELLOW CHEESE 418 KG 480 4800 .I~~ OTHER CHEESE 419 359 3590 ....,,>.1.:,,41 CREAM 420 KG 207 2070 ~ SOUR MILK 421 KG 289 2890 (~)~IJ..,...p.. BUTTER, LOCAL 422 KG 750 7500 ~~o-,-!j BUTTER (PACKET) 423 KG 717 7170 .:44o-,-!j ANLMALGHEE 424 KG 890 8900 ~I-"!"",:""",,, EOGS 425 No. 159 53 ~ OTHERS 426 ....,,>.1 5. OILS & FATS 500 ~.,.~~ ':',..jll 5 OLIVE OIL. LOCAL 501 KG 900 9000 I:'~ 0jU..) .::......) OLIVE OIL, IMPORTED 502 KG 900 9000 .>~.:"jU..)'::""'..) CORN OIL 503 Liter 393 3183.3 oJ:' .::.......) SUNFLOWER OIL 504 Liter 900 7290 ~I.>~.::.......) SOYA OIL 505 Liter 900 7290 ~IJ"'.::.......) PALM OIL 506 Liter 900 7290 ~I.::.......) I VEGETABLE GHEE 507 KG 736 7360 ~~a....-.. ANIMALGHEE ~c;l-"!"",:""",,, (MANUFACTURED) 508 KG 890 8900 OTHER OILS & FATS 509 847 8470 ....,,>.1 u,...>j .::.aJ-''') 6. FRUITS 600 4St~). 6 J~'.H ORANGES 601 KG 49 490 MANDARINS 602 KG 50 500 L.:.!J ....... CLEMENTINES 603 KG 50 500 ~ LEMONS 604 KG 35 350 0~ GRAPEFRUITS 605 KG 46 460 .::.a~Y-'~ BAUMALY 606 KG 43 430 ~y. BANANAS, LOCAL 607 KG 97 970 I:'~j.,.. .>~";"" BANANAS, IMPORTED 608 KG 102 1020 APPLE, LOCAL APPLE, Imported 609 610 KG KG 60 63 600 630 I:'~LLi:i r '>~LLi:i I GRAPES, LOCAL 611 KG 74 760 I:'~~ GRAPES, IMPORTED 612 KG 76 760 WATER MELONS 613 j KG 29 290 .>~~ ~ 76 SWEET MELONS 614 KG 28 280 ('w APRICOTS 615 KG 58 580 ~ PEARS 616 KG 64 640 ...... ~J +- PEACHES 617 KG 59 590 ';1.)..\ GUAVAS 618 KG 74 740 ~I'p'- + POMEGRANATES 619 KG 77 770 .:"LA.) FIGS 620 KG 84 840 DATES PEARS CHERRY ALMOND, FRESH +- 621 622 623 624 KG KG KG KG 225 52 70 643 2250 520 700 6430 ~/~ t.p- / .;~>:' ~I»I lJ :us EKE-DUNIA 625 KG 49 490 ~A...I BERRY 626 KG 64 640 ~.,:; OTHER FRESH FRUITS 627 KG 59 590 .s~1 ~ju.. -' 811 KG 420 4200 ~t;U""'.;; CANNED OTHER 812 No. 150 450 ~..sF-iJ~ LEGUMES DRY LEGUMES OTHER 813 31 31 u4-..s.?-tJ~ 9. SPICES rL..kJ1 d ......."'"-AJ I 900 rlaJal1uu.-...J J:!I~I 0.9 1 BLACK PEPPER 901 KG 377 3770 .).,....i~ -- 902 KG 903 ~Gr MIXED SPICES 25 250 ~dJL"o ~ ~ CARDAMOM SEEDS 319 3190 ~~ SALT 904 KG rw..~ VINEGAR 905 Liter -P- ANISE SEEDS 906 KG 364 3640 0""',-:! CINNAMON PICKLES 1 907 908 KG KG 364 3640 ujA ~)1.1;.... - - SESAME PASTE (TAHINA) 909 KG [ ~ 78 TOMATO PASTE 910 KG oJJ~1 '":'J SOUP (MAGI) 911 No. ~Lo.::.~ ROSE BLOSSOM WATER 912 Liter jAj.JlJ .lJYI .Lo CATSUP 913 KG ..,..1";';1S" Carbonate for cooking 914 KG ~~,...fi YEAST 915 KG o~ OTHERS 916 ..s?l 10. NUTS 1000 .:, !.J.wSl1 10 WATER MELON SEEDS 1001 KG 400 4000 ~.lH CHICK PEAS NUTS 1002 KG 376 3760 4...w.:8 MIXED NUTS 1003 KG 500 5000 ~.::.I~ PISTACHIO NUTS 1004 KG 637 6370 ~~ CASHEW NUTS 1005 KG 597 5970 ~IS" PEANUTS (SUDANIAN) 1006 KG 589 5890 (~) C;1.l,... J~ --- ALMONDS 1007 KG 643 6430 jy WALNUT 1008 KG 704 7040 ~ PINE SEEDS 1009 KG 617 6170 J-fY- OTHERS 1010 KG ..s?i.::.l~ 11. SUGAR, HONEY & J..-JIJ~I 1100 11 CONFECTIONERIES ':'~Ij SUGAR 1101 KG 368 3680 ~ HALAWA 1102 KG 360 3600 oJ)6. JAM & DATE JUICE [ 1103 KG 234 2340 ~.lJl.TjA HONEY, LOCAL 1104 KG 315 3150 ~~J....:. HONEY, IMPORTED 1105 KG 315 3150 .l~J....:. KUNAFAH 1106 KG 356 3560 ol.s' ASSORTED SWEETS 1107 KG 350 3500 ~.::.\:,6- BISCUIT ( COOKIES) 1108 KG 363 3630 ~~ CAKE 1109 No. 363 1815 # CANDY 1110 KG 390 3900 c.;sYJ~ CHOCOLATES, LOCAL IIII No. 393 78.6 ~4J~fi~ CHOCOLATES, IMPORTED 1112 No. 393 78.6 O.l~4J~fi~ --, MARSHMALLOW 1113 KG 390 3900 r..,;.6- JELLY 1114 No. 234 234 ~ OTHERS IllS ..s?i L12. TEA, COF~EE & COCOA 1200 jlSltJlj i~Ij Ii~I 12 \NOPILD BANK 79 TEA (KG) 1201 KG 40 400 f'1~~41:?~ TEA BAGS 1202 No. 40 2 ...,..~11:?~ COFFEE (READY MADE) 1203 KG 56 560 '~4-'~ COFFEE 1204 KG 47 235 ~.~ INSTANT COFFEE 1205 No. 56 56 ~~I COCOA 1206 KG 261 2610 JISIS OTHERS 1207 ..s~1 13. OTHER FOOD ITEMS 1300 ~1':'~.,st.. 13 SANDWICH 1301 No. 223 446 d'~J~L... FAST FOODS 1302 No. a......Jo'"' ~4J READY MADE FOODS 1303 No. ·j.&4-~4J I CHICK PEAS & BEANS (DISH) 1304 No. 220 440 ~JJ""~ FLAFIL 1305 No. 195 4.9 ~~ CHICK PEAS BEANS, CORN, 1306 112 112 "J~'J"" '~ (BOILED) ~..,....~ ~jJl THYME 1307 KG 86 860 SOUP, PACKET 1308 No. ...,..~Ia,.~ r--- COCONUTS 1309 KG 347 3470 ~iP. SAGE 1310 KG 60 600 ~~ • l.. CHAMOMILE 1311 KG 60 600 ~y. . I --+ POTATO CHIPS 1312 No. u..u.... . ~ • OTHERS 1313 ..s~1 14. BEVERAGES 1400 ':'4Joo~1 14 MINERAL WATER 1401 Liter 0 0 ~..I.&A.~ ---;- BEVERAGES (CANNED) 1402 No. 39 128.7 ~~4b..)A BEVERAGES < I LTR · 1403 Litre 39 195 ~ 0A JlI ~ ~4b..)A I BEVERAGES> I LTR 1404 Litre 39 487.5 ~ 0A ~I ~ ~4b..)A JUICE> LTR 1405 Litre 116 1160 ~0A~1.~~ JUICE < I LTR JUICE (CONCENTRATED) JUICE (POWDER) CAN 1406 1407 1408 Litre Liter KG 116 157 26 1160 1570 260 ~0AJlI.~~ jS..)A~L...~ ~'J-lY.~ =J JUICE (POWDER) PACKET 1409 KG 47 470 ...,..~l'J">y. ~ ... 1410 1490 ~ ICE CREAM KG 149 ICED PRODUCTS 1411 No. 149 149 ~~~ Sources: I. Ministry of Agriculture: Special documents faxed 2. Ministry of Health: Tables faxed on request 3. htl :1 Ifao.or Iwaicentlfaoinfo/economic/ESS/xxx .htm \t'\CJRLO IlANK 81 \ ............1 ANNEX 1.7 PROOF THAT CALORIE IS A MONOTONICALLY INCREASING FUNCTION OF WELFARE BY N. KAKW ANI The poverty line specifies the level of income or consumption that is just sufficient to maintain the society's basic minimum standard of living. A person is classified as poor if he or she is unable to enjoy this minimum standard of living. The standard of living is a difficult concept to quantify. In this note, we propose a model based on consumer choice theory that can help to quantify the minimum standard of living. PROPOSED MODEL We may define a utility function for an individual as (1) where qr and qn are the quantity vectors of food and non-food items of consumption, respectively; r is the average calorie requirement of an individual. Suppose p / and Pn are the price vectors of food and non-food items of consumption, respectively, then using the conventional treatment of consumer choice, an individual maximizes the utility function (1) subject to the budget constraint (2) where x is the total expenditure or income that is available to the individual. This maximization procedure yields the food and non-food demand functions as q f = rg f ~, rp f' np n ) (3) and (4) respectively. These equations are the Marshallian demand functions (Marshall 1930). 82 Substituting (3) and (4) into (1) yields the cost function x=e~,rpf,np,J (5) which is the minimum cost of buying the individual utility u at given food and non-food prIces. Further, substituting (5) into (3) and (4) yields the Hicksian food and non-food demand equations (Hicks 1957): q I = rg I ~, rp I ' np II ) (6) and qn =ngll~,rpf,nPn~ (7) respectively. The food and non-food poverty lines are then obtained by substituting u=u* in (6) and (7), respectively as F = P Iql = rpr gl ~*, rp l,npJ (8) and NF = Pllqn = nplIglI ~*,rPr,nplI) (9) Equations (8) and (9) give the food and non-food poverty lines at the point where the individuals enjoy the same level utility u* . These lines will be comparable across all individuals irrespective of where they live. The difficult problem is: How do we determine u*? The following solution is proposed. The food poverty line should satisfy the requirement that calorie intake is equal to the calorie requirement. Suppose c is the vector that converts food quantity vector qr into calories. c is fixed for all individuals. c.qr is the number calories that are obtained from the food basket qr , which should be equal to calorie requirement r. Thus, using (A.6), we obtain (10) This equation should hold for all exogenously determined values of r, PI' , nand Pn. This means that the function .g f (u*, rPr' np n) should not contain rpr and np n as its arguments and should depend only on u* . The food poverty line in (8) will then be given by (11 ) ,~~ ~ ." " ... l6 ~. ,_. 'MlRLD BANK 83 Since the food poverty line can also be written as the product of calorie requirement and calorie cost (which is the expenditure on food per calorie), which from (11) immediately gives calorie cost function as (12) which shows that the calorie cost of an individual depends on two factors, namely, food prices and the utility u*. A poverty line is said to be consistent if the utility level u* is fixed for all individuals. The food prices can be different for different individuals depending on where they live. Or, in other words, we have to take into account regional costs of living differences. Suppose p ~ is the vector of national food prices, then the regional cost of living index k is given by (13) which on substituting in (12) gives ccost* = gr (u*) (14) where c cos t * = c cos t I k is the calorie cost in national food prices or it is the calorie cost adjusted for the regional food price differences. Since g / (u*)) is a monotonically increasing function of u*, it implies from (14) that the calorie cost adjusted for regional food prices is a monotonically increasing function of the utility people enjoy. This proves Lemma I. Lemma I: The calorie cost adjusted for regional food prices is a monotonically increasing function of the society's minimum standard of living. We cannot measure u* but we can measure the calorie cost from the data so this lemma provides a link between the two. If we fix the price-adjusted calorie cost, we are effectively fixing the utility level or the standard of living in order to arrive at the consistent poverty line. We determine calorie cost for a reference group such as people belonging to the first or second quintile at the national level. This effectively determines the country ' s minimum standard of living. Given the calorie cost at the national level and the regional food cost of living, we determine the calorie cost for each region. Multiplying these calorie costs by individuals ' calorie requirements, we obtain the food poverty line for each individual. Given the food poverty fine for each individual, we can determine the non-food poverty line from equation (9), which we further adjust for regional non-food price differences. YoORLO BANK ANNEX 1.8 SOURCES FOR COMPARISON TABLE 1.10 Panama Poverty Assessment: Priorities and Strategies for Poverty Reduction, A World Bank Country Study, Report No. 20307, April 2000, The World Bank, Washington DC. Kingdom of Morocco: Poverty Update (In Two Volumes), Report No. 21506-MOR, March 20, 2001, Human Development Sector, Middle East and North Africa Region, The World Bank, Washington DC. Philippines Poverty Assessment, Volume II: Methodology, Report No. 20498, May 31, 2001, Poverty Reduction and Economic Management Unit, East Asia and Pacific Region, The World Bank, Washington DC. Dominican Republic Poverty Assessment: Poverty in a High-Growth Economy (1986-2000, In Two Volumes), Report No. 2J306-DR, December 17, 2001, Poverty Reduction and Economic Management Unit, South Asia Region, The World Bank, Washington DC. Poverty in Pakistan: Vulnerabilities, Social Gaps, and Rural Dynamics, Report No. 24296 PAK, May 31, 2002, Poverty Reduction and Economic Management Unit, South Asia Region, The World Bank, Washington DC. Arab Republic of Egypt: Poverty Reduction in Egypt, Diagnosis and Strategy (In Two Volumes), Report No. 24234-EGT, June 29, 2002, Social and Economic Development Group, Middle East and North Africa Region, The World Bank, Washington DC and Ministry of Planning, Government of the Arab Republic of Egypt. Republic of Yemen: Poverty Update (In Two Volumes), Report No. 24422-YEM, December 11, 2002, Social and Economic Development Group, Middle East and North Africa Region, The World Bank, Washington DC. Turkey: Poverty and Coping After Crises (In Two Volumes), Report No. 24185, May 2003, Human Development Unit, Europe and Central Asia Region, The World Bank, Washington DC. Republic of Tunisia: Poverty Note (In Two Volumes), July 1,2003 (Work in Progress), Social and Economic Development Group, Middle East and North Africa Region, The World Bank, Washington DC. Jordan: Poverty Line in Jordan by Nanak Kawani, 2003, unpublished work for Jordan Poverty Assessment. K 't"IClRLOBAN. 87 ANNEX 1.9 Percentage of Poor, 1997 Maan37.28 < ./ Legened _ 12.99 D 13.00-17.25 c=J 17.26 - 19.60 19.61 - 24.28 24.29 - 25.97 D 25.98 - 37.28 88 Percentage of Poor, 2002-03 Maa" 24.13 / j.. A 1S.,';l l _______ Legened ~ 9.22-9.73 9.74-12.19 0 12.20 - 15.15 15.16 - 18.37 18.38 - 22.26 022.27 - 25.41 \/IICALDBANK \._ _ ....I 1\, ' 89 Annex 1.10: Severity Of Poverty By Sub-districts, 2002-03 Sub-id mean(z1) mean(gap1) mean(sev1) NIC_Code NIC_Name_E 2223 73.34158 28.18006 13.71887 22023 Rwaished Sub-district 3412 55.57283 19.95545 9.438776 34012 Wadi Arabah SUb-district 1315 49.67612 12.3019 4.586546 13015 Dhlail Sub-district 2221 47.36079 15.18601 6.498763 22021 Salhiyeh Sub-district 3312 46.86503 15.5561 6.384469 33012 Huseiniyeh Sub-district 3314 46.01683 12.69305 3.921607 33014 Jafer Sub-district 3315 42.62537 12.63384 4.924073 33015 Mraighah Sub-district 1313 41.40106 8.474994 2.580622 13013 Bierain SUb-district 1312 40.29726 8.707466 2.715777 13012 Azraq Sub-district 3421 37.69522 11.31111 4.697247 34021 Qwairah Sub-district 3121 35.6686 7.28628 2.147558 31021 Ghor Safi Sub-district 2225 34.27077 10.21542 4.075378 22025 Dair EI-Kahf Sub-district 2224 33.618 8.718097 3.57166 22024 Um Ejjimal Sub-district 1181 32.00961 7.256298 2.479279 11081 Jizeh Sub-district 2215 31.6129 8.072324 2.992534 22015 Hoasha Sub-district 1314 27.22114 7.44664 2.738994 13014 Hashemiyeh Sub-district 3122 26.74446 7.505882 3.091437 31022 Mazra'ah Sub-district 2214 26.6444 7.973557 3.253889 22014 Sama Serhan Sub-district 1221 26.53069 5.694316 1.837234 12021 Dair Alia Sub-district 1182 26.41956 6.674062 2.453448 11082 Um Rsas Sub-district Shooneh Janoobiyeh Sub- . 1231 26.40374 7.641288 3.092201 12031 district 1171 24.59015 6.933114 2.699308 11071 Mowaqqar Sub-district 2131 24.14457 6.759325 2.4478 21031 Mazar Shamali Sub-district 3113 24.0231 5.75055 1.920759 31013 Qatraneh Sub-district 2212 23.33588 4.529235 1.428527 22012 Bal'ama Sub-district Shooneh Shamaliyeh Sub- 2171 23.03724 5.440995 1.932464 21071 district 1241 22.63721 4.567617 1.434979 12041 Ain EI-Basha Sub-district 1321 22.46821 5.249989 1.866796 13021 Ruseifa Sub-district 3311 21 .29788 5.17244 2.023988 33011 Ma'an Sub-district 2213 21.08214 4.720688 1.432079 22013 Erhab Sub-district 2222 18.9862 4.725331 1.66296 22022 Sabha Sub-district 2311 18.80019 4.784549 1.824309 23011 Jarash Sub-district 3141 17.92502 5.880787 2.777377 31041 Qasr Sub-district 2141 17·. 90527 4.068521 1.30328 21041 Koora Sub-district 2211 17.86418 4.183259 1.410555 22011 Mafraq SUb-district 1311 17.57454 4.195249 1.566117 13011 Zarqa Sub-district 90 Sub-id mean(z1) mean(gap1) mean(sev1) NIC_Code NIC_Name_E 3313 17.15444 r------ 5.335517 2.344689 33013 lei Sub-district 1422 15.18908 2.671811 0.6710003 14022 Ariedh Sub-district 1131 14.92452 3.525671 1.164801 . 11031 Qwaismeh Sub-district 3213 14.1444 2.419614 0.6470504 32013 Bsaira Sub-district - 2161 13.6633 2.994071 1.05479 21061 Ramtha Sub-district 3142 13.58971 4.025914 1.690286 31042 Faqoo' Sub-district 3331 12.99214 2.661762 1.039422 33031 Wadi Moosa Sub-district 2312 12.60218 3.690332 1.500246 23012 Borma Sub-district 3212 11 .63937 2.235185 0.5464487 32012 Hesa Sub-district 2121 11.5979 2.406719 0.8053079 21021 Bani Obeid Sub-district 1212 11.29431 2.569739 0.7710621 12012 Ardhah SUb-district 1411 10.34631 2.168579 0.7133498 14011- - Madaba Sub-district 2111 10.22363 2.152792 0.6725405 21011 Irbid Sub-district 1191 10.21515 2.03735 0.643836 11091 Na'oor Sub-district - -- 2181 10.08977 2.004439 0.5871398 21081 Tayybeh SUb-district 3112 10.05859 2.774414 1.033401 31012 Ayy Sub-district 3211 10.03555 1.958798 0.6259428 32011 Tafiela Sub-district - 2313 9.790412 ----"-- 2.162487 0.5824655 23013 Mastabah Sub-district 2112 9.689456 1.814478 0.5118653 21012 Wastiyeh Sub-district - 1111 9.674806 1.902301 0.5804047 11011 Amman Sub-district 1213 9.590772 3.152866 1.511513 12013 Zayy Sub-district 1161 9.580483 1.545413 0.3712283 11061 Sahab Sub-district 3321 9.007521 1.113312 0.242381 33021 Shoabak Sub-district 1421 8.9968 2.201879 0.76836 14021 Dieban Sub-district 3411 8.985841 1.950338 0.6771053 34011 Aqaba Sub-district 2151 8.900552 1.747111 0.5542791 21051 Bani Kinanah Sub-district 2411 8.847868 1.901412 0.5950767 24011 Ajlun Sub-district 2412 8.273813 1.154489 0.2310058 24012 Kofranjah Sub-district - 1121 7.46782 1.472117 0.4473756 11021 Marka Sub-district 3111 5.793475 1.419921 0.5409412 31011 Karak Sub-district 1192 5.736701 0.6144302 0.094934 11092 Um EI-Basateen Sub-district 3131 5.391207 1.369489 0.5232372 31031 Mazar Sub-district . 1211 3.913165 - -- 0.1192566 0.5253645 - 12011 Salt Sub-district - - _.. - 1215 3.617387 0.9747145 0.285219 12015 Ira & Yarqa Sub-district 1151 3.359803 0.6904517 0.2131568 11051 Wadi Essier Sub-district 1214 2.441314 0.5115588 0.1924883 12014 Mahes & Fohais Sub-district 1141 2.418982 0.407661 0.1034965 11041 Jami'ah Sub-district Source: Staff Estimates based on HEIS (2002). VtORLDBANK CHAPTER 2 UNDERSTANDING CHANGES IN POVERTY IN JORDAN 2.1. Analysis in the first chapter showed that consumption poverty in Jordan declined between 1997 and 2002. In this chapter we turn to explaining the observed changes in poverty. Section A examines the growth-poverty nexus to understand the roles of growth and redistribution in observed poverty reduction, evaluates the pro-poor bias of growth, estimates growth rates that are required to sustain the pace of poverty reduction envisaged in the national development plan, and discusses the impact of worker remittance inflows on poverty. Microeconomic analysis of determinants of poverty (demography, education, marital status, employment, gender, etc.) in Jordan is explored in Section B with the help of household survey data. This is complemented by a qualitative, anthropological summary in Section C of the coping strategies of the poor and lessons of escaping poverty learned from Bedouin communities living in a deep pocket of poverty in Wadi Araba. • The decline in poverty in Jordan is largely because of growth in aggregate real private per-capita consumption that registered a fast 3.5 percent annual growth over 1997-2002 compared to 0.8 percent annual rise in per-capita GDP. Importantly, this growth in consumption is broad-based and not confined to richer classes only. This fast rise in private consumption estimated from household surveys is corroborated by evidence from Jordan's national accounts and international experience of better performing middle-income countries. • Part of the explanation is that there was a shift to greater consumption out of private income reflecting probably, the gain from lower relative prices and confidence in reforms that it would boost incomes permanently. • Though poverty declined significantly and per-capita consumption grew across all income groups, Jordan's growth during 1997-2002 was not entirely pro-poor. Non-poor groups enjoyed marginally faster rise in their consumption than the poor. While half the governorates registered pro-poor growth the other half did not. • Surprisingly, not if one accounts for human capital and fIXed costs of migration, worker remittance inflows do not accnte much to the poorest. However, because of the impact on richer income groups, poverty gap could double if remittances were to dry up totally and percentage of poor could increase by two percentage points. Female-headed households are particularly vulnerable to remittance inflows. The percentage of poor in female-headed households could increase by 50 percent ifremittances were not there. 