Measuring Third World Poverty by the International Poverty Line: The Case of Reform China*

This article selects a fast growing economy, China, under Deng Xiao-ping's economic reforms, as a case example for exploring the use of the median income-linked international poverty line in measuring third world poverty. Those third world countries which have a fast growing economy have the prospect of increased income inequality. Henceforth, the widening income inequality justifies a comparable poverty measurement which takes into account the relation between economic affluence and income distribution.     

China's Pro-Poor Growth: Measurement and Implications

ABSTRACT. Pro-poor growth has been the preeminent strategic framework of the international development community because it describes relationships between growth, inequality, and poverty. Assessing whether economic growth and income distributional changes are “pro-poor” has important policy implications and has become increasingly widespread in academic and policy societies. The article aims to measure the pro-poor growth in rural China from 1989 to 2009 through analyzing the household survey data collected by the China Health and Nutrition Survey. Among the main findings, from 1989 to 2006, China's economic growth in rural areas was relatively weakly pro-poor and poverty reduction mainly relied on the “trickle-down effect” of economic growth. However, since 2006, both the “trickle-down effect” of growth and changes in income distribution have reduced poverty. During this period, Chinese economic growth was pro-poor. Research on pro-poor growth based on more comprehensive data is urgently needed to advise policymakers to make relevant policies.     

Does family still matter? Public and private transfers in emerging welfare state systems in a comparative perspective

Kim JW, Choi YJ. Does family still matter? Public and private transfers in emerging welfare state systems in a comparative perspective Int J Soc Welfare 2011: 20: 353–366 © 2010 The Author(s), International Journal of Social Welfare © 2010 Blackwell Publishing Ltd and the International Journal of Social Welfare. While the role of the family has been a distinctive feature of East Asian welfare systems, rapid social policy development and reforms in South Korea and Taiwan over the last two decades have led to an increase in public welfare. Yet, despite a growing number of studies, little is known about the role of family support – private transfers – and public programmes in the performance of state welfare. This article reports on a comparative analysis of the role of public and private transfers aimed at poverty and inequality reduction in 12 Western and two East Asian states employing the Luxemburg Income Study data set. Results indicate that, in contrast to the West, private transfers that rest primarily on family support remain more important than public transfers in reducing income inequality and poverty in South Korea and Taiwan.     

Do economic growth and institutional quality reduce poverty and inequality in West Africa?

Over the past two decades, the West African region has experienced much faster economic growth than other parts of the world. However, despite this economic upturn, the region has continued to experience high levels of inequality and poverty, yet economic growth is considered to be one of the main drivers of poverty reduction. An interesting literature indicates that local conditions may limit the expected effects of economic growth on poverty and income inequality. In this study, we are interested in the role of institutional factors that have been largely ignored in explaining poverty reduction and inequality outcomes in this region. Thus, this study empirically examines the role of economic growth and institutional quality on inequality and poverty reduction in West Africa. Using data from the World Development Indicators (WDI), the International Country Risk Guide (ICRG) and the Standardized World Income Inequality Database (SWIID), our results show that economic growth remains a necessary condition for poverty reduction and that the overall improvement in the quality of institutions contributes significantly to reducing poverty and income inequality in the long term. This contribution is made in particular through the improvement of democratic institutions, the alleviation of bureaucratic constraints, the quality of the judicial and regulatory system, the control of corruption and the quality of government stability. Furthermore, we show that improvements in the judicial system, low levels of corruption and better bureaucratic quality happen to be prerequisites for economic growth to significantly reduce income inequality. These results therefore call on policy makers in the West African region to improve their institutional framework and especially these dimensions with a view to enabling the region citizens to improve their living conditions.     

