Premature mortality and poverty measurement in an OLG economy

Mathieu Lefebvre, Pierre Pestieau and Gregory Ponthiere

No 2017016, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: Following Kanbur and Mukherjee (2007), a solution to the “missing poor” problem (i.e. selection bias in poverty measures due to income-differentiated mortality) consists in computing hypothetical poverty rates while assigning a fictitious income to the prematurely dead. However, in a dynamic general equilibrium economy, doing “as if” the prematurely dead were still alive is likely to affect wages, output and capital accumulation, with an uncertain effect on poverty. We develop a 3-period OLG model with income-differentiated mortality, and compare actual poverty rates with hypothetical poverty rates that would have prevailed if everyone faced the survival conditions of the top income class. Including the prematurely dead has an ambiguous impact on poverty, since it affects income distribution through capital dilution, composition effets and horizon effects. Our results are illustrated by quantifying the impact of income-differentiated mortality on poverty measures for France (1820-2010).

Keywords: income-differentiated mortality; poverty measures; missing poor; OLG models; capital accumulation (search for similar items in EconPapers)
JEL-codes: E13 E21 I32 (search for similar items in EconPapers)
Date: 2017-05-09
New Economics Papers: this item is included in nep-dem, nep-dge, nep-hea and nep-mac
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https://sites.uclouvain.be/core/publications/coredp/coredp2017.html (application/pdf)

Related works:
Journal Article: Premature mortality and poverty measurement in an OLG economy (2019)
Working Paper: Premature mortality and poverty measurement in an OLG economy (2019)
Working Paper: Premature mortality and poverty measurement in an OLG economy (2019)
Working Paper: Premature mortality and poverty measurement in an OLG economy (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:2017016

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