92 • Jordanians residing in rural areas tend to be poorer, living off agricultural incomes. Higher dependency ratio (more children and elderly) is associated with greater incidence of poverty. Education and employment in the formal sector reduces incidence ofpoverty. Female-headed households do not particularly tend to be poorer as a group. • Anthropological studies indicate that urban and rural poor employ different coping strategies to deal with poverty. When accounts of escape out of poverty are considered, adoption of settled life-style as opposed to nomadic, links to settled people, and emergence of effective local leadership seem to hold the keys. GROWTH AND POVERTY REDUCTION IN JORDAN The Strong Growth in Per-capita Consumption between 1997 and 2002 2.2. As we saw already, the decline in poverty between 1997-2002 is mostly because of the strong annual growth in per-capita consumption. Household expenditure surveys of 1997 and 2002-03 suggest a growth of 3.5 percent real growth in private consumption. However, in this period GDP per-capita I (or, disposable income that includes current transfers) registered only a modest 0.8 percent annual growth. This fact of faster rise in consumption relative to income needs to be explained in tenns of possible estimation errors, differential price movements between consumption and income, or economic factors that affect private consumption behavior. This will help understand whether this fast rise in consumption can be relied upon to reduce poverty in the future. I Private current transfers from abroad are added to GDP to measure disposable income. With or without private transfers, per-capita income growth over 1997-2002 remains the same at 0.9 percent per year. VttOALO BANK Figure 2.1: Annual Growth In Per-Capita Private Consumption And Income (Percent) 10.0 5.0 0.0 ~ C\I M F 0.0000 0.0000 0.0000 0.0000 N 44919 44919 37291 37291 Source: Staff Estimates based on HEIS (2002), Note: Governorate levelfixed effects and quarterly dummies were also significant. ."" ., VeORLD BANK ! 109 1J,- ., .-' COPING STRATEGIES OF THE POOR - AN ANTHROPOLOGICAL PERSPECTIVE 2.31. Faced with the stark reality of poverty, the poor seek many ways to augment their incomes, save on expenditures or borrow overtly or implicitly. There are three common characteristics shared by the urban and rural poor in coping with poverty. First, the poor, regardless of their residence, take decisions on short-term considerations. Second, ignorance of social disadvantages later appears to dominate their actions. Third, the anthropological approach also stresses the tribal or familial norms and ties that govern the range of activities that the poor can make use of. There are ways in which the coping strategies of the urban and rural poor differ. The urban and rural settings offer different scope and choices for the poor. Urban areas offer more market opportunities for selling labor and buying goods on the cheap. On the other had, in the rural areas augmenting own account production and selling labor services of females on the farm are possible. There seems to be more ways of borrowing money for the poor in rural areas. Strategies of Urban Poor Augmenting Incomes • Low Wage activities: usually members of poor families (mainly male) accept working in low-skilled jobs such as guards, servants, street cleaners, etc. while women (mainly young) work for many hours (not less than eight) in the private sector as clerks, and bordering on the minimum wage. • Informal activities: one of the main activities maintained by poor males is peddlery. Peddlers sell various food items, cigarettes and clothes. Others work in "lifting" either on shoulders or on mini-caravans, while others find begging another means of income. It is important to say that poor organize themselves according to familial or neighborhood ties. o On the other hand, poor females work in many activities, the most important one is the engagement in the hidden garment textile industry. An investor provides a group of women with machines, row materials, catalogues, and maintenance. Women in this case get paid according to the piece. This form of activities is widespread in main cities mainly Amman, Zarqa, and Irbid. Additionally, women accept work as housemaids, but still this work is performed uncover to the public because of cultural values. • Child ~abour : poor families who mainly live in large cities push their children to work in small industries, car maintenance workshops and street peddlery. While other children collect cans and sell them by weight. The age of working children ranges from eight to 16 years old. Again, such work is organized by familial and neighborhood ties. 110 • Partial (part-time) work: it became a phenomenon that poor males, who already have jobs, whether in public, private or informal sectors, seek another job in the afternoon. The main type of work is driving taxis or using their cars (if available) for delivery services. • Seasonal activities: many poor find certain occasions such as Ramadan and the two holy Eids important for their sustainability. They sell goods related to such occasions on the streets, mainly in the old downtown section of the cities. Additionally, the summer school holiday that lasts for about six weeks is important for such poor families, in which they send their children to work in the above mentioned activities of children. Saving on Expenditures • Friday markets: on Fridays, certain markets appear where some poor families sell different types of things (furniture items, birds, animals, vegetables, etc.). All items that might be important for other poor families exist in these markets. So, such markets can be considered as the places for poor to sell and to buy. • Buying used goods: there are specific shops where they sell used European goods, mainly clothes, shoes, and toys. The society gave such shops a local name to stigmatize those who buy from them as poor; the name is baleh. • Buying low quality food: many poor families buy their food, mainly vegetables, at the end of the day. The vegetable markets are usually located in the old downtown section of the city, locally called hesbeh. By this time, fresh vegetables with high prices are already purchased during the daytime. The remaining vegetables are then sold cheaply because sellers cannot afford to keep them for next day. Poor are aware of this, so they come in the evening and buy the food for low prices. Borrowing • Support from financial associations: such associations are widespread in the society, but they have much higher value for poor families. The local name of such associations is jam'yat. A group of relatives, neighbors, friends, or colleagues decide to collect a pool of money each month. The duration of the payment depends on the number of participants. Usually poor families plan to receive the payment on a specific time where they need the money, such as the beginning of school. STRA TEGIES OF RURAL POOR Augmenting Incomes • Use of domestic garden: Woman plant few trees, mainly olive and grow vegetables; they raise few head of sheep, or goats, chickens, etc. Most products are usually used YiORLOBANK III for family consumption, while some like milk and eggs are sold for relatives or neighbors. • Child labour: poor families use children as workers in the domestic or for agricultural works. The strategy here is affording the use of wage labour. • Women wage labour: women are almost the only Jordanian labour force III the irrigated agricultures, where men do not work. • Female Child labour: young girls between the age 13 to 16 years old work in the large irrigated farms. This indicates that child labour in rural areas is female, while it is for male in urban centers. Saving on Expenditures • Less food: the majority of poor families make do with the least variety of food products. Fruits and meat are rarely consumed. They might be available as gifts in holy occasions such in Ramadan or Eids. They depend mostly on bread and tea. Housewives cook many dishes from one ingredient, such as tomatoes. Tomatoes with garlic in one day, tomatoes with onion another day, with egg, etc. • Storage: housewives attempt to dry whatever they have from domestic fruits such as figs, grapes, apricots, etc. The same is done for certain vegetables and medicinal plants. Such dried items are used for both domestic consumption and selling in local markets. • Recycling goods: reusing goods, such as clothes is common in Jordanian society, but it is very important for poor families . Usually the recycling of such goods takes place within specific social circles, such as within the same family (i.e., from old to young generations) and between families who are relatives or neighbors. • Reiigious dressing: almost all women, especially young, wear the famous Islamic dressing called locally higab and gilbab. This dressing covers all parts of the body. Since it is religious, it should be not fancy; on the contrary it should be simple. This dressing reduces the need to wear different types of dresses and reduces the use of make-up and hair styling. Borrowing • Social lending: this type of lending is widespread in the Jordanian society, but it is much more important for poor families than for non-poor ones. For the poor, such ·lending activities earn social respect and help as a financing source, while for the non-poor it functions as an activity that earns social respect. It is important to say that such social lending takes place within familial or tribal ties. 112 People exchange goods and services either in kind or cash as gifts in certain social occasions, such as weddings, giving birth, mourning, etc. While poor families participate along with other members of their local community in such "gift- exchange," they are actually placing their minimal assets in a social context for a long-term investment. According to the dominant cultural values, people expect to have in return at least (if not more) the same value of what they gave in the past. The repayment is socially compulsory, so it is almost guaranteed. Local people value gifts that have been given by poor more than the average. So, poor men and women are aware of participating in social occasions as much as they can even symbolically. • Borrowing at very high interest rates: Some shops in local commumtles lend to known people from poor families in cash with high "informal" interest that might reach 20 to 25% with open ended repayment period. • Borrowing without interest: some shops lend poor in kind without interest. Here poor are obliged to pay back the value of goods in limited time, mainly from one to two months. Escaping Poverty: Lessons from Bedouin communities living in a deep pocket of poverty - Wadi Araba 2.32. Though Aqaba has 15 percent of the population as poor in 2002-03, only slightly higher than the national average, there are specific sub-districts in which poverty can be extreme. Wadi Araba, located in the southern governorate of Aqaba, is one such pocket of intense poverty. It has the second worst poverty indicators among all the 73 sub- districts in Jordan with 53 percent of the population in poverty and a poverty gap of 20 percent. 2.33. Two contrasting case studies show that when willingness, awareness, knowledge, and cooperation come together from within the poor society itself, people can overcome the state of poverty. The two communities share the same climate, environment, and social, tribal background. Yet, one succeeded in overcoming poverty, while the other failed. A Story of Failure 2.34. Not far from the village qrayqra in Wadi Araba, certain nomadic groups of people live in a semi-starvation like state with limited material wealth. They live not more than eight kilometers from the nearest settled village. They are classified into two sub-groups. The basic difference is that the first sub-group has an average flock of 40 (mainly goats or camels) and wander in a large territory with better economic conditions than the 'oI'tCIRLOBANK • 113 '" '1t ... , ... . ..~ " second group. Whereas, the latter have an average size of flocks of six, wander within the same closed local territory, and live in almost starvation state. 2.35. The first sub-group live mainly in black tents, while the others live in shelters (like a tent) made of old pieces of rough textiles - large bags that swing together forming a tent, called locally kharboosh. Many other families do not even have this shelter, so they use trees as their houses. 2.36. Both sub-groups wash and clean themselves rarely, are illiterate, are very thin, and get little medical care. Water is used only for drinking (for themselves and for their animals); food is mostly bread, tea, and lentils. Life expectancy is about 50 years old, while it is on national level is 70. 2.37. Because of the scarcity of natural resources they depend on, such groups cluster themselves in bands; each does not exceed four to six families dominating an area of about five square kilometers. They live either as pastoralists or as semi-pastoralists (i.e., more or less as hunters and gatherers). The social fabric of these groups is simple, and leadership is not clear, that is, not yet crystallized. 2.38. Most of these families have plots of land (given from the government) for the sake of housing in the nearby villages, mainly qrayqra and ghwiabeh (about 10kms to the north of qrayqra). Some of them have the financial ability to build houses and to settle, but they prefer wondering with their flocks than settling. Therefore, from the materialistic point of view, such people have the cash asset to improve their life, but they are not interested in doing so. 2.39. There are three sets of reasons why these communities never escaped consumption poverty. First, ethnographic studies show that cultural values are very strong in hindering the socio-economic changes for such groups. What is important for them is the state of freedom for themselves and for their flocks. Moving freely as a way of life means neglecting the value of ownership of place. So, they reject the concept of settled housing regardless to the services and benefits that they might get. 2.40. Second, they lack acculturation and they lack links with other groups of people who are socio-economically better. Thirdly and finally, the sense of effective local political leadership is lacking, though traditional leadership already exists. In many cases of success, the story usually starts with certain key knowledgeable pioneers who are socially respected and at the same time members of the traditional local leadership of the community, as will be presented in the next case. A Story of Success 2.41. In the mid 1970s many families who have the same tribal affiliation and blood ties of the same groups presented in previous case, went in contact with outsiders (Jordanians, but not from the area) who had at that time agricultural farms growing cash crops. Relationships emerged between the communities through the channels of wage labour, 114 tenancy, and sharecropping. In a few years, they were transformed basically from nomads living in the same conditions presented earlier in the case above, into semi-farmers. Their involvement in agriculture did not make them take their hands off raising animals, and many were still living in tents and under the trees. 2.42. At one stage, after reaching a relatively high level of agricultural practices, a few leaders decided to run their own business and depend on themselves. Immediately, they decided to establish two agricultural cooperatives. They are two, because the area under consideration was dominated by two tribes. 2.43. This process means that tribal organization was reshaped (from the economic point of view) in a civil form. The tribesmen themselves carry out the administration, financing, agricultural activities, and marketing of such cooperatives. 2.44. The settlement process started around the farms they work in. Some influential key persons helped the people to settle. Nowadays, the place of settlement became a well known village called qrayqra with about 1200 people, living in cement houses, having access to almost all services such as electricity, water, communication, roads, schools, and a health care center. 2.45. The cooperative spmt, awareness, group willingness, and the common administration of such cooperatives by the tribes form the secrets of success of such cooperatives. This success manifested itself in the whole process of social, economic, and cultural shift in the life of such tribesmen. 2.46. One can say that such cooperatives that were started as ideas of certain tribesmen (or pioneers) and then crystallized at a later stage, became one of the most important establishments in the life of local people that took them out of the state of poverty and misery they used to live in. This points to the virtue of community-based solutions to the problem of poverty in areas with deep-seated poverty. \M:)RLD BANK j 115 ".. >. , ANNEX 2.1 How CAN WE CALCULATE THE IMPACT ON POVERTY OF INCREASING ONE YEAR OF SCHOOLING? By N .KAKWANI Suppose we have a regression model: where w is the household welfare (per capita consumption divided by poverty line multiplied by 100) so that poverty line is always 100. s is the years of schooling by the household head and X~ measures the impact of other variables on household welfare. Let us consider the additive separable poverty measures 100 e = f P(w).f(w)dw (2) o where few) is the density function ofw. Differentiating (1) with respect to s gives ~ ae = ~ Tap aw [(w)dw (3) e as e 0 aw as . which measures the percentage change in poverty when we increase years of schooling by 1 year. Differentiating (1) with respect to s gives which on substituting in (3) gives the impact of increasing 1 year of schooling on total poverty: I ae 1 IOOap - - = - I-(a l + 2a 2 s)wf(w)dw (5) e as e ° aw For the Foster, Greer and Thorbeck's (1984) poverty measures 116 P(w)=[lOO-w)Y (6) where y is equal to 1 for poverty gap and equal to 2 for severity of poverty. Differentiating (6) with respect to w gives ap =y(lOO-W)Y-1 (6) aw which on substituting in (5) gives the schooling effect of poverty for the FOT measures: which measures the impact of schooling in the total population on the aggregate poverty. For Watt's measure P(w)=log( 1OO)-log(w) which gives 1 aw 1 - - - = -- W as w f(a 100 0 l + 2a 2 s)f(w)dw Suppose we want to increase schooling for the jth group only (for instance in rural areas or females), then we want to know the how the total poverty is affected. Let us write the poverty measures as J e = £..,; ae.} ~ } (8) j=1 where a j is the population share of the jth group and J is the total number of groups. Differentiating (8) with respect to s gives ~ ae = ~ ~ a .e .(_1 ae j ) e as e £..,; } } e. as } \NORLD BANK 117 I as where - --.I measures the impact of increasing schooling by 1 year on the percentage Sj as change in poverty in the jth group. The impact of increasing schooling in the jth group on the total poverty will be given as as . (~)[ _ _ _ J] I as. S Sj as which is the product of the poverty share of the jth group and the impact of schooling on the poverty in the jth group. This tells us which group in the society we should focus on. Our objective is to maximize the poverty reduction. We should also make an adjustment for the cost of increasing schooling in different groups. Obviously the larger groups will have greater cost. ,"'- _il" '" ... . A ,~.t V«::ALDBANK 119 ANNEX 2.2 How GOOD IS THE MODEL IN PREDICTING WELFARE AT THE GOVERNORATE LEVEL? Actual Predicted % error Amman 232.9 233.3 -0.17 Balqa 176.9 177.9 -0.56 Zarqa 150.9 151.7 -0.56 Madaba 192.5 190.1 1.26 Irbid 181.7 180.7 --1 0.55 Mafraq 140.5 141.6 -0.83 Jarash 167.2 166.9 0.21 Ajloun 178.9 177.9 0.54 Karak 189.5 187. 1 1.28 Tafeela 180.8 174.8 3.30 -- - Maan 150.4 150.4 -0.02 Aqaba 183.3 186.0 -1.47 - - Jordan 190.9 190.9 0.00 Source: Staff Estimates based on HEIS (2002). VWlRLDBANK 121 CHAPTER 3 LABOR MARKET AND THE POOR INTRODUCTION 3.1. The poor seek to improve their living conditions by using the one asset they have in abundance - labor. How much of this abundant asset they are able to offer in the labor market (participation rate), how successful they are in finding work (unemployment rate), and how much they earn ultimately determines whether they escape poverty. 