Poverty and Inequality: A Micro Framework

Abdelkrim Araar and Jean-Yves Duclos

Journal of African Economies, 2010, vol. 19, issue 3, 357-398

Abstract: This paper explores the link between poverty and inequality through an analysis of the poverty impact of changes in income-component inequality and in between- and within-group inequality. This helps understand various possible linkages between poverty, growth and inequality. It might also help design policies to improve both equity and welfare. The tools are applied using the recent 2004 Nigerian national household survey. Interesting insights emerge from both the analytical and empirical analyses. One such insight is that both the sign and the size of the elasticities can be quite sensitive to the choice of measurement assumptions (such as the choice of inequality and poverty-aversion parameters, and that of the poverty line). The elasticities are also very much distribution-sensitive and dependent on the type of inequality-changing processes taking place. This also suggests that the response of poverty to growth can also be expected to be significantly context-specific. Copyright 2010 The author 2010. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Date: 2010
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