Umar Serajuddin

A Global Count of the Extreme Poor in 2012

The 2014 release of a new set of purchasing power parity conversion factors (PPPs) for 2011 has prompted a revision of the international poverty line. In order to preserve the integrity of the goalposts for international targets such as the Sustainable Development Goals and the World Banks twin goals, the new poverty line was chosen so as to preserve the definition and real purchasing power of the earlier

The World Bank's Classification of Countries by Income

1.25 line (in 2005 PPPs) in poor countries. Using the new 2011 PPPs, the new line equals

Updating Poverty Estimates at Frequent Intervals in the Absence of Consumption Data: Methods and Illustration with Reference to a Middle-Income Country

1.90 per person per day. The higher value of the line in US dollars reflects the fact that the new PPPs yield a relatively lower purchasing power of that currency vis-à-vis those of most poor countries. Because the line was designed to preserve real purchasing power in poor countries, the revisions lead to relatively small changes in global poverty incidence: from 14.5 percent in the old method to 14.1 percent in the new method for 2011.In 2012, the new reference year for the global count, we find 12.7 percent of the worlds population, or 897 million people, are living in extreme poverty. There are changes in the regional composition of poverty, but they are also relatively small. This paper documents the detailed methodological decisions taken in the process of updating both the poverty line and the consumption and income distributions at the country level, including issues of inter-temporal and spatial price adjustments. It also describes various caveats, limitations, perils and pitfalls of the approach taken.

Who is Deprived? Who Feels Deprived? Labor Deprivation, Youth and Gender in Morocco

The World Bank has used an income classification to group countries for analytical purposes for many years. Since the present income classification was first introduced 25 years ago there has been significant change in the global economic landscape. As real incomes have risen, the number of countries in the low income group has fallen to 31, while the number of high income countries has risen to 80. As countries have transitioned to middle income status, more people are living below the World Banks international extreme poverty line in middle income countries than in low income countries. These changes in the world economy, along with a rapid increase in the user base of World Bank data, suggest that a review of the income classification is needed. A key consideration is the views of users, and this paper finds opinions to be mixed: some critics argue the thresholds are dated and set too low; others find merit in continuing to have a fixed benchmark to assess progress over time. On balance, there is still value in the current approach, based on gross national income per capita, to classifying countries into different groups. However, the paper proposes adjustments to the methodology that is used to keep the value of the thresholds for each income group constant over time. Several proposals for changing the current thresholds are also presented, which it is hoped will inform further discussion and any decision to adopt a new approach.

Estimating Poverty with Panel Data, Comparably: An Example from Jordan

Obtaining consistent estimates on poverty over time as well as monitoring poverty trends on a timely basis is a priority concern for policy makers. However, these objectives are not readily achieved in practice when household consumption data are neither frequently collected, nor constructed using consistent and transparent criteria. This paper develops a formal framework for survey-to-survey poverty imputation in an attempt to overcome these obstacles, and to elevate the discussion of these methods beyond the largely ad-hoc efforts in the existing literature. The framework introduced here imposes few restrictive assumptions, works with simple variance formulas, provides guidance on the selection of control variables for model building, and can be generally applied to imputation either from one survey to another survey with the same design, or to another survey with a different design. Empirical results analyzing the Household Expenditure and Income Survey and the Unemployment and Employment Survey in Jordan are quite encouraging, with imputation-based poverty estimates closely tracking the direct estimates of poverty.

Energy Subsidies Reform in Jordan: Welfare Implications of Different Scenarios

One of the recurrent explanations of the Arab spring is that governments were disconnected from their populations and that public policies were simply not in line with peoples sentiments and expectations. This paper provides a methodology to better understand how objective conditions of deprivation are translated into subjective feelings of deprivation using a strand of the recent literature on relative deprivation. The authors apply this methodology to better understand the question of gender and youth deprivation in the context of the Moroccan labor market. They find that the reference group (the people with whom people compare themselves) plays a pivotal role in understanding how feelings of labor deprivation are generated. This can explain the apparent mismatch between objective conditions and subjective feelings of deprivation related to joblessness among young men and women. The methodology can help us understand why greater discontent may be exhibited by a group of individuals who are in fact less deprived in a material sense. It can also potentially help governments design public policies that address objective conditions of deprivation, such as unemployment, with a better understanding of subjective implications.