3.2. This chapter presents an overview of recent trends in the growth rates of the labor force and employment in Section A, along with characteristics of the unemployed. The poverty incidence of the population, in terms of their status in the labor market, is presented in Section B. Section C is devoted to the analysis of the unemployed poor. In Section D, we tum to the characteristics of the working poor. 3.3. The following key messages emerge from this chapter: • Unemployment has worsened over the 2000s, rising from 13.7% in 2000 to 14.5% in 2003. Based on projections of the growth of the labor force, sign(/icant reductions in unemployment over the next decade will require economic growth averaging between 6-7% a year, substantially greater than the 3.8% that took place between 1997-2002. • Families of the unemployed are significantly more likely to be poor, with 21 .5% of the population where the household head unemployed living below the poverty line, compared with only 12.8% of the population where the household head is employed, and 15.9% of the population where the household head is not economically active. • At the same time, poverty rates for the population where the household head is unemployed have realized the greatest relative declines since 1997. All groups experienced significant declines in poverty between 1997-2002, but while the poverty rate for those where the household head was employed or not economically active declined over the period by 34% and 30%, respectively, the poverty rate for those where the household head was unemployed declined by almost 39%. Transfers have played a major role in this poverty reduction, with the proportion of household income from transfers having increased from about 25% in 1997 to over 40% in 2002. • Though poverty has declined for the unemployed, certain segments of the unemployed have increased their absolute and relative risk for poverty. Poverty 122 rates for the least educated unemployed have increased over the 1997-2002 period. • Poverty has also declined for employed workers since 1997, and the proportion oj households in Jordan headed by the "working poor" has declined from almost 10% in 1997 to only 6% in 2002. OVERVIEW OF THE LABOR MARKET 3.4. A major challenge facing the Kingdom of Jordan is improving conditions in the labor market. Over the last two decades, deteriorating labor market outcomes - rising unemployment, declining real wages, and low to negative productivity growth - have made improving conditions in the labor market central to the government's overall strategy of strong economic growth, poverty reduction and prevention, and continuing social stability. This section reviews key labor market features in Jordan such as the characteristics of the labor force, employment growth, and the unemployed, to serve as a backdrop for understanding its implications for the participation of the poor. Characteristics of the labor force 3.5. Jordan is characterized by its young, well-educated labor force . Skilled workers go abroad seeking work even as low-skilled workers in Jordan remain mainly in agriculture and construction activities. In 2003, the total size of the labor force in Jordan was estimated at 1.3 million workers. This was comprised of 1.24 million Jordanian laborers, and another 50,000 laborers of non-Jordanian citizenship, who make up slightly less than 4% of the labor force. 3.6. Jordanians employed abroad also constitute a significant share of employment for Jordanians. It is estimated that some 300,000 Jordanians are employed abroad, representing more than a quarter of all Jordanians employed. Remittances from Jordanians working abroad reached over US$l.9 billion in 2002, or about 21 % of GOpl . Thus, the ultimate labor market conditions for Jordanian workers depend, in part, on labor market conditions abroad. 3.7. The national labor force in Jordan 2 is well educated, compared with other countries in the Middle East and North Africa. Almost half have a high school education, and more than 30% have had some college education (see Table 3.l). The pattern of women's labor force participation has had a great deal to do with the generally high educational attainment of the Jordanian labor force. Women's labor force, participation is all but restricted to women with relatively higher levels of education. Only 4% of women with a secondary education 3 or less participate in the labor force, compared with 47% of women with more than a secondary education. As a result, women constitute a very small I Economic Monitoring Note, Spring 2003. 2 Jordanians. 3 Age 15 or older. VIIORLD BANK share of the less educated labor force (less than 7% of the labor force with a secondary education or below), but a major share of the more skilled labor force (representing a third of the labor force with more than a secondary educationt Table 3.1: Jordanian Labor Force, By Level Of Education Completed, 2003 Proportion of labor force, 2003 I-!!ghest level of education completed Total Male Female Illiterate 2% 2% 2% Less than secondary_ _ 52% 59% 16% Secondary 14% 14% 12% Il'\termediate Diploma 13% 9% 31% -- Bachelors and above 19% 16% 39% 100% 100% 100% Source: Annual Report on U,nemployment and Employment, 2003. 3.8. That very low participation of women at low levels of education has ramifications on the overall labor force participation rates of the poor versus the non-poor. Labor force participation among the poor (36.7%) in Jordan is lower than the non-poor (40%) (Table 3.2). While there is not much variation between poor and non-poor participation rates for males, a considerably lesser proportion of poor women (6.7%) enter the labor force compared to the ratio for the non-poor (13.5%). Relatively speaking, while Ajloun and Maan lag behind among both the poor male and female participation rates, Jarash and Zarqa suffer from low female participation among the poor. 3.9. Such low female participation rates might seem at first glance surprising, as one would presume a higher participation rate to fight poverty and vulnerability. H9wever, this phenomenon has been observed across countries when poor women have higher fertility rates or have to manage greater domestic responsibilities in a context of minimal access to several basic services. 3.10. Like other economies in MENA, the Jordanian labor force is characterized by its youth. More than a quarter of the labor force is under the age of 25. With female participation in the labor force having increased significantly for young, educated women, Jordan's female labor force has also become increasingly young, with the proportion of the female labor force under the age of 25 increasing from 24.4% to 28% over the 2000s (Table 3.3). 4 Employment and Unemployment Survey, 2003. 124 Table 3.2: Jordan Participation Rates by Governorate And Gender, 2002 Total Male Female Governorate Poor Non-poor Poor Non-poor Poor Non-poor Amman 38.3 40.6 72.7 67.4 5.7 14.7 _ BaJqa 39.2 41.7 65.9 67.8 10.1 16.3 Zarqa 37.5 40.3 68.1 69.0 5.1 11.1 Madaba 31.9 40.4 57.2 65.2 6.4 15.5 Irbid 36.1 38.5 67.0 65.2 7.4 11.3 Mafraq 34.0 37.8 59.7 65.7 8.3 11.2 Jarash 34.7 37.0 69.8 63.6 3.1 9.6 ~jloun 26.3 36.0 46.1 60.8 4.9 11.9 Karak 36.0 41.9 67.0 64.8 12.4 19.3 Tafeela 38.7 38.4 71.6 66.0 5.9 10.9 Maan- - 27.0 40.5 52.0 63.6 4.2 16.1 ~aba 41.4 42.3 70.9 71.8 10.2 12.3 Jordan 36.7 40.0 67.4 66.8 6.7 13.5 Source: StailEstimates based on HEIS (2002). Table 3.3: Age Composition Of The Jordanian Labor Force, 2003 Sex And Age Group Proportion Of Labor Force, Proportion Of Labor Force, 2000 2003 Male 15-24 __ -----1-6 .9% 27.8% 25-64 71.6% 70.8% 65+ 1.4% 1.4% Female 15-24 24.4% 28.0% 25-64 75.5% 71.8% 65+* 0.1% 0.2% Total 15-24 26.6% 27.9% 25-64 72.2% 70.9% 65+ 1.2% 1.2% Source: Staff Estimates based on datafrom Department of Statistics, Jordan. 3.11. The participation rates of the poor and non-poor vary, not only overall, but also dependent upon age and gender. Figure 3.1, below, shows that the participation rates peak for every subgroup considered at the age group 24-35. After 35 years of age, for all groups, participation rates show a steady decline until they become senior citizens who "" ~ .. 'NORLO BANK I 125 ... "",, " may no longer be employable. Male non-poor and female non-poor have consistently higher levels of participation rates compared to the male poor and female poor respectively across virtually all age groups. The exception to this is the higher participation of male poor to non-poor at the 15-24 year subgroup, where continued schooling may playa large part in lower non-poor participation. For females, the lower participation rates of the poor versus the non-poor occur at the child-bearing and rearing age groups, with the gap in participation rising to a peak in the 24-35 group, but remaining until age 50, at which point the participation rates of the poor exceed those of the non-poor. Figure 3.1: Age And Participation Rates For Poor And Non-Poor By Gender, 2002 120 100 - - C1I co ~ t: 80 - 0 ;: 60 co a. '(3 :e co 40 D.. 20 ...----- >'-- ~ o- :------ 15-24 24-35 35-45 45-50 50-60 60-65 65-99 Age Group --+- Male Non-Poor ------ Male Poor ---.- Female Non-Poor Female Poor Source: Staff Estimates based on HEIS (2002). 3.12. If we examine the population structure of the poor and non-poor, Figure 3.2, below, helps us to infer that a significantly higher proportion of the poor population is concentrated in lower age group up to and below the category 15-24 relative to the non- poor. This is true for both male and female groups. Also, as one would expect, a lower proportion of the poor are among the upper age groups, age 25 and older, compared to the non-poor. 126 Figure 3.2: Population Structure Of The Poor And Non-Poor, 2002 Population Structure for the Non-Poor Population Structure for the Poor 65+ 65+ 25 to 64 25 to 64 Q. Q. ::I ::I ... 0 c; 15 to 24 ... 0 c; 15 to 24 ~ 0.0 10 to 14 ~ 10 to 14 < < 5 to 9 5 to 9 o to 4 o to 4 40 20 0 20 40 60 40 20 0 20 40 % in Age Group % in Age Group [0"0/0Males % Female~ , D % Males .. % Females I Source: SIal/Estimates based on HEIS (2002). Labor force growth 3.13. An analysis of labor force and employment growth of Jordanians over the period 2000-2003 was made, based upon the results from the Annual Report on Employment and Unemployment. Based on the participation rates recorded in the Employment and Unemployment Surveys (EUS), the average growth of the Jordanian labor force over the last three years was 1.7% per year. This figure is well below forecasts of growth of the labor force from other sources, such as the International Labor OrganizationS, and stands in sharp contrast to the average annual growth of the working age population in Jordan, which was 3.4% per year over the same period. 3.14. The source of this estimated slow labor force growth is a significant recorded decline in labor force participation, across gender and age, but particularly impacting Jordanian males. According to the 2000 survey, 66% of Jordanian males over age 15 participated in the labor force. By 2003, however, that figure had dropped to 63.2%. For females, the decline was smaller, from 12.3% in 2000 to 11.2% in 2003. These labor force declines could point to worker discouragement. 3.15. To the extent that problems with the survey sample are limited to an over- representation (over-weighting) of those not economically active in the population in 5According to the ILO Labor Statistics Database, the estimated average annual growth of the labor force over the 2000-2010 period is 3.9%. v.cJRLD BANK 2003, however, an analysis of the unemployment rate or of employment growth relative to labor force growth remains valid. Job Growth and Unemployment 3.16. Employment growth in Jordan lagged labor force growth over the period 2000- 2003, with job growth averaging 1.4% a year, relative to labor force growth of 1.7% a year. As a result, the rate of unemployment increased over the 2000s from 13.7% in 2000 to 14.5% in 2003 . 3.17. Job growth was generally moderate across sectors of the economy, with few sectors demonstrating dynamic employment growth (with employment growth substantially exceeding the growth of the labor force). Rather, where jobs have been created over the 2000s, job growth has ranged from an average of between 0.5% per year to 3.2% per year. A few sectors of the economy recorded job losses over the period, including agriculture and mining, with job shedding averaging almost 9% a year in agriculture and 6% a year in mining. In addition, several of the sectors in which job growth has been anemic have traditionally been major employment creation sectors. Public administration and defense job growth averaged only 0.5% a year, job growth in education averaged only 0.7% a year, and in construction only 0.8% a year. Together, these three sectors account for more than a third of all employment in Jordan (Table 3.4). 3.18. The sluggish job growth in Jordan has resulted in especially high levels of unemployment for young, first-time job seekers. More than half of the unemployed (55%) are first-time job seekers 6 . Some 58% of the unemployed are young (under the age of 25), and the unemployment rate for younger workers was more than three times as high as that of workers 25 or older. Younger workers not only make up the majority of the unemployed, they have also disproportionately borne the burden of the deteriorating employment prospects. Between 2000-2003, th_e unemployment rate for young workers increased by three percentage points (from 27% to 30%), compared to declines in the unemployment rate for older workers. 3.19. Women have also been disproportionately affected by the lack of employment opportunities. Their overall unemployment rate, 20.8%, is more than seven percentage points higher than for men. Women just entering the labor force have the worst employment prospects. Almost three quarters of unemployed women are first-time job seekers, and more than 40% of female laborers under the age of25 are unemployed. 3.20. In terms of skill-type, unemployment affects workers of all skill levels, although the least-educated in Jordanian society exhibit the lowest levels of employment, primarily reflecting a complete lack of employment among illiterate females. With the obvious links between lack of education and poverty, employment is in all likelihood not an option for these uneducated laborers. The patterns of unemployment differ for men and women. Unemployment primarily impacts less educated males (especially those with less 6 HIES, 2002_ 128 than secondary education). For females, unemployment increases with progressively higher levels of education, revealing a high degree of labor market segmentation and/or discrimination, with female unemployment rates two or more times that of men at higher levels of education (Table 3.5). Table 3.4: Jordanian Job Creation 2000-2002, By Industry Industry Proportion Average Proportion of of total annual job new jobs created, employment, growth, 2000- 2000-2003 2003 2002 (percent) ~riculture, hunting, forestry . and fishin 3.6 -8.9 -29.1 Mining and quarrying 1.2 -5.9 -6.3 Manufacturing 12.4 2.3 + 20.9 Electricity, gas, and water 1.7 0.6 0.8 Construction 6.4 0.8 -t- 3.8 Wholesale and retail trade, repair of motor vehicles, motorcycles, and personal and household goods 17.9 . 2.2 28.2 Hotels and restaurants 2.4 6.0 9.8 Transport, storage, and communications 10.0 2.7 19.2 Financial intermediation 1.8 -0.6 -0.8 Real estate, renting and business activity 3.5 5.3 12.7 Public administration and defense, com~ social sec uri 16.6 0.5 6.1 Education 11.6 0.7 6.1 Health and social work 4.7 2.5 8.5 Other community, social and personal service activity 5.6 3.2 12.8 - Private households with employed persons 0.4 25.8 4.4 + Extraterrestrial organizational bodies 0.4 12.6 2.7 Total 100.0 1.4 100 Source: Staff Estimates based on data f rom Department of Statistics, Jordan. \M)RLOBANK ; I 129 '11!it,:;_\.~ Table 3.5: Unemployment Rates By Sex And Educational Attainment Of Head Of Household, 2002-03 Education level Male Female Total Illiterate Less than secondary Seconda~ Intennediate Diploma 10.7% 15.5% 11.3% l 0% 16.7% 17.3% --- 9.5% 15.5% 12.1% ---- 1 8.7% 21.0% 13.2% Bachelors and above 10.7% 24.0% 14.7% Total 13% 21% 14% Source: Stal/Estimates based on HEIS (2002). 3.21. Reducing the unemployment rate in Jordan will require significantly higher economic growth than what has taken place over the last five years. Based on estimates of the working age population, the Jordanian labor force is projected to grow at between 3.5-3.9% a year for the next ten years. With such strong labor force growth projections, even with optimistic assumptions about the employment creation capacity of growth 7, economic growth will need to average between 5-6% a year just to absorb new entrants into the labor force. If in addition Jordan wishes to lower the current unemployment rate over the next decade by half (from 14.5% to 7.2%), economic growth will need to average between 6-7% a year. POVERTY INCIDENCE OF THE WORKING AGE POPULATION, BY ECONOMIC ACTIVITY STATUS 3.22. What groups are most at risk of poverty, in terms of status in the labor force? Among the region, data from household surveys in five MENA countries show that the relationship between poverty and employment status varies across countries, and by urban and rural location. The relationship between unemployment and poverty is complex (see Box 3. 1). A strong association with poverty is not limited to those with absolute lack of work (and may not even be associated with unemployment), but also with unstable or inadequate employment. In addition to casual wage work, which is strongly associated with poverty, self-employment and work for family-run enterprises appear to be highly vulnerable to poverty in some contexts, such as in Morocco and rural Jordan (World Bank 2003). 7With an elasticity of employment creation with respect to output growth of between 0.6 and 0.7. At the height of their employment growth period, the "miracle" East Asian economies only exhibited an average employment elasticity of 0.5. 130 Box 3.1: The Relationship between Unemployment and Poverty Between 1997 and 2002, the Figure 3.3: unemployment rate in Jordan Poverty And Unemployment, Cross-Country Evidence slightly increased from 14.4 to 15.2 percent even though the 40 percentage of poor declined 35 • • ~ from 21.4 to 14.2 percent. How 15 30 ~ can poverty decline while o .! 25 unemployment failed to show a o • • • • • ~ .. ~ sympathetic trend? International evidence (Figure 3.3) shows that • ~ • there is no clear relationship • between unemployment and 5 • • • • • poverty. Also, it is often the o • • • • ~ case that at any given point in o 5 10 15 20 25 time, across population groups differing in employment status, Source: ILO for unemployment and World Bankfor poverty. the incidence of poverty does not increase with increasing unemployment. In contrast, microeconomic evidence invariably shows that at the individual level, unemployment increases the risk of the individual being poor. This box explains why this uncertainty arises in the relationship between unemployment and poverty when one aggregates over individuals or compares national aggregates over time. First, from a data gathering and definitional standpoint, the movement in unemployment and poverty need not coincide. While unemployment status is specific to an individual, the status of poverty is determined at the household level. An unemployed person may not live in a poor household because there could other income earners in the family, or, the household could receive income transfers (remittances) from family members working abroad. Conversely, an individual could be "working poor" because he shares his income with other unemployed or non-working members in the family. Second, from a policy standpoint, there are several sources of tradeoff between unemployment and poverty (Agenor, 2003). If job creation policies lead to a significant reduction in real wages, poverty may rise with reduction in unemployment. For example, an employment subsidy may raise the employment of unskilled labor in the formal sector even as it raises cost of living for those depending on the informal sector and therefore poverty, if inflationary financing is used to finance the subsidy. Even budget-neutral policies can lower unemployment while increasing poverty as it happens when a reduction in minimum wages applied in the formal sector drives wages down in the informal sector. While the tradeoffs described immediately above could be termed short-term, such tradeoffs can also arise in long-term growth context as noted in Agenor, 2003 . 3.23. In Jordan, poverty disproportionately impacts families where the household head is unemployed, with 21.5% of the population with the household head unemployed living \/'tClALDBANK I 131 \''IIoft..: .