A Structural Analysis of Growth and Poverty in the Short-Term

Paolo Verme

Department of Economics and Statistics Cognetti de Martiis. Working Papers from University of Turin

Abstract: "Growth is good for the poor" is a ubíquítous statement and one generally backed by theory, research and history. In the long-run, growth reduces poverty. Yet, growth in output - per se - ís neíther a necessary nor a sutficíent condítíon for poverty reductíon, especíally in the short-term And the short-term matters a great deal to tbc poor. `Che paper uses a number of parametric, non-parametric and decomposition methodologies to assess regional changes in output, income, poverty and inequality in one transition economy which experienced fast growth and fast poverty reductìon over a short period of time. Tbc purpose is to test what is behind this simple covariance that led observers to conclude that output growth deternined poverty reduction. Combining macro e micro regional data, we find a very small trickle down effect of output growth on household incomes and no evidence that output growth is correlated with poverty reduction. We find ínstead that a modest growth in household íncome combined with a pro-poor distribution of such growth explains well poverty reduction. Effective shorterm poverty reductíon polícies should focus on pro-poor actions where pro-poor means making sure that marginal changes among the incomes of the poor outperform marginaI changes among theincomes of the rich.

Pages: 23 pages
Date: 2007-06
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Citations: View citations in EconPapers (4)

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Related works:
Journal Article: A structural analysis of growth and poverty in the short-term (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:uto:dipeco:200705

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