Absolute poverty measurement with minimum food needs: A new inverse method for advanced economies

Balint Menyhert

No 2021-04, JRC Working Papers in Economics and Finance from Joint Research Centre, European Commission

Abstract: This paper explores the feasibility of calculating absolute poverty lines on the basis of minimum food expenditures in developed countries. It makes three important contributions. First, it demonstrates that standard statistical methods used in the developing world deliver inadequate poverty estimates in rich countries characterised by a relatively low food expenditure share. Second, it proposes a new simulation-based inverse method that focuses on the non-food Engel curve and uses available food reference budgets not as inputs but as targeted reference points for the calculations. Finally, an empirical application of the new method using household budget survey data from Italy shows that resulting poverty estimates are in line with the official figures of the Italian Statistical Office in terms of both the poverty rate and the poverty profiles. The proposed method is therefore well suited to produce robust and consistent absolute poverty measures in a large number of developed countries.

Keywords: absolute poverty measurement; household expenditures; statistical modeling (search for similar items in EconPapers)
JEL-codes: C10 C63 D12 E20 G50 I32 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2021-12
New Economics Papers: this item is included in nep-cwa, nep-eec, nep-mac and nep-ore
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Published by the European Commission, 2022

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Persistent link: https://EconPapers.repec.org/RePEc:jrs:wpaper:202104

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