~... below the poverty line, compared with only 12.8% of the population where the household head is employed and 15.9% of the population where the household head is not economically active. Box 3.2: Deciding Activity Status of an Individual over 15 Did you work in the last 7 days? (Question 515) Yes~ ~NP (Employed) • Have you been on leave? (Question 516) Yes ~ ------------.. No (Employed) Are you Available to work? (Question 522) Yes No Were you looking for work? (Question 523) (Inactive LongTerrn) Yes ~ ~No (Unemployed) (Inactive Short Term) Definitions Labor Force = Employed + Unemployed Participation Rate = Labor Force / (Labor Force + Inactive LT + Inactive ST) Unemployment Rate = Unemployed / Labor Force Note: Question numbers refer to HEIS (2002-03) General Characteristics questionnaire for individuals. Source: Staff Estimates based on HEIS (2002). 3.24. At the same time, poverty rates for the population where the household head is unemployed have realized the greatest relative declines since 1997. All groups experienced significant declines in poverty between 1997-2002, but while the poverty rate for those where the household head was employed or not economically active declined over the period by 34% and 30%, respectively, the poverty rate for those where the household head was unemployed declined by almost 39%. 132 Table 3.6: Poverty Rates Of The Population, By Economic Activity Status 1997 And 2002 Economic activity Poverty Rate, 1997 Poverty Rate, 2002 Change in Poverty status Total POQulation Unem ~ed t _ 21.1 35 .0 14.2 21.5 32.8% 38.6% Em lo~ _ 19.3 12.8 33.6% ~ot economic~ actIve I 22.7 15.9 29.8% Source: HEIS (/997) and (2002). 3.25. Among other things, transfers have played an important role in the reduction of poverty among the unemployed. 8 In 1997, earnings from employment accounted for almost half of the family income of unemployed persons, but by 2002 that had been reduced to less than 40%. On the other hand, transfers, which had accounted for less than 25% of the total household income for the unemployed in 1997, had risen to over 40% by 2002. In this way, an important safety net for the unemployed has become much more prevalent, and has been instrumental in allowing for a dramatic reduction in poverty incidence among the unemployed (Table 3.6). The other key driver for reducing poverty is a shift to consumption across all income groups regardless of employment status. As noted in volume 1 of this report, this consumption shift is the combined effect of re1ative l price shift to tradeables, reduction in real interest rates, and perceived wealth effects from a credible shift in economic policies that is expected to boost future incomes. THE UNEMPLOYED POOR 3.26. Unemployment in MENA falls disproportionately on the young. Youth unemployment ranges from 37% of total unemployment in Morocco to 73% in Syria, with a simple average of 53% for all countries for which data are available. 9 Jordan compares well to this group at 37% in 2002. However, compared to the non-poor youth, the poor youth in Jordan face a much higher rate of unemployment (42% for the poor against 36% for the non-poor). Figure 3.4 shows that yout~ unemployment levels also have a gender dimension with the highest unemployment rates recorded for the female poor among the youth subgroups. Problems due to very low participation rates among women are only compounded by high rates of unemployment. 8Households headed by an unemployed person. 9"Unlocking the Employment Potential in the Middle East and North Africa: Towards a New Social Contract", The World Bank, Washington DC, 2003. ~ ., ,, .• • , l..,. .. YoOALOBANK 133 Figure 3.4: Unemployment Rate And Participation For Youth (Age 15-24), 2002 50 .0 50.0 1 40.0 r-- r----- 40.0 r - - 30.0 r-- r-- 30.0 I - - - 20.0 I - - - I--- 20.0 r-- 10.0 I - - - i- 10.0 r----- 0.0 0.0 Female Poor Male Poor Female Non-Poor Male Non-Poor Unemployment Rate I Unemployment Rate I 70.0 70.0 60 .0 r-- 60.0 50 .0 I--- 50 .0 - 40.0 r-- 40.0 30.0 r-- 30.0 20.0 r-- 20 .0 10.0 r----- 0.0 I J 10.0 0.0 I J Female Poor Male Poor Female Non-Poor Male Non-Poor Participation Rate Participation Rate Source: Staff Estimates based on HEIS (2002). 3.27. Figure 3.5 below shows the geographic dimension of the youth unemployment. Aqaba, Ajloun, and Maan have the highest youth unemployment rates among the poor ranging around 60%. However, among the governorates of Amman, Jarash, and Karak, we find that youth unemployment among poor is less acute compared to the non-poor. While youth unemployment is a serious problem for Jordan, it is more so among the poorer sections of the society. 134 Figure 3.5: Youth Unemployment Among The Poor And Non-Poor By Governorate, 2002 70 r- 60 - 50 :- ~ l- r- - - 40 ~ I-- r- I-- - I-- - L r- - 30 - r-"' ~ r- - r- r- - r- - r- '-- - 20 - r--- - I-- - - r--- - I-- - - 10 - r- - r- - - r---- - L I-- '-- o - ---',-- -- '-- '- - --' ' - - '-- - , '-- '-- Amman Jarash Irbid Zarqa Madaba Karak Tafeela Mafraq 8alqa Maan Ajloun Aqaba I_ Non-Poor 0 Poor 1 Source: Staf/Estimates based on HEfS (2002). 3.28. Who is particularly vulnerable to poverty in unemployment? In terms of poverty incidence, unemployment presents particular poverty risk by age and education. For those in the prime working age (between 25-64), unemployment raises the incidence of poverty to 21.5%, compared with only 14.4% for the overall prime age population. This is not entirely surprising, as unemployment would be especially costly for families in which the head of household is in his/her prime earning years. 3.29. Unemployment also presents increased poverty risk for the least educated. At all levels of education, unemployment is associated with increased poverty risk (where the unemployed have higher risk of poverty than the rest of the working age population), but this incremental risk declines progressively with higher levels of education. Moreover, and more troubling, since 1997, poverty has actually increased for the unemployed for the lowest levels of education. This is consistent with the finding in the Chapter 4 on educational outcomes for the poor that economic returns for those with low levels of education have declined as the structural reforms have increased the returns for education. VtClRLD BANK 1 135 I"... ~ ~.Ii" Table 3.7: Poverty Incidence Of The Unemployed By Educational Attainment Poverty Incidence, Poverty Incidence, Education Change(%) 1997 2002 Illiterate 51.1 53.2 4.1 Read and Write 39.1 42.0 ~ 7.3 Elementary 35.1 28.4 -19.1 Preparatory Basic Education Vocational 32.5 0.0 25.2 19.6 9.6 0.0 ! -39.5 + -100.0 Secondary 32.7 12.5 -69.1 I Intennediate 10.9 6.2 -43.0 Bachelor, above 0.0 2.7 + Total 35.0 21.5 -38.6 Source: HElS (199 7) and (2002). WHO ARE THE WORKING POOR AND WHY ARE THEY POOR? 3.30. Labor is the most abundant and potentially valuable asset held by the poor. Since labor is the poor's primary means of generating income, which in turn detennines consumption levels, this asset exerts significant influence on the poverty status. Table 3.8, below, shows that labor generates (income from employment and income of own account workers and · employers) 64.6% of the total current income for the poor, as compared with 58.9% for the non-poor. Table 3.8: Mean Per Capita Income By Source For The Poor And Non-Poor, 2002 (JD) Income Source Non-poor 0/0 Poor % I Total Income from Employment 429 48.0 194 53.9 Total Income of Own Account Workers and Employers 98 10.9 38 10.7 Total Income from Rents 177 19.8 50 14.0 Total Property Income 28 3.2 5 1.4 Total Transfers 163 18.2 72 20.0 Total Current Income t 895 100.0 359 100.0 Source: Staff Estimates based on HElS (2002) . 3.31. In 2002, 14.2 percent of the population lived at or below the poverty line in Jordan. While a significant proportion of this poor population were either children or adults who either did not participate in the labor force or unemployed, there were around 136 a hundred thousand poor individuals that were employed and yet poor. The working poor are individuals who were employed but whose consumption fell below the official poverty line. However, since poverty is determined by per-capita consumption at the household level, a relevant statistic would be the percentage of households with an unemployed head that were below the poverty line. In 1997, 9.82% of the total households in the country were poor and were headed by an employed person. By 2002, this number fell to 6.6% as a greater proportion of those households with employed heads escaped the clutches of poverty (Figure 3.6). Figure 3.6: Population Distribution By Employment Status And Poverty Detail, 1997-2002 1997 2002 9.82 6.60 • • 0 • 0 0 0 • • • • Source: Staff Estimates based on HEIS (2002) . 3.32. Workers in Jordan as a proportion of the labor force of the poor is the least among select comparators. Poorer countries like Egypt and Yemen have a higher share of their labor force as working. Jordan has about 73% of its poor labor force that is counted as working, similar to Tunisia at 76% (Figure 3.7). Figure 3.7: Workers As A Proportion Of Labor Force Of The Poor (Percent) 120.0 100.0 ,--------. 80.0 r-- ,--- - 60.0 - - 40.0 - ~ 20.0 - - .:. 0.0 Jordan Tunisia Egypt Yemen Note: Thesefigures are based on World Bank poverty assessments for Egypt and Yemen completed in 2002. Jordan numbers are based on HEIS 2002. v.oRLDSANK ! 137 + 3.33. Table 3.9 below provides the regional and rural-urban dimensions of the working poor. Amman, Zarqa, and Irbid have more than 70% of the total working poor in Jordan. However, only 23.4% of the working poor live in rural areas compared to 76.6% that belong to urban Jordan. Table 3.9: Distribution Of Working Poor By Governorate And Rural-Urban Groups Governorate Urban Rural Total Amman 30.8 3.6 34.4 Balqa 5.7 2.8 8.5 _ Zarqa 17.1 - - 1.0 -- 18.1 0.8 - 1.4 Madaba - 0.6 ~ Irbid 13.2 4.4 17.6 ---- Mafraq 1.9 4.7 6.6 Jarash Ajloun 2.2 0.5 l.l 0.5 -- I 3.3 1.0 J -- Karak 1.4 ~ 2. 1 3.5 Tafeela 0.7 0.3 -- 1.0 Maan Aqaba Jordan 0.4 1.9 76.6 2.0 0.3 23.4 --1- 2.4 2.2 100.0 Source: Staff Estimates based on HEfS (2002) . 3.34. One would presume that being employed would enable a person not to be poor. But we observe that while working substantially lowers an individual ' s probability of being poor, it does not eliminate it. Since individuals live with their family members, the consumption thresholds used to determine poverty status are in tenns of family, rather than the personal income of the household head. Thus, earnings from employment of the household head or even all the employed individuals in the family are only one factor in detennining the poverty status of individuals living in family settings. Factors like the family size, dependency ratio, sector employed, and education levels could be some explanatory variables that can provide some understanding on how these families are poor despite having their household heads or other members employed. 3.35. Educational attainment and the likelihood of living in poverty can be expected to be inversely related. The higher the educational/skill level of an employed person, the higher can the expected real wages be. At higher levels of income there would be a lower probability of falling under the poverty line. The incidence of being counted among the working poor declines further as educational attainment rises. Table 3.13 supports this line of thinking. While 77.4% of the working poor did not have any training above basic education, only 53.3% of the working non-poor had an educational level below basic education. On the other hand, 46.7% of the working non-poor had training levels of vocational apprenticeship and above compared to a low 22.6% of the working poor. 138 • Table 3.10: Level Of Education Of Employed Persons Across Poor And Non-Poor Level of Education Working Poor Working Non-Poor Illiterate 6.7 2.,-", _ _ _ 6_ __ 10.8 5.2 Elementary 24.0 14.3 _~~Pre arato _ _ _ _ _ _ __ L-~ 21.3 19.1 Basic Education 14.6 12.0 Vocational ApRrenticeship 1.2 1.8 Seconda ==-'-- - - - 11.4 15.4 Intermedj.!te D iplol1'!a . 6.9 13.5 B _ __.A.,B.Sc. 2.7 13 .8 Higher Di lorna 0.2 0.6 M.A.,M.Sc. 0.2 1.3 Ph.D 0.0 0.4 Total 100 100 Source: Staff Estimates based on HEIS (2002). 3.36. Also, as may be expected, according the HEIS 2002 survey, the average family size for the working non-poor is 7.5 compared to the working poor family size of 9.7. For a given level of income, ceterus paribus, the larger the family size, the probability of falling under the poverty line can be expected to be higher. Shaban et al 1997 finds that for Jordan, incidence and depth of poverty in both 1992 and 1997 tended to increase with rising economic dependency ratios. An additional household member was found to decrease per-capita expenditure by 9% and 11 % in 1992 and 1997 respectively. The economic dependency ratio can be defined as the ratio of the number of household members that are not employed to the number of members that are. This gives us a summary measure of the average number of people dependent per employed person. The number is 4.45 for working non-poor versus 6.06 for working poor in Jordan. This means that in a working poor household an income earner provides for an average of six individuals while the average income earner in a working non-poor household needs to provide only for four and half people on an average. Hence, the dependency ratio being higher in the working poor families can be offered as a partial explanation for their poverty. 3.37. Turning to the sectors that employ most of the poor, Table 3.11, below, shows that the 13 sectors that employ almost two-thirds of the poor are also the most important employers for the non-poor. However, land transport, agriculture, market gardening, horticulture, construction, manufacture and repair of motor vehicles, manufacture of wearing apparel, and retail sale of food, beverages and tobacco are the sectors that employ a higher proportion of the poor than non-poor. Sector of employment is usually a relevant factor in determining poverty. For instance, the construction sector is known to be a low-wage sector in some developing countries. Industry-specific wage data can WORLD BANK 139 throw useful light on the nature of poverty depending on the wage gap across sectors that are important for the poor. Table 3.11: Share Of Employed By Industrial Sector, 2002 Non-poor Poor Total Industry % % % Community Services 26.9 17.9 26.1 ~oadTransport 8.5 15.4 9.1 Administration of the state and the economic and social policy of the community 15.7 12.2 15.4 Growing of crops; market gardening; horticulture ----l Building of complete constructions or parts thereof; civil engineering 3.1 5.3 9.4 7.9 3.7 5.5 Manufacture and repair of motor vehicles 3.7 6.6 3.9 -- Other retail trade of new goods in specialized stores Manufacture of wearing apparel, except fur apparel Primary education Human health activities D6 r 6.7 10.9 7.6 6.2 5.4 4.9 ~.9 6.6 3.8 10.4 7.3 Other service activities 1.9 3.5 2.1 Retail sale of food, beverages and tobacco in specialized stores 2.6 3.3 2.7 Non-specialized retail in stores 3.4 3.3 3.4 Total 1 100.0 100.0 100.0 Source: Staff Estimates based on HEIS (2002) . WORLD BANK 141 CHAPTER 4 UNDERSTANDING EDUCATIONAL OUTCOMES FOR THE POOR INTRODUCTION 4.1. Education is an important dimension of capabilities of individuals and helps realize the opportunities jor income growth. Increasing awareness of the importance of education for economic and social growth led many governments to prioritize public investment in education during the 20 th century. Jordan, like many countries in the Middle East and North Africa (MENA) region, is committed to improve educational outcomes, as reflected in its consistently high levels of spending on education (on average 5.6% of GOP from 1990 to 2000), one of the highest in the region (see Box 4.1 on the educational system in Jordan). Jordan's commitment to achieving the Millennium Development Goals (MDGs) is also reflected in diverting a large proportion of resources towards basic education since the mid 1990s. As a result, Jordan has achieved near universal coverage in basic education. Coverage in higher education has also expanded greatly since about the mid 1990s. 4.2. There is a high level o.fformal educational achievement with workers having more than seven years, on average, o.fformal education in Jordan. This is rising over the years and is higher than that for most countries in the region. Workers have traditionally achieved high educational and skills levels and have proven to be the economy's most successful "export." Low wages for the relatively unskilled have increased Jordanians' willingness to get as much education as they can. 4.3. The 2002 education reform in Jordan aims to prepare Jordanian youth. for the knowledge economy. The government has prioritized enhancements in the quality of education through improved methods of teaching and learning and assessment as well as a new curriculum and Infonnation and Communication Technology (lCT)-based instruction. Recognizing the significance of early childhood education (ECE) in countering the disadvantages (socio-economic, physical, and psychological) in the early years of a child's development, the government is also extending the provision of quality services to the poorest of the population residing in the most rural remote areas as a part of this refonn. The investment targets children whose parents cannot afford private ECE services by providing ECE in areas of the country where no private entity would invest, i.e., in remote and/or rural low-income areas. About 250 public Kindergartens (KGs) will be added to primary schools with appropriate equipment and learning materials. The program will also support equipping 50 KGs managed by non-profit NGOs. 4.4. In this chapter educational attainment of Jordanians is reviewed in Section A with a special focus on the poor in tenns of literacy and enrollment rates. This section also provides an explanation of the observed weak educational attainment of the poor. Given the relatively large public expenditure on education in Jordan, Section B reviews how far 142 the poor benefit from public subsidies to promote education. Educational outcomes in terms of schooling quality and returns to education are examined in Section C distinguishing among the poor and non-poor. Section 0 offers recommendations from the analysis. Box 4.1: Education Sector in Jordan The 1994 Education Law extended the basic education cycle to cover Kindergarten (KG) and divided the education system into three stages: KG (two years), basic (10 years) and, secondary (two years). While the basic and secondary stages are free of charge in public schools, only the basic stage is compulsory. Early childhood education (EeE) is available to children from ages four to six through mostly private providers. A high percentage of KGs are coeducational and located in urban areas. The total KG enrollment in 2000 was 83,777 and the Gross Enrollment Rate (GER) was 35%. Enrollments in basic education were 1,173,314, resulting in a GER of 102%. Most students (73%) were enrolled in public schools, followed by the private sector (14%), UNRWA - the United Nations Relief and Works Agency for Palestine Refugees in the Near East (12%), and other ministries (1 %). Secondary education consists of two streams: comprehensive (academic and vocational) and applied. The applied stream leads to pre-employment or apprenticeship training. In addition to the public sector and UNRWA institutions, there were 1,893 privately operated schools in 2000: 1,164 pre-schools, 592 basic, and 137 secondary schools. All private schools must follow the nationally prescribed curriculum. The higher education system consists of non-university level community colleges and universities. Access to the post-secondary education system is limited to those who complete the secondary education cycle and successfully pass the tawjihi. In 1999/2000, 20 percent of the 20 to I 24 age group were enrolled in higher education (females represented 51 percent). There are 22 (eight public, 14 private) universities and 47 (27 public, two UNRWA, 18 private) community colleges. In 2000, there were 29,707 community college student enrollments (68 percent female). More than three-quarters (67 percent) of university enrollments in Jordan are accommodated in public universities. In 2000, there were 112,483 university students - of which 47 percent are female, up from 37 percent in 1994/1995. Jordan has made a significant investment in basic education since the onset of the education refonn in the early 1990s. Between the years 1990 and 200 I, JD 395 million has been spent on capital at the basic education level, averaging JD 32 million each year. Private and household finance plays an important role, especially in the provision and financing of higher education. Student tuition fees account for almost 30 percent of public universities' recurrent expenditures (World Bank 1996), which gives Jordan one of the highest levels of cost-recovery in the world (World Bank 1994). 