Gaurav Datt

Growth and redistribution components of changes in poverty measures : a decomposition with applications to Brazil and India in the 1980s

This report shows how changes in poverty. measures can be decomposed into growth and redistribution components, and uses the methodology to study poverty in Brazil and India during the 1980s. Redistribution alleviated poverty in India, through growth was quantitatively more important. Improved distribution countervailed the adverse effect of monsoon failure in the late 1980s on rural poverty. However, worsening distribution in Brazil, associated with the macroeconomic shocks of the 1980s, mitigated poverty alleviation through the limited growth that occurred. Indias higher poverty level than Brazil is accountable to Indias lower mean consumption; Brazils worse distribution mitigates the cross-country difference in poverty.

Why has economic growth been more pro-poor in some states of India than others?

We use 20 household surveys for Indias 15 major states spanning 1960?1994 to study how the sectoral composition of economic growth and initial conditions interact to influence how much growth reduced consumption poverty. The elasticities of measured poverty to farm yields and development spending did not differ significantly across states. But the elasticities of poverty to (urban and rural) non-farm output varied appreciably, and the differences were quantitatively important to the overall rate of poverty reduction. States with higher elasticities did not experience higher rates of non-farm growth. The non-farm growth process was more pro-poor in states with initially higher literacy, higher farm productivity, higher rural living standards (relative to urban areas), lower landlessness and lower infant mortality.

Why Have Some Indian States Done Better than Others at Reducing Rural Poverty

The unevenness of the rise in rural living standards in the various states of India since the 1950s allowed the authors to study the causes of poverty. They modeled the evolution of average consumption and various poverty measures using pooled state-level data for 1957-91. They found that poverty was reduced by higher agricultural yields, above-trend growth in nonfarm output, and lower inflation rates. But these factors only partly explain relative success and failure in reducing poverty. Initial conditions also mattered. States that started the period with better infrastructure and human resources - with more intense irrigation, greater literacy, and lower infant mortality rates - had significantly greater long-term rates of consumption growth and poverty reduction. By and large, the same variables that promoted growth in average consumption also helped reduce poverty. The effects on poverty measures were partly redistributive in nature. After controlling for inflation, the authors found that some of the factors that helped reduce absolute poverty also improved distribution, and none of the factors that reduced absolute poverty had adverse impacts on distribution. In other words, there was no sign of tradeoffs between growth and pro-poor distribution.

Is India's Economic Growth Leaving the Poor Behind?

There has been much debate about how much Indias poor have shared in the economic growth unleashed by economic reforms in the 1990s. The authors argue that India has probably maintained its 1980s rate of poverty reduction in the 1990s. However, there is considerable diversity in performance across states. This holds some important clues for understanding why economic growth has not done more for Indias poor. Indias economic growth in the 1990s has not been occurring in the states where it would have the most impact on poverty nationally. If not for the sectoral and geographic imbalance of growth, the national rate of growth would have generated a rate of poverty reduction that was double Indias historical trend rate. States with relatively low levels of initial rural development and human capital development were not well-suited to reduce poverty in response to economic growth. The studys results are consistent with the view that achieving higher aggregate economic growth is only one element of an effective strategy for poverty reduction in India. The sectoral and geographic composition of growth is also important, as is the need to redress existing inequalities in human resource development and between rural and urban areas.

A Profile of Poverty in Egypt

This paper presents a profile of poverty in Egypt for 1997. It assesses the magnitude of poverty and its distribution across geographic and socioeconomic groups, provides information on the characteristics of the poor, illustrates the heterogeneity amongst the poor, and helps identify empirical correlates of poverty. This poverty profile is constructed using data from the Egypt Integrated Household Survey (EIHS), which is a nationwide, multiple-topic household survey. One of the more striking set of findings relates to the differences between the poor and the non-poor in their educational attainments. Our results indicate a significant literacy and schooling gap between the poor and the non-poor. On average the poor have 2.6 fewer years of schooling than the non-poor, and their literacy rate is 27 percent lower than the non-poor. Our results also indicate that augmenting educational attainment of the poor does not require building more schools, but reducing the poor’s opportunity cost of attending schools and increasing their returns from extra schooling, both suggesting the importance of income generating activities as a policy instrument. Le present article dresse un profil de la pauvrete en Egypte pour l’annee 1997. Il evalue l’ampleur du phenomene de pauvrete et sa repartition entre les groupes geographiques et socio-economiques, presente les caracteristiques des pauvres, illustre l’heterogeneite des situations de pauvrete, et aide a identifier les correlats empiriques de la pauvrete. Ce profil de la pauvrete se fonde sur des donnees tirees de l’Enquete integree sur les menages en Egypte (EIHS), un sondage national portant sur une multiplicite de sujets. L’un des constats les plus marquants concerne les differences entre les pauvres et les non pauvres en matiere de resultats scolaires. Notre enquete revele un ecart significatif entre les taux d’alphabetisation et de frequentation scolaire des pauvres et des non pauvres. En moyenne, les pauvres vont 2,6 annees de moins a l’ecole que les non pauvres et leur taux d’alphabetisation est de 27 pour cent inferieur a celui des non pauvres. L’enquete revele egalement que pour ameliorer les performances scolaires des pauvres, il n’est pas necessaire de construire de nouvelles ecoles mais de reduire le cout d’opportunite de la frequentation scolaire pour les pauvres et d’accroitre le rendement de chaque annee supplementaire de frequentation, deux facteurs qui soulignent l’importance des activites generatrices de revenu en tant qu’instrument de politique.

