It is important to know how aggregate economic growth or contraction was distributed according to initial levels of living. In particular, to what extent can it be said that growth was "pro-poor?" There are problems with past methods of addressing this question, notably that the measures used are inconsistent with the properties that are considered desirable for a measure of the level of poverty. The authors provide some new tools for assessing to what extent the aggregate growth process in an economy is pro-poor. The key measurement tools is the "growth incidence curve," which gives growth rates by quantiles (such as percentiles) ranked by income. Taking the area under this curve up to the headcount index of poverty gives a measure of the rate of pro-poor growth consistent with the Watts index for the level of poverty. The authors give examples using survey data for China during the 1990s. Over 1990-99, the ordinary growth rate of household income per capita in China was 7 percent a year. The growth rate by quantile varied from 3 percent for the poorest percentile to 11 percent for the richest, while the rate of pro-poor growth was around 4 percent. The pattern was reversed for a few years in the mid-1990s, when the rate of pro-poor growth rose to 10 percent a year--above the ordinary growth rate of 8 percent.
Details
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Author
Ravallion, Martin Shaohua Chen
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Document Date
2001/08/31
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Document Type
Policy Research Working Paper
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Report Number
WPS2666
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Volume No
1
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Total Volume(s)
1
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Country
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Region
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Disclosure Date
2010/07/01
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Doc Name
Measuring pro-poor growth
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Keywords
incidence curve;development research group;rate of poverty reduction;household income per person;headcount index of poverty;high growth rate;foreign direct investment;cumulative distribution function;measure of poverty;exchange rate regime;crime and violence;increase in income;aggregate welfare;aggregate growth;Poverty Measurement;poverty reducing;labor demand;economic reform;income gain;national account;explaining inequality;piped water;academic publishers;stochastic dominance;poverty give;agglomeration economy;entry regulation;mathematical economics;capital control;firm entry;survey data;monitoring poverty;measurement tool;escape poverty;rural distribution;rural area;measure of use;numerical integration;relative price;global production;observed change;income change;inequality fall;inequality measure;aggregate poverty;farm credit;human capital;aids epidemic;monetary sector;Job Creation;household welfare;distribution network;Transition economies;transition economy;macroeconomic performance;
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Citation
Ravallion, Martin Shaohua Chen
Measuring pro-poor growth (English). Policy, Research working paper ; no. WPS 2666 Washington, D.C. : World Bank Group. http://documents.worldbank.org/curated/en/747531468746709289/Measuring-pro-poor-growth