4.5. The main messages from the analysis in this chapter are: • Despite significant gains observed at the nationalleve!, the poor, especially those in rural areas, are behind the rest oj the population in terms oj educational attainment. Rural poor have 20% illiteracy compared to eight percent illiteracy ~LOBANK 143 among non-poor. Despite equal access, poor children are one-third less likely than the rich to enroll in education levels beyond primary. • Illiteracy goes hand in hand with poverty. In addition, the payoffs of having higher education in reducing the likelihood of being poor has dramatically improved between 1997 and 2002. This is indicative of the demand for skill intensive labor during the era of structural reforms. • Even with similar endowment ofhigher education, the returns to higher education are 60 percent higher for the non-poor compared to the poor. • Public spending is more equitably distributed at the lower levels of education, and there is scope for greater equity in higher education. Persistence of inequities in education system at the higher stages calls for more effective public intervention to improve educational outcomes jar the poor. EDUCATION ATTAINMENTS Literacy 4.6. Adult literacy increased significantly over time and Jordan compares favorably with international standards. In 1961, the adult literacy rate was 32 percent. By 1999, the rate was almost 90 percent. The adult literacy rate is much higher in Jordan than the average for Middle East and North African countries. By the late 1990s, Jordan's adult literacy rate surpassed average literacy rates for East Asia and Latin America (Figure 4.1). 4.7. Between 1997 and 2002, there was considerable progress in reducing illiteracy. Overall, illiteracy declined 30%, from 14% in 1997 to 9.2% in 2002.1 In 2002, 68.8% of the Jordanian population 2 had basic education or lower while 7% were university graduates. IBased on analysis of the Jordan Household Expenditure and Income Survey (HEIS). 2Individual rates calculated from the 1997 and 2002 Jordan Household Income and Expenditure Surveys (HEIS) for all persons aged 12 or more. 144 Figure 4.1: Adult Illiteracy Rates, 1970-1999 (Percent) 80 Africa 70 60 -------.- --- --------__ South Asia 50 Jordan ------.-.--.. --- 40 East Asia Middle EasVN. Africa 30 20 Latin America 10 East. Euro etC . Asia 0 1970 1975 1980 1985 1990 1995 Source: UNESCO 2001. 4.8. Significant educational investments have resulted in improved educational attainments among the younger generation. Analysis of the 2002 Jordan Household Expenditure and Income Survey (HEIS) shows that illiteracy among those between the ages of 12 and 18 is 6.6%, which is half the rate for heads of households (13.2%). Moreover, close to 50% of 12 to 18 year olds have attained more than basic education, while 32% of head of households have attained those levels. 4.9. While both the poor and the non-poor achieved significant gains in literacy, the drop in illiteracy was more pronounced for the poor. The overall incidence of illiteracy dropped 34% from 14% in 1997 to 9.2% in 2002. During this time, illiteracy dropped 41 % among the poor, from 22% to 13% and 31 % for the non-poor. The remarkable progress in illiteracy rates could be attributed in part to the Government's efforts to expand universal coverage of basic education as well as literacy campaigns targeting the poor. Current government policy and Education For All (EF A) strategy includes continuing the delivery of literacy programs, mostly through evening classes at public schools and at work places. 4.10. Nevertheless, the poorest wealth quintile still lags behind the rest of the population in terms of literacy achievement. As shown in Figure 4.2, while the proportion of illiterates is between 8% and 9% in the upper four wealth quintiles, 12% of the lowest wealth quintile was reported to be illiterate in 2002 . The difference in the illiteracy rate between the poorest wealth quintile and the rest of the population is statistically significant, thus indicating that poverty and educational outcomes are highly correlated. 4.11. A larger proportion of the rural population is illiterate with a significant difference between the poor and the non-poor. In 2002, the incidence of illiteracy was 7.9% in urban areas as opposed to 14.1 % in rural areas. The incidence of illiteracy among the poor in rural areas is more than twice as much as it is among the poor in urban areas (20.4% versus 9.6%). On the other hand, there is only a 5% difference in incidence of VKlRLD BANK 145 illiteracy between the non-poor in urban and rural areas (7.7% versus 13%). Moreover, illiteracy rate among the poor living in rural areas is 50% higher than the percentage found amongst the rural non-poor. Looking at other levels of education, 50% of the poor in rural areas have attained below elementary level of education (grades 1-6) in 2002, which is 16% higher than the ratio of non-poor in urban areas. The highest levels of illiteracy are found in Mafraq, the governorate with the lowest human development index (UNDP, 2003). The incidence of illiteracy in the capital city of Amman, on the other hand, is 7.3%, the lowest in the country. Figure 4.2: Educational Attainments Of Individuals By Wealth Quintiles, 2002 100% ,------,.-__- -____- -____- -____- - ° Phd. OMS 80% - High Diplom -SA 60% o Diploma - Secondary 40% D Vocational - Basic 20% o Preparatory o Elementary - Read/Write Poorest 20% 2 3 4 Richest 20% Illiterate SOllrce: Staff Estimates based on HElS (2002). 4.12. In general the difference between the incidence of illiteracy among men and women is significant, for the poor and the non-poor alike. In 2002, 4.5% of men were illiterate while 13.9% of women were illiterate. However, the gender difference in the incidence of illiteracy is the same for the poor and the non-poor (at 9%). Interestingly, the lowest gender difference is among those in the third wealth quintile (8%) and the highest is among the richest quintile (11.2%). ENROLLMENT RATES AND ACHIEVEMENT OF MILLENNIUM DEVEl.OPMENT GOALS 4.13. Jordan has made remarkable progress in education coverage. The Gross Enrollment Rate (GER) for grades 1 to 6 was 104 percent in 2000, while the Net Enrollment Rate (NER) was 96 percent. The system has expanded significantly over time. In 1999,83.4% of the 5-14 year olds and 46.5% of the 15-19 year olds are reported to be in public and private schools. Educational attainments of the Jordanian population are higher than the average for countries in the MENA region (see Figure 4.3) as well as in countries at similar income levels outside of the region. 146 Figure 4.3: Net Enrollment Ratio For Students 5 To 19 years Old In Public And Private Schools, 1999 100 75 50 25 n u c .=:.= u .0 o ;:l '" o .... o '0" -0 .... '>. " °Vi '" °Vi °2 Cl 00 til ;:; N 0. :::.G ...., '" co ;:l U ~ c U~ ;:l I- 0 0 ::E U • Net Enrollment Ratio for 5 to 14 years olds Net Enrollment Rate for 15-19 years Source: GECD. 4.14. Jordan is well advanced in reaching the Millennium Development Goals (MDGs) with respect to universal completion of primary schooling and elimination of gender disparities. The primary school completion rate was 100 percent for both boys and girls in 2000 (World Bank 2002). Female enrollments accounted for 47 percent of all kindergarten enrollments, 49 percent of all basic education enrollments (grades 1-10), 50 percent of secondary enrollments (grades 11-12), 68 percent of community college enrollments, and 47 percent of public university undergraduate enrollments in 1999. 4.15. The Jordanian government's interventions to enhance access have resulted in near universal enrollment in basic education. During the 1990s, the government introduced a policy to provide a school if there were a minimum of 10 students who did not have access to a school. Analysis of the 2002 household survey data shows that 80% of households live within three kilometers distance of an educational facility (school, college, university). There is no significant difference between access to an educational facility between the poor and the non-poor. This shows up in enrollment patterns of the rich and the poor in basic schooling. Basic education (grades 1-10) is compulsory and the net enrollment rate (NER) of all wealth quintiles is above 94% (see Figure 4.4). There is a 3% difference between NER of poorest and richest wealth quintile, which is statistically not significant. 4.16. Nevertheless, there is a small number of children who have never been to school. Children who come from poor families and who reside in rural areas are more representative of this group. Analysis of the 2002 HEIS shows that among the non-poor, 6.4% of the basic education age group have never been to school, while this proportion is 11.3% for the poor. In addition, for the poor in rural areas, the percent of basic age children not in school is twice that in urban areas. The percent of girls in the basic education age group who are out of school is marginally higher than that for boys (7.5% vs. 6.9%). There was no significance of working with never attending school. 147 Figure 4.4: Net Enrollment Rate By Wealth Quintile, 2002 100% I 75% BASIC SECONDARY 50% HIGHER 25% 0% .L-.C'---..-..........L-,-------'---,----------~--'-- Poorest 20% 2 3 4 Richest 20% Source: StafjEstimates based on HEIS (2002). 4.17. While most Jordanians, rich and poor, reside within three kilometers of an educational institution, enrollments in secondary and higher education are highly correlated with income. While 80% of the richest wealth quintile are enrolled in secondary schools, only 54% of the poorest wealth quintile are enrolled. The difference in enrollments is more severe for higher education, with the poorest wealth quintile representing less than one-third the proportion of the richest 20% in higher education institutes (public and private). There could be many factors constraining enrollment despite access to physical facilities, including direct and indirect cost of attending (e.g., fees, school related expenditures and lost income) as well as quality and relevance of education. 4.18. Girls are just as well represented in basic education as boys, but outnumber the proportion of boys for both secondary and higher education amongst both the poor and the non-poor. As indicated in Figure 4.5, poor and non-poor girls and boys are equally well represented in basic education. There is a sizeable difference between the enrollment rates of the poor and the non-poor in secondary education (26%) as well as one between boys and girls (13%). This indicates that both poor girls and poor boys are under represented in secondary enrollments but poor boys are much less likely to be enrolled, possibly because of the higher opportunity cost in terms of lost income for boys. Boys also represent a greater proportion of the children who drop out of basic schooling - while low, the dropout rate for boys from the basic education cycle (0.87%) is 44% higher than that for girls (Ministry of Education 2002). A 2002 study into the causes of school dropout commissioned by the government of Jordan (see Box 4.2) indicates that family poverty and parental education are significant factors of school dropout (NCHRD, 2002). Overall, dropout rates are relatively higher for grades 7 through 10. Close to 80% of the children who had dropped out of basic schools came from households with family incomes that were less than JD 200 per month (less than US $300). Once they have dropped out, boys are likely to work in the labor market to augment family income. 148 Figure 4.5: NER At Different Levels Of Education, By Gender And Poverty Status Of Individual, 2002 120.00% 100.00% ~ ,...,.. 80.00% LI ~\ J. 60.00% +--, ~~ - [) POOR o NON POOR r-I 40.00% 20 .00% r- i J --' r - -I r-- .,.. 1 :J r 0.00% Girl s I Boys Girls I Boys Girls I Boys Basie Secondary Higher Source: Staff Estimates based on HEIS (2002). 4.19. The pattern of lower enrollments continues for all Jordanians at higher levels oj education and is particularly more pronounced for the poor. While the difference between the enrollments of poor and non-poor is most significant for higher education, and girls represent a higher proportion of the students than boys, the gender difference is much smaller than the poverty difference. That is, both poor females and poor males are under represented in higher education. The gender difference, however, used to be large at different levels of higher education. Amongst community college graduates, females exceed males by almost 60% while males exceed females amongst BA/BSc degree program graduates by 74%. However, there is a great achievement in gender equality. ... WiORLOBANK l 149 Box 4.2: Factors Affecting Dropout in Jordanian Schools A study of the factors affecting dropout from public basic schools, based on a random sample of 270 schools and interviews with 323 children who had dropped out, revealed that while the incidence of dropping out is low, the relative rates are higher among grades 7 through 10, especially so for boys. While 50% of the dropouts had repeated classes before dropping out, a large majority came from disadvantaged backgrounds: 77% came from families with incomes less than JD 200 per month; 84% were from large families (between 6 and 10); 97% of their mothers do not work, 56% of their mothers are illiterate; more than 82% did not have computers, Internet, and books at home. The primary reason for dropping out of school for more than 60% of these children was their desire to help increase family income, willingness to work, preference to work over school, difficulty of studies, and lack of reinforcement for school from family. Over 80% of these children said they had good relations with their teachers and the environment at school was positive, but 76% of them perceived that their family needed them to work. Family income and parental education were statistically significant indicators of school drop out. Source: Minis/I)' of Education 2002. EDUCATIONAL ATTAINMENTS AND POVERTY 4.20. Overall in Jordan, poverty is inversely related to educational attainment. As shown in Figure 4.6, the educational attainment of the non-poor is similar to that of the entire population, but educational attainments are much lower for the poor. Over 86% of the poor had only basic education or less as opposed to 1.3% having attained BA or higher. Amongst the non-poor, on the other hand, 67% attained basic education or less while 7% attained BA or higher levels of education. Figure 4.6: Educational Attainment Of Individuals 12 Years And Over, By Incidence Of Poverty, 2002 Phd. Mi • High Diploma .BA CT Diploma • Secondary • Vocational • Basic ':J Preparatory [] Elementary • ReadlWrite Illiterate Overall Non-Poor Poor Source: Sta.tIEstimates based on HEIS (2002). 150 • 4.21. There are significant differences in educational attainment and its correlation with poverty between urban and rural areas. There is a significant difference between the educational attainments of the poor and the non-poor in both urban and rural areas, indicating that education is a strong driver of poverty in both urban and rural areas. As shown in Figure 4.7, the profile of the urban poor is significantly biased towards lower educational attainments - 84% of the poor had attained basic education or lower as opposed to 64% of the non-poor and i % of the poor had attained BA or higher level of education versus 9% of the non-poor. In rural areas, although the magnitude of the differences is a bit smaller than that in urban areas, there is a significant difference between attainments of the poor and the non-poor. 4.22. Nevertheless, it appears that education played a stronger role in averting poverty in urban areas than in rural areas for those individuals who did not pursue education beyond the compulsory basic cycle. As shown in Figure 4.8, poverty was highest for individuals who are illiterate and those below the basic education level in both rural and urban areas. Poverty rates amongst those with secondary education are less than one-third the average rates for individuals who can read and write. In fact, education beyond the basic stage reduces the likelihood of being poor considerably below the national average. The difference in the incidence of poverty between rural and urban areas continues until the basic cycle. However, the rural-urban difference between the incidence of poverty becomes marginal at education beyond the basic level. This is illustrated in Figure 4.8 as poverty rates declined for all individuals with secondary education, whether they reside in rural or urban areas. Figure 4.7: Educational Attainment Of Individuals 12 Years And Over In Rural And Urban Areas, By Incidence Of Poverty, 2002 Phd. Mi o Diploma • Secondary • Vocational • Basic [J Preparatory o Elementary 10 • ReadlW,1 o lIIilo' ale O % ~--~---L--~---L----L---r---~--~---.--------~~ Rural Source: Stal! Estimates based on HEIS (2002) . Y«lRLO BANK 151 4.23. The acquisition of education is significantly related with the reduction in the incidence of poverty. An investigation of the relationship between the educational attainment of the head of household and its impact on the incidence of poverty showed that all education levels have a significant impact on poverty, controlling for residence, gender of household head, size of household, sector of work, age, and whether or not a household head is currently working (Table 4.1). The effect increases with higher levels of educational attainment. For example, a head of household who is illiterate is 2.3 times more likely to be poor as one with elementary education. This likelihood increases to almost 19 times as compared to someone who has attained more than two years of college education. Furthermore, a household headed by a male is 1.4 times more likely to be poor than a female-headed household. Rural residents are 1.5 times more vulnerable to poverty than those in urban areas. For every additional household member, the odds of being poor increase by 1.3 times. Also, family size plays a significant role when controlling for residence. Employment, particularly in the public sector, reduces the incidence of poverty, while age of head of household does not make a difference. Figure 4.8: Regional Poverty Incidence By Individual Education Level (%), 2002 25 ··.---~---------------------------------------------, 20+-~=_~----~~--------------------------------~ Overall l5t-~----~=====_--~~------------------------~ ___ Urban _ Rural IO ·~--------------------~~~~----------------------~ 5 t-----------------------~~~~===_----__j ~---=-I O~----~----_-----------------~---------------~ lIliterate R/W Elementary Basic Secondary Diploma BA Higher Source: Staff Estimates based on HEIS (2002). 152 Table 4.1: Determinants Of Poverty In Jordan, 1997 And 2002 1997 2002 Independent I Coefficient Exp(8) lIExp(B) Coefficient Exp (B) lIExp(B) Variables ReadIWrite -0.569* 0.57 /.8 -0.513* 0.60 1.7 Elementary -\.009* 0.36 2.7 -0.842* 0.43 2.3 Preparatory -1.169* 0.31 3.2 -1.348* 0.26 3.8 Secondary -1.535* 0.22 4.6 -1.555* 0.21 4.7 Vocational -2.026* 0.13 7.6 -1.503* 0.22 4.5 Djploma -2.069* 0.13 7.9 -1.878* 0.15 6.5 BA or higher education -2.572* 0.08 J3.1 -2.929* 0.05 18.7 Gender of Household Head 1.404* 4.07 0.323* 1.38 Residence -1.085* 0.34 3.0 -0.413* 0.66 1.5 Sector 0.030 1.03 1.0 -0.122* 0.88 1.1 Age -0.020* 0.98 1.0 -0.042* 0.96 I Working Status -0.486* 0.62 1.6 -0.296* 0.74 1.3 Family Size 0.229* 1.26 0.23\ * 1.26 Urban FSize 0.119* 1.13 0.044* 1.05 Constant -2.630* 0.07 -0.942* 0.39 Notes: I. * indicates coefficient is significant with p < 0.001. 