When is Growth Pro-Poor? Evidence from the Diverse Experiences of India's States

The authors use 20 household surveys for Indias 15 major states, spanning 1960-94, to study how initial conditions and the sectoral composition of economic growth interact to influence how much economic growth reduced poverty. The elasticities of measured poverty to farm yields and development spending did not differ significantly across states. But the elasticities of poverty to (urban and rural) non-farm output varied appreciably, and the differences were quantitatively important to the overall rate of poverty reduction. States with initially lower farm productivity, lower rural living standards relative to those in urban areas, and lower literacy experienced a less pro-poor growth process.

Transfer Benefits from Public-Works Employment: Evidence for Rural India

Current knowledge provides little guidance on one of the key questions in evaluating public employment schemes aimed at directly reducing poverty: What are the net income gains to participating workers? This paper offers an answer for rural public employment in two villages in the state of Maharashtra in India. A model of intrahousehold time allocation is proposed and estimates are made using household data over six years. The empirical implementation indicates that the projects induce significant behavioral responses. Transfer benefits are large and are greatly underestimated using prevailing market wage rates for similar work to estimate forgone incomes. Copyright 1994 by Royal Economic Society.

El NiñO or El Peso? Crisis, Poverty, and Income Distribution in the Philippines

Using household survey data for 1998, the authors assess the distributional impact of the recent economic crisis in the Philippines. The results suggest that the impact of the crisis was modest, leading to a five percent reduction in average living standards, and a nine percent increase in the incidence of poverty - with larger increases indicated for the depth, and severity of poverty. The greater shock came from El Nino, rather than through the labor market. The labor market shock was progressive (reducing inequality) while El Nino shock was regressive (increasing inequality). Not all households were equally vulnerable to the crisis-induced shocks. Household and community characteristics affected the impact of the shocks. Ownership of land, made households more susceptible to the El Nino shocks, higher levels of education made households more vulnerable to wage, and employment shocks. The impact of the crisis was greater in more commercially developed communities. Occupational diversity within a household helped mitigate the adverse impact. There is some evidence of consumption smoothing by the households affected by the crisis, but the poor were less able to protect their consumption, which is a matter of policy concern.

Growth and Poverty in Rural India

Unlike most developing countries, consistent poverty measures for India can be tracked over a long time. The authors used 20 household surveys for rural India for the years 1958-90 to measure the effects of agricultural growth on rural poverty and on the rural labor market and to find out how long it takes for the effects to be felt. They found that measures of absolute rural poverty responded elastically to changes in mean consumption. But agricultural growth had no discernible impact - either positive or negative - on the share of total consumption going to the poor. For the rural poor, the authors attribute the long-run gains from growth to higher average farm yields, which benefited poor people both directly and through higher real agricultural wages. And the benefits from higher yields were not confined to those near the poverty line - the poorest also benefited. The process through which Indias rural poor participate in the gains from agricultural growth takes time, although about half of the long-run impact comes within three years. The long-run elasticity of the head-count index to farm yield was over 2 - of which 40 percent came through wages. Short-run elasticities were far smaller. Inflation adversely affected the rural poor by eroding their real wages in the short-run.

Poverty in Egypt: Modeling and Policy Simulations

Poverty profiles are a useful way of summarizing information on the levels of poverty and the characteristics of the poor in a society, but they are limited by the bivariate nature of their informational content. Using the 1997 Egypt Integrated Household Survey (EIHS), this article estimates models of household consumption in the first stage and then predicts poverty rates corresponding to changes in potential policy variables. The key results of the study point to the important instrumental role of education, parental background, land redistribution, and access to health facilities in alleviating poverty in Egypt.