Poverty: Looking for the Real Elasticities

Florent Bresson ()

No 200618, Working Papers from CERDI

Abstract: After decades of intensive research on the statistical size distribution of income and despite its empirical weaknesses, the lognormal distribution still enjoys an important popularity in the applied literature dedicated to poverty and inequality. In the present study, we emphasize the drawbacks of this choice for the calculation of the elasticities of poverty. Using last version of WIID database, we estimate the growth and inequality elasticities of poverty using 1,842 income distributions under fifteen rival distribution assumptions. Our results confirm that the lognormal distribution is not appropriate for the analysis of poverty. Most of the time, it implies an overestimation of the elasticities and bias our estimation of the relative impact of growth and redistribution on poverty alleviation.

Date: 2006

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Persistent link: http://EconPapers.repec.org/RePEc:cdi:wpaper:812

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