2. Thejol/owing variables are dichotomous: Dependent variable is dichotomous; value "I" denotes poor; value "0" denotes non-poor. Gender of Household Head: value" I" denotes male; value "0" denotes female. Residence: value" I" denotes urban; value "0" denotes I1Iral. Sector: value "I" denotes public sector employee; value "0" denotes non-public sector employee. Working Status: value" I" denotes respondent currently working; value "0" denotes respondent currently not working. 3. Urban FSize is an interaction variable. 4. Exp(B) is the odds ratio; I/Exp(B) is used as the odds ratio./or negative coefficients. Source: Analysis of 1997 and 2002 Jordan Household Income and Expenditure Surveys. 4.24. The strength of the effect of higher education on the incidence of poverty increased almost 50% between 1997 and 2002. Investigation of the 1997 and 2002 household surveys shows that all levels of education made a significant impact on the incidence of poverty (Table 4.1, see note I and Annex 3.1 for details). While the likelihood of being poor changed marginally for those who had acquired up to secondary education, the relative importance of vocationa~ education in reducing the likelihood of poverty decreased from 7.6 times to 4.5. This could be due to the possibility that jobs are less easily available after acquiring vocational education as they used to be five years ago. On the other hand, higher education became more important in 2002 - a head of household who is illiterate is close to 20 times more likely to be poor as one with higher education. The ratio has increased 50% from 13.1 in 1997 and could be the result of VlCALOBANK \ J 153 "\'>ru. ~ ...,. improved returns from higher education (Table 4.1 , see note 2 and Annex 3.1 for details). While it is a troubling statistic, given the proportionally lower representation of lower income groups in higher education, it is likely to have a positive impact on encouraging higher educational attainments among Jordanian youth. There is an improvement in the impact of living in urban areas. EDUCATION EXPENDITURES 4.25. Private and household finance plays an important role in the financing 0./ education, especially at the higher education level. The average Jordanian household spends JO 36 per year or 4% of total household expenditures on education. Educational expenditures are equitably distributed across wealth quintiles: the poorest wealth quintile spends 2% while the richest quintile spends 6.5% of total household expenditures on education . Average annual household spending at public schools is JD 14, while that at private schools is JO 359. Annual expenditure at the community college level averages JO 262, while that at public higher education institutions is JO 738. 4.26. Private spending at public higher education institutions is equitable, but there is scope for greater equity. On average, the richest wealth quintile spends 2.25 times what the poorest wealth quintile spends on public universities. While this expenditure is equitable, it renders a greater financial burden on the poorest income group, as this represents over five times their annual income, as opposed to the richest 20% for whom this expenditure represents less than twice their annual income (see Table 4.2). The present policy of cost recovery in higher education is a sound policy, but it appears that there is a need for additional support (in the form of scholarships or subsidized loans) to make the system more equitable by enabling the poor to access higher education. Table 4.2: Household Expenditure At Public Higher Education Institutions By Wealth Quintile, 2002 Poorest Richest 2 3 4 20% 20% Expenditure at Public Higher Education 477 606 638 742 1,073 Institutions (JD) Average Family Income (JD) 93 150 205 286 597 - - Ratio of Expenditure to Income 5.13 4.04 3.12 2.59 1.79 Source: StallEstimates based on HEIS (2002). 4.27. The government of Jordan spends a considerable sum on education: 5.3 percent of GDP and 17 percent of total expenditures in 2000. Although expenditure on education as a share of GOP is lower today (5.3 percent) than it was at the start of the reform in 1990 (5.8 percent), it compares favorably to average expenditure levels in lower-middle income countries (see Figure 4.9). More importantly, there has been an upward trend in public spending on education as a proportion of total government expenditures since 1990. The bulk of the increase in public spending on education during the last decade has 154 • been recurrent in nature and it is expected to grow in absolute and relative terms as Jordan attempts to maintain its present infrastructure and move towards education for the knowledge economy. Figure 4.9: Public Expenditure On Education As A Percent Of GDP In Selected Countries Portugal 1 5. 7 Jordan 5.5 Malaysia 4.8 - Thailand 4.7 Brazil 4.7 - WEI Average 14 .6 Hungary 4 .6 Chile 3.6 Philippines -.J 3 .5 Turkey ,3 o 2 3 4 5 6 Source: GEeD 2001. 4.28. Per pupil expenditure in basic and secondary education has increased by almost 30 percent (from JO 141 in 1990 to JO 180 in 2000). Between 1990 and 2000, enrollment in basic and secondary education increased by 23 percent from 810,172 students in 1990 to 994,300 students in 2000. The share of recurrent spending increased from a little over 91 percent in 1990 to over 95 percent in 2000. The proportion of recurrent spending in the basic and secondary education sectors going to personnel costs has increased from 83 percent to 90 percent in 2000. The wage bill in basic and secondary education accounts for 11 percent of total government spending. This has left Jordan with limited resources to devote to improving the quality of education offered. The proportion of basic and secondary education expenditures incurred on non-wage current expenditures, in fact decreased from 7.2 percent in 1990 to 4.1 percent in 2000. The high share of personnel expenditures in basic and secondary education may also reflect low internal efficiency, as measured by the low student-teacher ratio (21: 1) in remote and rented schools and the high teacher salary. The starting salary is 210 percent of per-capita GOP. Teacher's salaries after 15 years of expelience is 290 percent of per-capita GOP, much higher than that for most countries. 4.29. In general, children from poorer families form a high proportion of the enrollments at public basic and secondmy schools, while the reverse is true for higher education. Over 50% of the enrollments at public basic schools represent children from the two lowest wealth quintiles, while the richest quintile accounts for 9% of the WOFtLD BANK 155 enrollments (Figure 4. 10). Enrollments at public secondary schools are fairly equally distributed amongst children from diverse socio-economic groups. However, enrollments of students from the richest wealth quintile represent close to 2.5 times those from the poorest wealth quintile in public higher education institutions. The distribution of public enrollments is generally used as an indicator of the equity of distribution of public subsidies because public spending is often based on the number of personnel and extent of capital expenditures proposed rather than on student characteristics and financial need (Vawda 2003). Data presented in Figure 4.10 thus implies that public funding in Jordan may be inequitably distributed at the higher education levels. Figure 4.10: Proportion Of Students In Public Institutions By Wealth Quintile, 2002 40%.---------------------------------------------------, 30% r--------------------------------------------------i [I Basic o Secondary 20% [] Higher \0% 0% Poorest 20% 2 3 4 Richest 20% Source: Sta.ff Estimates based on HEIS (2002) . 4.30. Public expenditure is pro-poor at the basic education level, while there is a pro- rich bias in subsidies to higher education. Figure 4.11 displays a Lorenz curve for each level of education. This shows the percentage of total subsidies at this level of education received by the poorest 20 percent of the population, the poorest 40 percent of the population, and so on. A Lorenz curve coinciding with the diagonal line at every point along the way represents perfect equality. The more concave a Lorenz curve is below the diagonal line, the more unequal is the distribution of subsidies in favor of the rich. A Lorenz curve that is above the diagonal line represents a pro-poor distribution. In the case of Jordan, subsidies to basic education are pro-poor, while those for secondary education are almost equally distributed amongst all socio-economic groups. At the post-secondary education levels, however, public subsidies are disproportionately in favor of the non- poor. The extent of the pro-rich advantage in 2002 seems to be smaller in Jordan than in 156 other countries (for which data exists for much earlier year)3, and could be attributed to the success of the higher education reforms initiated during the late 1990s. Nevertheless, the fact that 70% of public higher education spending in Jordan still goes to the richest 60% of the population means that there is a strong case for enhancing the targeting of higher education financing towards lower income groups, through, for example, targeted scholarships and subsidized loans. Figure 4.11: Distribution Of Subsidies For Education -a ·0 u - 15 t-- ::: .- c ~ '2 ~ "I' ---~ '" 0'0 - 10 f-- r- 1 ---, f--- f- - i [] Prevalence of Disability o Incidence of Injury I: . ~ '- 0 '" (.) i n c '" '" t-- I I~ - ' - 5 - I (.) t-- 'c-,;) -" .- l ~ > ~ Q., - (.) c 0 Lowest Second Middle Fourth Highest Income Quintiles Source: Staff Estimates based on HEIS (Z002). 5.11. The percent of women aged 15-49 who use a modern method of contraception is around 27.5 percent among women in the lowest income quintile. This percentage rises steadily to 46.8 percent of women in the highest income quintile - an almost 70 percent increase from the lowest to highest income groups in Jordanian society. This differential helps explain the wide variation, albeit not completely, in fertility rates observed in Table 5.1. Other factors, such as female education, could also be examined for any explanatory power. 5.12. The percent of children aged 12-23 months recelvmg DPT immunization coverage (diphtheria, pertussis, and tetanus) actually declines, although marginally, with increases in income - from 97.6 percent in the lowest quintile to 92.5 percent in the highest quintile. This trend is reversed when observing immunization rates against measles. The percentage begins at 89.9 percent in the lowest quintile and rises to 92.5 percent in the highest quintile. These differences in vaccination coverage are only marginal and therefore probably do not help explain the observed variation in child health outcomes. 5.13. The percent of women with a recent birth who had one or more visits to a physician rises from 83.1 percent in the lowest quintile to 96.1 in the highest quintile. A similar trend is observed for the percent of women with a recent birth who have one or more visits to a medically trained person. The percentage rises from 92.5 percent to 97.3 percent across the income quintiles. The following indicators are also important ones (of the process indicators) in terms of explaining the differences in child mortality and disability across income quintiles. The percent of births assisted by a physician in the lowest quintile is 46.5 percent while the percentage in the highest quintile is 81.2 percent - a difference of around 35 percentage points. The percent of births at home declines ~LOBANK ~. 1 173 .... , ... ..... from 13.4 percent in the lowest quintile to three percent in the highest quintile. These two indicators probably have an important impact on the observed variation in infant and child mortality rates across income groups. Proper medical supervision for high-risk pregnancies and delivery complications helps reduce the rate of childhood mortality, particularly infant mortality, and the incidence of childhood disability. 5.14. Out of the health process indicators, significant variation is observed in the use of modern contraception methods and the degree of medical supervision during delivery. Immunization rates and utilization of prenatal services do not vary to the same extent across income groups. Recent literature on child survival strategies point to the importance of birth spacing, availability of medically prescribed antibiotics (for premature rupture of membranes and sepsis), newborn temperature management, newborn resuscitation, and clean deliveries in reducing rates of childhood mortality. These interventions help reduce the number of deaths caused by pre term delivery, birth asphyxia, neonatal tetanus, and neonatal sepsis.5 Table 5.2: Health Process Indicators By Income Quintile Lowest Second Middle Fourth Highest LowlHigh Quintile Quintile Quintile Quintile Quintile Ratio Indicator Contraception Prevalence I Women using modem 27.5 35.7 35.4 42.1 46.8 .6 contraceptive methods (%) Immunization Coverage Measles coverage (%) 89.9 89.3 88.8 89.6 92.5 1.1 OPT coverage (%) 97.6 95.2 96.5 96.8 92.5 1.2 Prenatal Care One + visits to an MD 83.1 89.3 92.5 94.1 96.1 .9 (%) One + visits to a 92.5 95.3 97.8 97 97.3 medically trained person (%) Delivery Attendance Births assisted by MO 46.5 61.8 67.9 74.5 81.2 .6 (%) Births at home (%) 13.4 6.7 4.8 4.4 3 4.5 Source: 1997 Jordan Demographic Health Survey. --- ---- ---- ---- 5 "Child Survival: The Unfinished Revolution." (Jan 2003) The Lancet. Volume 361. 174 • Underlying Risk Factors 5.15. Other indicators contributing to poor health outcomes (and often associated with poverty) are ones such as underlying household environmental and behavioral risk factors. These factors include available household waste disposal methods, local rain water run off systems among residential neighborhoods, indoor and outdoor air pollution, substance abuse, alcohol consumption, and tobacco use. 5.16. These factors, according to recent household data, vary differently across the income quintiles. Information on available waste disposal methods, for example, exhibits two varying trends. While 51 percent of the poorest income quintile reported having their garbage disposed of by a municipal garbage handler, 50 percent of the richest income group reported the availability of the same kind of service (a reverse situation or an increasing trend would naturally be expected). A different and expected trend is observed for using closed garbage containers. Seven percent of the poorest Jordanians place their garbage in closed containers while the figure for the richest Jordanians is close to 15 percent. As to rain water run off systems, a rising trend is also observed. Only 47 percent of the poorest quintile reported having an "excellent" system available while 68 percent of the richest twenty percent reported the availability of an excellent run off system. These examples from the household environment point to noticeable, yet not wide, disparities across income groups within Jordanian society.6 5.17. Another important risk factor for poor health outcomes is tobacco use. This example of a behavioral risk reveals an increasing level of use as income rises - making it a behavior more associated with the richer income groups in Jordan. Twelve percent of the poorest quintile smoke regularly while 17 percent of the richest quintile are regular smokers. This household evidence seemingly under-estimates the prevalence of adult smoking when compared to other national surveys of smoking prevalence among youth and adults. 7 5.18. International Comparisons. Available multi-country data on health inequalities indicates that Jordan does not perform badly in terms of infant mortality and child mortality in comparison to a certain number of countries from East and Western Asia, Latin America, the Middle East and North Africa, and Sub-Saharan Africa. Figure 5.3 indicates that Jordan out-performs the Philippines, Turkey, Nicaragua, Egypt, Morocco, Ghana, excluding Uzbekistan, with rich/poor ratios of 1.5 and 1.7 for infant mortality and child mortality respectively. This comparative performance is naturally influenced by the selected comparators. Out of 41 low- and middle-income countries worldwide selected by the World Bank for multi-country equity analyses of mortality rates, Jordan fares in the top third of the countries selected. Many of the countries faring better than Jordan in terms of in-country mortality inequalities, particularly those in Sub-Saharan Africa like Tanzania and Namibia (not shown in Figure 5.3), however, still do much worse in terms of the overall level a/childhood mortality. 6 Jordan 1997 DHS Survey. 7 UNICEF, Ministry of Health and Jordan Anti-Smoking Society. "Prevalence of Smoking Among Youth in Jordan," (Arabic), 2000. \NCRLDBANK 175 Figure 5.3: Multi-Country Rich/Poor Ratios for Infant and Child Mortality Rates [J Infant Mortality Rate o Child Mortality Rate c.. c c >-. " '51 0 " 'c '" I!) c '0. . I!) .>< :I .." 'u >-. eo LLl .. '" "Cl 0 -, u u 0 .... '" ..c 0 .'S '" :.;;; .9- f- '" 0 :.:E I!) .D :.c 0... i N ::l Countries Source: World Bank PREM Network Website. Health and Poverty multi-countryl technical papers. 2003. 5.19. In tenns of health service use and nutritional indicators, Jordan perfonns satisfactorily compared to the same list of country comparators. Jordan clearly comes out ahead of a 41 country list assembled by the World Bank in tenns of prenatal visits and DPT3 immunization differentials by income. Jordan outperfonns all countries in tenns of the equity of one indicator across income (one prenatal visit to a doctor) except for the countries of Uzbekistan, Dominican Republic, Paraguay and Niger. This comparative perfonnance is shown below in Figure 5.4 with Uzbekistan representing a "better perfonner." As to DPT3 coverage, only Kyrgyzstan, Uzbekistan, and Namibia have better ratios than the rich-poor ratio for Jordan (although, again, at the absolute level and not in ratio tenns, Jordan fares much better than these countries in tenns of health service utilization indicators). 5.20. One indicator that Jordan does not perfonn very well in comparison to the 41 countries is the indicator of moderate wasting in children under five years (low weight for age - below minus two standard deviations). The rich/poor ratio for Jordan is 2.9, which is somewhere above the median ratio for all 41 countries. This inequality in wasting (low weight for age) warrants further examination and intervention by the Jordanian health authorities given its conspicuousness in both in-country and between-country tenns. It stands out compared to the inequalities of other health outcome indicators within Jordan and with those of other countries. 176 Figure 5.4: Multi-Country Rich/Poor Ratios for Health Service Use/Nutritional Indicators . ~ 14,-------------------------------------------- iUI ~ f~5 JJt~I ~j II Prenatal Visit to MD o Wasting II opn Coverage >-. Ol :l P- c 0 ~ C -. Ol "0 u u ~ g -" .... Ol .... OJ) .... 0 ...c:: Countries Source: World Bank PREM Network Website. Health and Poverty multi-country technical papers, 2003. 5.21. Gender Differentials. The inter-connections between gender, income poverty, and health outcomes, as mentioned before, can be very important. Gender discrimination contributes to poverty levels that in turn negatively affect health status. Reversing the causal flow, gender issues (e.g., lower levels of female educational attainment) also help determine health outcomes that influence the general level of poverty income. Illustrating these putative associations can be done using the same household survey data and separating the desired indicators and quintiles (e.g., prevalence of disability) by gender. 