Noncomparable Poverty Comparisons

Poverty estimates based on enumeration from a single point in time form the cornerstone for much of the literature on poverty. Households are typically interviewed once about their consumption or income, and their wellbeing is assessed from their responses. Global estimates of poverty that aggregate poverty counts from all countries implicitly assume that the counts are comparable. This paper illustrates that this assumption of comparability is potentially invalid when households are interviewed multiple times with repeat visits throughout the year. The paper provides an example from Jordan, where the internationally comparable approach of handling the data from repeat visits yields a poverty rate that is 26 percent greater than the rate that is currently reported as the official estimate. The paper also explores alternative definitions of poverty, informed in part by the psychological and biophysical literature on the long-run effects of short-term exposure to poverty or generally adverse environments. This alternative concept of poverty suggests that the prevalence of those who have been affected by poverty in Jordan during 2010 is more than twice as large as the official 2010 estimate of poverty.

The Distributional Impact of Fiscal Policy in Jordan

Facing a fiscal crisis, Jordan initiated substantial petroleum subsidy reforms in 2012. The government has also long contemplated how to cut electricity subsidies, which surpass the fiscal burdens imposed by the petroleum subsidies. This paper estimates the impacts of the 2012 petroleum subsidies reform on household welfare and government revenues. It also simulates the distributional and fiscal impacts from ending subsidies in the electricity sector, where the pricing structure is more complex than petroleum prices. The paper looks at the direct and indirect impacts of reform. Moreover, the paper discusses the political economy considerations of reform. While the full removal of petroleum subsidies would have increased poverty, the compensatory cash transfer program the government instituted is estimated to have fully offset the negative impact for the poorer population. The impact of reforms in the electricity sector will depend significantly on the implementation method chosen. A flat increase of tariffs toward cost recovery will put a huge burden on the poorest households. However, a progressive increase in tariffs will generate substantial savings for the government, even with compensatory mechanisms to mitigate the strong negative impact on the vulnerable population. The immediate compensation of the losers from reform appears to be a crucial factor in the successful implementation of reforms in Jordan.

Costing household surveys for monitoring progress toward ending extreme poverty and boosting shared prosperity

Abstract Poverty estimates based on enumeration from a single point in time form the basis for most country-level analysis of poverty. Cross-country comparisons of poverty, and global counts of the poor, implicitly assume that country-level poverty headcounts are comparable. This paper illustrates that the assumption of comparability is potentially invalid when households are interviewed multiple times throughout the year, as opposed to a single-visit interview. An example from Jordan illustrates how the internationally comparable approach of handling data from repeat visits yields a poverty rate that is 26 per cent greater than the rate that is currently reported as the official estimate.

Filling Gaps when Poverty Data are Missing: Updating Poverty Estimates Frequently with Different Data Sources in Jordan

This paper analyzes the impact of Jordanian government’s fiscal policies on poverty and inequality in the country. The CEQ methodology is applied o analize all the key fiscal policies employed by the government, such as direct taxes (personal income taxes); indirect taxes (sales taxes); direct transfers; indirect subsidies (subsidies for food, oil, electricity, and water); and in-kind benefits (benefits for education and health). The results indicate that the Jordan’s policies are mostly progressive and equalizing, primarily through direct taxes, direct transfers, indirect subsidies, and in-kind benefits. Moreover, the results show that the combination of tax and expenditure policies is poverty-reducing. However, the indirect tax system, in its current form, is slightly regressive and inequality-increasing, as the poor are paying a greater fraction of their income than the rich as sales tax.The World Bank has partnered with the Commitment to Equity Institute at Tulane University to implement their diagnostic tool—the Commitment to Equity (CEQ) Assessment—designed to assess how taxation and public expenditures affect income inequality, poverty, and different economic groups. The approach relies on comprehensive fiscal incidence analysis, which measures the contribution of each individual intervention to poverty and inequality reduction as well as the combined impact of taxes and social spending. The CEQ Assessment provide an evidence base upon which alternative reform options can be analyzed. The use of a common methodology makes the results comparable across countries. This volume presents eight country studies that examine the distributional effects of individual programs and policy measures—and the net effect of each country’s mix of policies and programs. These case studies were produced in the context of Bank policy dialogue and have since been used to propose alternative reform options.