5.22. Two figures are presented below that provide information on certain "health inequalities" by gender. Figure 5.5 is a chart representing female school completion (Le., percent of women in the household aged 15-49 who have completed fifth grade) vis-a- vis male school completion. Across all income quintiles, female completion percentages are below those for males, particularly in the lowest income quintile. The differential in the lowest quintile is about II percentage points while the differential in the highest income quintile in only about two percentage points. The gender gap, particularly, amongst the poor, is quite evident. WORLD BANK 177 Figure 5.5: School Completion Rates by Quintile & Gender 1201 100 80 1 0 ,.. .. r" I ~I ~ II Female School Completion ~ [] Male School Completion 60 40 I ~ I~ I! 1\1 20 o- 1\ I' I! I", ~ Lowest Second Middle Fourth Highest Income Quintiles Source: 1997 Jordan Demographic Health Survey. 5.23. The second graph - Figure 5.6 - reveals the incidence of injury and the prevalence of disability by income quintile and gender. As shown below, female incidence of injury is marginally yet consistently greater than male incidence of injury as income rises. The largest differential, again, is found in the lowest income quintile with more than one percentage point (8.4 per 1,000 persons for males and 9.4 per 1,000 persons for females). As to the prevalence of disability, a much larger differential is noticed in the poorest quintile (16.3 per 1,000 for males and 19.4 per 1,000 for females), which then reverses itself in the second poorest and middle-income quintiles. In the fourth income quintile, female prevalence of disability is once again higher than males and then dips below the rate of males in the richest quintile. It may be safe to surmise that beyond the poorest quintile the "gender effect" vis-a-vis disability - at least from the available data on Jordan - cannot be discerned. Further evidence would have to be gathered to better explore gender as it relates to the prevalence of disability especially among the poorer groups of society. Figure 5.6: Incidence of Injury and Prevalence of Disability by Income Quintile and Gender '0 g 25 '- 0) 0 20 -1----=,...-- -- - - - - - - - - - - 1 II Male Incidence of Injury o g -" c:: ~ ~ ~.,g 15 (] Female Incidence of Injury c:: '" O)~>.= Q. '" :-g 0'::: .";:: Q. 10 o __ :::::: 0 [) Male Prevalence of Disability .5 ~ ~ Cl.. 5 - 0 Female Prevalence of Disability 50 o ~~~~~~~~~~~~~~~~~ Lowest Second MiddJe Fourth Highest Income Quintile Source: Stalf Estimates based on HE1S (2002). 178 Equity of Health Financing 5.24. Health financing arrangements are generally pro-poor (progressive) when health spending as a percentage of total household expenditure rises at an increasing rate across income quintiles (from lowest to highest). This measure of equity is often called the "progressivity" of a health financing system. If health payments increasingly decline as a percentage of household spending as income rises then the system is generally considered pro-rich (regressive). Measuring the degree of "progressivity" or "regressivity" in a health financing system is usually of general interest to health policymakers - as it is generally viewed as "unfair" and it can have an effect on income poverty levels as discussed in the introduction. Obliging the poor to pay disproportionately more than the rich on health is perceived by many health reformers as hurting the inherent "fairness" of a health care system. 8 5.25. Some pieces of information, however, are available on some of the established health financing sources in Jordan. A national household health expenditure and utilization study undertaken in 2000 provides reliable information on the progressivity of out-of-pocket health expenditures on in-patient and out-patient services as a percentage of disposable income. These health expenditures, which represent around percent of all health expenditures 9 are presented below in Table 5.3. As shown in the table, out-of- pocket expenses on out-patient care as a percentage of disposable income actually decline with upward movements in income except for the final jump to the highest quintile. Yet still the lowest quintile group pays more out-of-pocket on out-patient care. Other anecdotal information on the major social insurance schemes in Jordan (a civilian insurance scheme for public sector employees and a military insurance scheme for military personnel) also indicate a mixture of proportionality and regressivity. The monthly premium deducted from all civilian public sector employees is computed as three percent of their monthly salaries up to a cap of around $42. Below the cap, contributions are neutral or proportional; yet beyond the cap, financing becomes regressive. As to the military public scheme, all military personnel pay a monthly flat premium ranging from a minimum of $1.40 to a maximum of $3.50. This source of financing is clearly a departure from proportionality and highly regressive. 8 Daniels N et. AI. (1996) Benchmarks of Fairness for Health Care Reform. New York: Oxford University Press. 9 Jordan National Health Accounts, 2000, 200 I. YA)RLOBANK I 179 Table 5.3: Out-Of-Pocket Expenditures On Out- Patient Care As Percent of Household Income Out-Of-Pocket on Out-Patient Care As Percent of Household Income Income Quintile Lowest 9% Second 6% Middle 5% Fourth 5% Highest 7% Source: 2000 Jordan Health Expenditure and Utilization Study, PHR, Abt. Associates. To WHAT DEGREE DO THE POOR BENEFIT FROM PUBLIC SECTOR HEALTH SPENDING IN JORDAN? 5.26. Public sector (and semi-public) health spending in Jordan emanates from a mixture of intermediary financing entities: the Ministry of Health, the military Royal Medical Services, the Jordan University Hospital, the King Abdullah Hospital of the Jordan University for Science and Technology - including the Prime Ministry and the Royal Court. These intermediary financing agents are all funded in varying degrees by the Ministry of Finance. 5.27. To what degree do the poor in Jordan benefit from this health spending by the public sector? How target efficient is the spending (or these health sector subsidies)?lo Does it reach the poverty target groups it is meant to reach rather than over-subsidize the richer groups within society? Benefit incidence analysis (BIA) helps in analyzing the distribution of these health sector subsidies across different income groups - and assessing whether these subsidies are working to narrow or broaden the disparities between the rich and poor in a given society. 5.2S. The methodology consists of a number of different steps: i) separating individuals into distinct categories of income groups (i.e., quintiles); ii) analyzing the utilization patterns of public sector health services by the individuals; iii) estimating the subsidy given to each individual who utilizes public sector health services; and iv) comparin? the distribution of the explicit subsidy to a specific idealized or "target" distribution. I In order to estimate the size of the subsidy, "unit costs" or "unit expenditures" are estimated for each unit of health care service (e.g., in-patient admission or out-patient visit) used by individual patients. This exercise in estimation usually involves two big assumptions (in 10 In this note recurrent public sector health spending on primary, secondary and tertiary health care services is viewed essentially as a "subsidy" to the individual citizen. Some of the spending can justifiably be argued on equity and economic grounds (i.e., merit goods) and not viewed as an explicit subsidy to private consumption of health care services. Naturally these subsidies can be reduced through the imposition of user fees and monthly premiums. II Technical Note #12. World Bank PREM Website on Health Equity Analysis. 180 • the absence of detailed facility-level or individual-level data) that limit the accuracy of the exercise: i) unit costs are assumed to be uniform across all health care facilities, and ii) unit costs derived from top-down expenditure data are supposed to equal the value of the service to the end patient. The first assumption is clearly unrealistic given the range of inefficiencies prevalent across different facilities, and the second assumption is also problematic given the size of administrative overhead costs in all health care organizations. 5.29. The foregoing preliminary benefit incidence analysis of public health spending in Jordan does not capture all public health spending in the country. Expenditures on Jordanian patients by the Royal Court and the Prime Ministry are not included in this preliminary analysis - nor are the expenditures by the semi-public institutions of higher education. These expenditures are not included due to current data limitations. Recurrent budgetary outlays, for example, for the two university hospitals in 2000 are currently unavailable. The analysis also does not extend into step three and step four of the BIA methodology, as described above. Since accurate revenue data (user fees and premiums) are currently unavailable for the major public providers, estimating the explicit subsidy (or benefit incidence) to each individual and comparing the distribution of these subsides to some reference distribution is beyond the scope of this preliminary exercise - and can be left to a later stage once all the data is made available. Table 5.4: Quintile Share Of Public Sector Out-patient Utilization MOH MOH RMS RMS Hospitals Hospitals Hospitals Hospitals (out-patient (Percentage of (out-patient (Percentage of Out-patient Out-patient visits) visits) visits) visits Quintiles Poorest 20 % 4053 27% 277 15% 2nd Poorest 20 % 3012 20% 364 19% Middle20% 3214 22% 456 24% 2nd Richest 20 % 2694 18% 406 22% Richest 20 % 1816 12% -380 20% 14789 1882 Source: Jordan Healthcare Utilization and Expenditure Survey, 2000. v.oRLOBANK 181 Tab'le 5.5: Quintile Share Of Public Sector Inpatient Utilization MOH MOH RMS RMS Hospitals Hospitals Hospitals Hospitals (Percentage of (Percentage (in-patient in-patient (in-patient in-patient admissions) admissions) admissions) admissions) Quintiles Poorest 20% 78 22% 11 10% 2nd Poorest 20% 74 20% 24 22% Middle 20% 76 21% 30 28% 2nd Richest 20% 78 22% 25 23% Richest 20% 55 15% 18 17% 360 108 Source: Jordan Healthcare Utilization and Expenditure Survey, 2000. 5.30. Table 5.4 reveals a decreasing rate of utilization of MOH out-patient facilities (as one may expect) with increasing levels of income. In contrast to the Ministry, utilization of RMS facilities actually increases with higher levels of income - up until the middle 20 percent after which it begins to decline again. The pro-poor bias in providing MOH services is apparent from the data presented (i.e., the poor get more than their proportionate share of delivered care). This finding runs contrary to many other findings around the world that indicate a pro-rich bias in the distribution of hospital-based care. Table 5.5 reveals a similar pattern for in-patient care utilization. The MOH services are generally pro-poor while the RMS services are geared towards the middle class income groups of society. Table 5.6: Preliminary Estimation Of Unit Costs Recurrent Total Unit Public Utilization Costs Expenditure (millions JD) (JD) Hospital Care 154,500 Inpatient 140,000 393,285 admissions 356 ---+- Outpatient 14,500 6,0 16,369 visits 2 Primary Health Care 34,554 6,618,163 visits 5 Source: Staff Estimates. 5.31 Table 5.6 represents a beginning attempt to estimate the unit costs of different health care service units. These data are only for MOH and RMS services and represent two different years (2000 and 2001). The recurrent expenditure for hospital care within the MOH and the RMS are lumped together and the recurrent expenditure for primary 182 I~ health care is identified separately. These aggregate expenditure figures are divided by the total utilization service units to come up with the unit costs for type of service unit (i.e., out-patient visit or hospital admission). 5.32. These figures in Table 5.6 are not entirely accurate (still needing refinement) given some inconsistency and the incompleteness of the data. The expenditure data from the RMS and the MOH, for example, used to estimate the recurrent spending on hospital care are not from the same reference year. The allocation of hospital care expenditures across in-patient and out-patient services should depend on in-depth costing studies of health care facilities in Jordan, which currently are unavailable. Some international studies focusing on cost functions indicate that in-patient unit costs could be between 10- 17 times greater than the unit costs for out-patient services. The lower end estimate was used to derive the recurrent expenditure allocations across the hospital-based in-patient and out-patient rows in Table 5.6. To complete the incidence benefit analysis (and possibly derive indices of overall health financing progressivity or regressivity), certain information gaps would have to first be filled. These gaps include the recurrent expenditure figures for the university sector hospitals in year 2000 and the user fee/premium revenue figures for all the public and semi-public providers in year 2000. With these data, estimates of the health sector subsidies across income quintiles could be derived and the extent to which the poor in Jordan benefit from these subsidies could be better evaluated. Summary Observations and Interventions to Improve the Outcome of the Poor 5.33. Recent household surveys reveal important inequalities in the health indicators of the poorest twenty percent of Jordanian society. These inequalities include higher infant and child mortality rates, greater childhood malnutrition, greater disability prevalence and higher total fertility rates. The "process" indicators include lower numbers of deliveries assisted by physicians, fewer deliveries at home, and a lower rate of contraceptive prevalence. Some underlying "risk factors" include lower school completion rates (particularly for women), higher rates of smoking prevalence, and poorer methods of waste disposal. Other factors such as health financing methods suggest a substantial degree of regressivity within the Jordanian health financing system (which should be explored further by undertaking a more fonnal analysis of all the sources of health finance in the country). 5.34. There are a wide number of possible reasons for the higher infant and child mortality rates among the poor in Jordan. While the survey data reveals no significant difference in overall vaccination rates or prevalence of childhood disease across income quintiles, they do show substantial differences in the prevalence of childhood malnutrition. The percentage of poor children, as shown in Table 5.1, who are stunted or suffer from wasting is much higher than the percentage of rich children suffering from the same levels of under-nutrition. These levels of malnutrition work to lower the immune defenses of children and make them more susceptible to childhood illnesses. Other direct and indirect factors could include the effects of high fertility and less access VlClRLD BANK 183 ~ 1 '>. .... • . to prenatal care and medically supervised deliveries - which combined could contribute to higher infant and child mortality rates among the poor. Understanding the causes, both distal and proxima1, of child mortality in Jordan, especially among the poor deserves much deeper analysis and attention. One important intervention could be the immediate improvement of mortality coding and death registration data in hospitals and health centers around the country. 5.35. Other health-related inequalities, like disability prevalence, also deserve greater study and investigation. Are these inequalities due to greater degrees of co-sanguinity among the poor or due to poorer access to effective health care services? Why should congenital hearing loss or poor vision be more prevalent among the poorer segments of Jordanian society? Why do the poorest twenty percent of Jordanian society not use modem methods of contraception? How could greater utilization of these methods be encouraged? Why do the poor smoke more? Is there any way to promote greater risk pooling across different income groups to minimize the impact of out-of-pocket expenditure on unexpected yet needed health care services by the poor? 5.36. There are a many layers of interventions that could improve the health outcomes (i.e. mortality, morbidity, fertility, nutrition, and income protection) of the poor in Jordan. In a recently elaborated "Pathways" framework developed by the World Bank, three distinct layers of interventions are identified and developed. The first layer concerns household and communal practices (e.g. , hand washing, no smoking, use of iodized salt, exclusive breastfeeding, safe sanitation, consumption of clean water) that are essential to good health outcomes. The second layer involves the programs and services of the health sector and other concerned sectors. These services and programs could include preventive and curative care at all levels, health insurance schemes, female education policies, water and sanitation infrastructure, housing, and food safety. The third layer could concern general government policies to redress social and economic inequities (e.g., promoting public education or pushing for a more progressive taxation system). 12 5.37. In the case of Jordan, a few strategic interventions are identified below to help promote greater health outcomes among the poor. These interventions could be integrated horizontally into the current public health programs in the country or be initiated via a direct vertical approach. • Improve data collection systems to generate reliable mortality, fertility, chronic morbidity, nutrition and disability data at regular intervals. Improving mortality coding and death registration systems within the health care system would be a key initiative to undertake. • Promote childhood nutrition interventions for pre-schoolers and school age children to address the apparent malnutrition problems of the poor children in 12 There is a growing and important literature on the "social determinants" of health inequalities. See Marmot MG (1999) "Social Causes of Social Inequalities in Health." Harvard Center for Population and Development Studies, Working Paper Series 99.01. January 1999. 184 Jordan (i.e., stunting and wasting), and establish effective programs for the integrated management of childhood diseases . • Strengthen current reproductive health services to increase the utilization of modem contraception and prenatal services among the poor- and enhance the capacity of the health care system to effectively handle high-risk pregnancies in the poorer rural areas of the country. • Undertake national screening programs (i.e. , early detection of hearing loss among newborns) and injury prevention campaigns (i.e., road safety) to reduce the incidence of disability among the poorer income groups. • Continue to narrow the "gender gap" in female education via effective out-reach services to support higher school enrollment and attendance by girls from poorer backgrounds. Closing this gap in education can have very significant "cross-over" effects in health. • Initiate significant health finance reforms to better mitigate the effects of high out- of-pocket expenditures on health care by poorer income groups. Greater risk pooling arrangements either via general taxation or special social insurance schemes could help protect households from the financial risks associated with unexpected illnesses and accidents. 'WORLD BANK i 185 ..... ~<>' r CHAPTER 6 VULNERABILITY, SOCIAL PROTECTION AND DISADVANTAGED GROUPS 6.1. In Chapter 1 we examined the level and trends in poverty for Jordan. These were in the nature of ex-post analysis. This chapter returns to the theme of consumption poverty from a different perspective. First, in Section A, we construct an ex-ante measure of poverty - vulnerability to poverty. This identifies which population groups are likely to become poor who may not be currently poor. This is useful to policy makers interested in lifting people above poverty and preventing them falling below. This leads us to discuss the workings of Jordan's main social protection scheme - the National Aid Fund - in section B. Then we shift focus to poverty among clearly identifiable disadvantaged groups in Jordanian society - women and children in sections C and D, respectively. The key messages from this chapter are: • Though the percentage of poor in 2002-03 is estimated at J4.2 percent, the percentage of population vulnerable to poverty is slightly higher at J6 percent, which implies that nearly two percent of currently non-poor also are vulnerable to poverty. The central region is the least vulnerable among the three regions oj the kingdom with total vulnerable population at J5 percent. • Chronically poor - those who are expected to remain poor - in Jordan are a small four percent of the population with the Southern region having the highest percent ofpopulation chronically poor at five percent. Chronic poverty is mostly a rural phenomenon except for the Zarqa governorate, which is mostly urban. • The chronically poor and vulnerable non-poor have almost identical profiles in terms of human capital, employment status, and dependency ratio, differing only in sector of employment. The vulnerable non-poor have more public sector jobs whereas the chronic poor depend more on private sector jobs. • Three-quarters of the Jordanian poor are transient poor. Their mean consumption is below the poverty line, but consumption volatility moves them in and out ofpoverty. • The main social safety net in Jordan - National Aid Fund - is making a difference to the livelihood of the poorest. It is by far the most important supplement to the incomes of the poorest decile. • However, the overall effect of NAF assistance on poverty is slight, amounting to less than one percent. As currently designed, two-thirds of the NAF assistance 186 leaks to the non-poor. Scope for a simpler poverty oriented targeting could better help target transfers to the poor. • In terms of consumption poverty, female-headed households do not have a higher incidence of poverty than male-headed ones. Some sub-population groups oj female-headed households such as "separated" (waiting for divorce) have higher incidence of poverty than corresponding male-headed households. Within female-headed households, single and widowed household heads are relatively better off compared to the divorced and separated • Poverty among children (16 percent) is higher than in the general population (14.2 percent) because poorer households have larger numbers of children. Two- thirds of poor children live in three governorates of Amman, Irbid and Zarqa. About three percent of children in 10 to 18 age group work, and this ratio is higher for male children atfive percent. VULNERABJLITY TO POVERTY 6.2. A poverty index is an ex-post measure of the deprivation suffered by the society. It is a useful index to monitor poverty over time and across various socioeconomic and demographic groups in the society as we did in the previous chapters. The main limitation of various poverty indices is they provide a snapshot of the current conditions of deprivation suffered by the society. Many recent studies, however, have suggested that many individuals move in and out of poverty in a short period of time. This can happen because of events such as illness, death in the family, bad harvest, economic downturn, l and so on. Obviously these shocks will affect different people differently. Or, in other words, some people are more vulnerable to such shocks than others. 6.3. In contrast to poverty, vulnerability is an ex-ante measure of likelihood of an individual or household falling to future poverty. It is obviously a dynamic concept. It provides an assessment of an individual's (or household's) vulnerability to poverty in the future, which means that to measure it, we need to make an assessment of an individual's (household's) future income (or consumption). This is indeed a more difficult task than just measuring poverty. In this section, we discuss how to measure the degree of vulnerability so that the policy makers can make an ex-ante policy analysis of poverty. This measurement will allow us to analyze chronic poverty against transient poverty and also to explore sources of vulnerability among the categories of poor and the non-poor (See Box 6.1). 6.4. Since vulnerability is a dynamic concept, its measurement should obviously require panel data for at least two time periods. Pritchett (2000) has in fact suggested using the panel data to quantify vulnerability. Unfortunately, panel data generally are not available. The most widely available data are from the household surveys. In this chapter, we utilize the methodology developed by Chaudhuri (2000) to measure vulnerability to poverty using cross-sectional data. \NOALOBANK Box 6.1: Definition of vulnerability Suppose Ci is the per-capita consumption of the ith household, which has per-capita poverty line then the ith household is classified as poor, if Cj ~ E :2 --, -ex:: co co -ex:: :2 I- Source: Stal/Estimates based on HEIS (2002). 6.46. This means that the impact of poverty on the health and educational status of this group is expected to be large. These children are at greater risk of dropping out of schools to work and earn for themselves and their families. If in school, they are at greater risk of low attendance and poor achievement. 6.47. High urbanization rate engender adverse living conditions, especially for those who are poor and disadvantaged. One noticeable consequence of the urbanization process is the break-up in the traditional extended family structures and support systems. In particular, childcare during the early years can become inconsistent, with adverse impact on child development, as working parents attempt to balance work and child care responsibilities, especially with increasing numbers of women entering the labor force (Belskey). Yet another consequence of urbanization is neglect and abuse of children and violence among juveniles and in the households, which can have far reaching consequences for those affected, including health problems and disability. WClRLD BANK 209 6.48. Regional conflicts aggravate the difficult conditions. Jordan has been continuously affected by regional conflicts, both indirectly through the impact on its economy, but also directly through the influx of refugees. The Gulf Wars have been costly. The impact of the recent second Gulf War was severe as a result of the influx of 300,000 returnees over a short period of time, the economic consequence of which has just started to register. According to recent data, there are 1.7 million refugees registered with the United Nations Relief and Works Agency (UNRWA) in Jordan.4 The impact of movements and setting up temporary shelters (for the refugees) and the impact of job loss (for the returnees) are felt most heavily by children. Situation of Disadvantaged Children 6.49. In Jordan, the key categories of disadvantaged children include those who are (a) working (including dropouts from schools), (b) juvenile delinquents, (c) disabled children, (d) orphans, and (e) refugees. These children .are those who have little or no capacity to reduce, cope with, or mitigate the various forms of disadvantages they face. The absolute size of the disadvantaged children in Jordan is not large, with estimates between 5-13 percent of the relevant age group. However, as noted above, there IS concern that their number will rise given the sources of vulnerabilities noted above. 6.50. Working Children. Based on HEIS 2002-03, it is estimated that about 3% of children between the ages of 10-18 years were employed in 2001. Statistics on the prevalence of child labor is probably under-estimated as households typically are reluctant to acknowledge that they have underage children working. Age and sex breakdown among the children who are working shows that male children start working earlier. About 5% of male children in the age group 10 to 18 are reported to be working. This would also suggest that among those who drop out of school to work, a greater proportion of males would drop out earlier. Even though the annual dropout rate from the basic education level is less than 1%, over 12% either do not enroll in, or do not complete, secondary education. The total percentage of those graduating from 12th grade was only 76% of all children who had begun first grade. Earnings by children are very low. According to a Department of Statistics Survey, 71 % of working children earn less than $140 per month, and 28% of working children earn less than $200 per month. 5 Breakdown by age categories indicates that children 10-14 years of age, working 37 hours per week earn $40 per month, and children 15-18 working 53 hours per week earn $104 per month. 6 6.51. Juvenile Delinquents. Over the three-year period between 1999 to 2001, crimes involving juveniles in Jordan made up an average of 11 % of all crimes. The trend shows an.increase from 1999 (8.7%) to 2000 (12.6%) and 2001 (12.0%). Increasing numbers of children on the streets, particularly in urban centers such ~s Amman, Zarqa, and Irbid, 4 Information on refugees comes principally from data collected and reported by the United Nations Relief and Works Agency. For UNRWA data, consult this site: http://www.un.org/unrwa/refugees/jordan.htmL 5 Annual Report of Employment and Unemployment Survey 2001, Department of Statistics. 6 Jordanian Youth: Their lives and views, UNICEF 2002, page 54. 210 have become a concern for institutions and professionals working in the child protection sector. Begging is an offence, and accordingly children who are picked up for this crime risk court proceedings, or placement in detention or orphanages. The multi-faceted "risky nature of the majority of offenses would indicate that holistic, social interventions at the community level will likely be an effective basis for preventive action. Background data for juveniles arrested were viewed according to student or economically active status. The percentage of arrested children who attended school for some period of time was about 59%, compared to those who were economically active (41 %). 6.52. Disabled children. The official Ministry of Social Development estimates of the total number of all disabled persons in Jordan 2.6%7, which is higher than the WHO estimate of 10% disability in any given population. Different types of disability can be attributed to various factors. Mental retardation was related to two main factors: sequelae from high perinatal morbidity or meningitis in infancy and a high degree of intermarriage. 8 Perinatal factors accounted for 25% and postnatal factors for 24% of the background to mental retardation. Mental and visual disabilities also were linked to iodine deficiency disorder and vitamin A deficiency, especially in poor rural areas of the country. The link between disability care and poverty is an important one. In Jordan, over 37 percent of disabled people come from households with a monthly income of less than JD 50, and hence cannot afford specialized services tailored to their needs. Children from poor families are unlikely to prevent against or rehabilitate the disabilities they face, leading to poor performance in schools and inability to earn and lead productive lives in the future . 6.53. Orphans. In general, the category of orphans covers children without living fathers or mothers or both, children who have been abandoned, or children who have birth certificates without parents' names. Overall, it is likely that the number of orphans recorded in public or private institutions significantly understates the actual number of orphans as many do not reside in institutions. An analysis of the 2002 DHS data shows that majority of orphans (81 %) have only a mother, about 17% have only a father, and a very small percentage (1.2%) have neither. There is no estimate on the total number of orphans in Jordan. The analysis shows that there are no significant gender, economic, or educational differences between orphans and non-orphans in Jordan. This is because cultural attitudes and religious traditions in Jordan create an atmosphere in which most children who are orphans are cared for in extended family networks rather than being institutionalized. As a result their health and educational outcomes are as robust as other children's with parents. 6.54. Refugee children. According to recent data, there are 1.7 million refugees registered with the United Nations Relief and Works Agency (UNRWA) in Jordan.9 Yet the congestion and overcrowding present significant challenges for quality of life for all. There are about 644,000 children (under the age of 18) with official refugee status in 7 A study of Disabled Care Centers in Jordan, 2001, UNICEF. 8 The situation of Jordanian Children & Women: A rights-based analysis, 1997, UNICEF. 9 Information on refugees comes principally from data collected and reported by the United Nations Relief and Works Agency. For UNRWA data, consult this site: http://www.un.org/unrwaJrefugees/jordan.html. WORLD BANK • 211 .~. ,~~. j Jordan. UNRWA provides ten years of basic-education schooling for 136,000 boys and girls. Of these about 63,000 attend UNRWA schools inside the camps. Enrollment figures of refugee pupils in governrnent and private schools are believed to be incomplete, since refugee pupils lack incentives to report their status as refugees in non- UNR W A schools. These challenges include high unemployment, limited supplies of clean water, inadequate drainage/sanitary systems, and high rates of non-communicable diseases (such as diabetes, hypertension, cardiovascular diseases, and cancer). Birth rates are high, and intervals between births are short, thus affecting women's health. Diarrhea and intestinal parasites, particularly affecting children, are prevalent. All of these conditions increase the vulnerability of refugee children vis a vis other children in Jordan, even though the Jordanian Government has consistently attempted to provide the same public services and support to the refugee communities. .. .... -' 213 ANNEX 6.1 METHOD FOR ESTIMATING VULNERABILITY • To estimate vulnerability, we have to assess the future consumption of each household. One way to achieve this objective is to estimate a household's future consumption conditional on its current characteristics. This will require developing an econometric model that explains a household's consumption in any period by means of a variety of household characteristics. Suppose that a household i is characterized by the row vector Xi, which consists of k observable household characteristics. For instance, these characteristics may be age, sex, occupation, educational attainment of household head, household size, location of household, and so on. Then, we may assume that the consumption of household I IS generated by a stochastic model given by (5) where ~ is the column vector of k parameters and E; is the stochastic error term with zero mean and variance a;2 , which varies across households. In this model, it is assumed that the vector of parameters ~ remains the same over time, which implies that the structure of the economy remains relatively stable over time. It means that the uncertainty about future consumption stems from the uncertainty about the idiosyncratic shock E;, which household will experience in future. Since we have allowed the variance of logarithm of consumption to vary across households, we need to make a further assumption about the structure of the variance. A simplest assumption that can be made is that the variance depends on the household characteristics as described by the vector Xi: (6) which can be consistently estimated by the ordinary least squares (OLS) method applied to (7) where • The method of estimation discussed here is due to Chaudhuri (2000). 214 f3 being the OLS estimator of f3 obtained from (5). Suppose 8 is the OLS estimator from (7), then a consistent estimator of 0;2 is given by (8) then for large sample sizes, we can say that Ln (Ci) is normally distributed with mean ~ ~ Xi f3 and variance Xi 8 , which obviously gives loge; -X;f3 (9) <;; = JXlf is distributed as asymptotically normal with zero mean and unit variance. The vulnerability index defined in (3) can be written as Vi = Pr [ Ci < Zi] = Pr [Ln(ci) < Ln(zi )], which in view of (9) gives an estimate of Vi as (10) where (.) is the cumulative density of the standard normal. If J; is the proportion of people represented by the ith household, then the estimated average vulnerability (EA V) suffered by the whole society will be given by n EAV= If";. ;=1 (11) As noted earlier, the mean vulnerability of the whole society will be equal to the probability of being poor in the society, i.e., AV=H, but EAV will not generally be equal to H because EAV is not equal to AV. Since EAV has been estimated on the basis of an econometric model explaining the per-capita household consumption in terms of several household characteristics, the difference (EAV-H) will indicate the goodness of fit the model or the extent to which various household characteristics can explain the household consumption. Section 5 develops this model using the Lao data. Poverty and Vulnerability Categories Equation (10) gives the vulnerability level of each household. Some households are obviously more vulnerable than others. It will be useful to divide the households into two categories: vulnerable (v) and not vulnerable (v). This involves choosing a level of vulnerability, above which a household may be classified as vulnerable, otherwise not VIoCFtLDBANK , I 215 '........" vulnerable. The choice of this threshold is ultimately arbitrary but a threshold of 0.5 seems to be somewhat justifiable. It is the point at which the household's expected future per-capita consumption is equal to its poverty line. It implies that a household is vulnerable if it faces a 50 percent or higher probability of falling into poverty in the near future. Thus, a household is vulnerable if Vi> 0.5, otherwise it is non-vulnerable. This allows us to identify whether a household is vulnerable or not vulnerable. Since our concern is mainly with individuals, we should be estimating the proportion of individuals who are vulnerable. To be able to estimate it, we need to make an assumption that if a household is identified as vulnerable, then all its members are also vulnerable. A consistent estimate of the proportion of vulnerable individuals in the society can then be obtained as (12) i=l where n is the total number of households sampled and ~i = 1, if Vi> 0.5 = 0, if Vi ::; 0.5 We may also classify households into two categories: one with low expected consumption (L) and other with high (not low) expected consumption (L ). A household may be classified as having low expected consumption if its expected per-capita consumption is less than its per-capita poverty line, which means that such a household is not expected to be able to satisfy its minimum basic needs. A consistent estimate of proportion of individuals with low expected consumption can then be obtained as (13) i=l where 't i = 1, if Xi~ < Ln(z;) = 0, if Xi ~ 'C. Ln(z;) As we know, the poor are those whose per-capita consumption is less than the poverty line. Among the poor, we may define chronic poor as those who have low expected consumption. These are the persons who are currently poor and also have low expected consumption and hence are more likely remain poor in the future. The proportion of chronic poor in our notation can be written as P(p,L), which can be estimated consistently as 216 /I P(p,L) = Ifu; (14) ;=1 where u; = 1 if Ln(cJ 0.5 and Xi l~ < Ln(zJ = 0, otherwise. Similarly, an estimate of proportion vulnerable due to high volatility of consumption will be given by P(v, L) = P(v)-P(v,L). (18) v.cALO BANK 217 " '., ..... Finally we define the "total vulnerable group" as sum of those who are currently poor and those currently non-poor but are vulnerable to falling into poverty in the near future. The proportion of such persons will be given by P(Total vulnerable group)= pep) + P( .0, v) =P(p) + P(v)- P(p,v) (19) Where a consistent estimate of P(p,v) is given by 11 P(p,v) = fcpj, j=! where cp j = 1 if Ln(cJ 0.5 j = 0, otherwise. WiClALDBANK 219 --------- ------------- --- REFERENCES Adams, Jr., R. and J. 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