Poverty,income inequality and externalised problem behaviours of children: an empirical study in Korea

The primary purpose of this study is to examine the effects of neighbourhood poverty and income inequality on children's externalised problem behaviours in Korea. For the analysis, we used the National Survey of Children and Youth data and employed a multilevel analysis method. The results show that income inequality level of a community is a significant factor in increasing children's externalised problem behaviours. When controlled for income inequality, poverty itself was not significantly related to the level of children's externalised problem behaviours. We provide social welfare practice and policy implications of the findings in the paper.     

Public income transfers and wealth accumulation at the bottom: Within and between country differences in Canada and the United States

Both Canada and the United States are considered liberal welfare states, yet exhibit notable differences in income poverty attributed to social policy. While a more generous welfare system lifts many above income poverty, models of household financial behaviour suggest that more income from the state should displace private savings via a substitution effect. Using nationally representative wealth surveys from Canada and the US from 1998/1999 to 2016 we extend knowledge on the relationship between the welfare state and private wealth accumulation. Specifically, we study household asset poverty defined as financial asset levels that fall below three-month adjusted income poverty threshold. Asset poverty rates varied over time in the two countries and were higher in the less generous US welfare state. Further, income transfer share was positively related to asset poverty in Canada but not in the US. Counterfactual estimates offered evidence of the substitution effect in Canada, where higher levels of transfers may crowd out private asset accumulation. Results invite further consideration of the concept of asset poverty and its relationship to welfare state characteristics.     

Inequality, income, and poverty: comparative global evidence

Objectives. The study seeks to provide comparative global evidence on the role of income inequality, relative to income growth, in poverty reduction.Methods. An analysis-of-covariance model is estimated using a large global sample of 1980–2004 unbalanced panel data, with the headcount measure of poverty as the dependent variable, and the Gini coefficient and PPP-adjusted mean income as explanatory variables. Both random-effects and fixed-effects methods are employed in the estimation.Results. The responsiveness of poverty to income is a decreasing function of inequality, and the inequality elasticity of poverty is actually larger than the income elasticity of poverty. Furthermore, there is a large variation across regions (and countries) in the relative effects of inequality on poverty.Conclusion. Income distribution plays a more important role than might be traditionally acknowledged in poverty reduction, though this importance varies widely across regions and countries.     

The impact of trade liberalisation on poverty and inequality: Evidence from CGE models

In this paper we carry out a systematic review of the evidence from CGE models regarding the effect of trade liberalisation on income inequality and poverty in developing countries. The evidence suggests quite strongly that trade liberalisation tends to reduce poverty, but is more likely to increase inequality than reduce it; however, the predicted effects are relatively small. Variation in the size and direction of effects can be explained by the choice of outcome measure, the fiscal response to liberalisation, the type of CGE model, and certain country characteristics – but not the method used to link the CGE model to the distribution of income.     

Estimating the impact of the Global Financial Crisis on poverty and deprivation

Although the Australian economy has avoided going into recession since the onset of the global financial crisis, relatively little is known about the social impact of the crisis. Survey and anecdotal evidence presented by a number of community sector NGOs suggest that the demand for emergency relief and other services rose in the aftermath of the crisis. This article reports results derived from two national surveys on poverty and social disadvantage that were conducted in 2006 and 2010 – prior to and after the crisis struck. The survey data allow income‐based poverty rates to be estimated as well as the extent and nature of deprivation, where deprivation is defined as being unable to afford items that a majority regards as essential: things that no‐one in Australia should have to go without. Poverty and deprivation are not alternative indicators but can be combined into a multi‐dimensional measure of consistent poverty. The paper examines how conventional (income) poverty, deprivation and consistent poverty changed between 2006 and 2010, and analyses the sensitivity of the results to alternative definitions. The findings provide the first comprehensive evidence on how the profile of social disadvantage in Australia changed in the period that spans the financial crisis.     

Behavioral responses and the distributional effects of the Russian ‘flat’ tax

This paper simulates the distributional impact of the Russian personal income tax (PIT) following the flat tax reform of 2001 using data from the Russian Longitudinal Monitoring Survey. I decompose the change in the distribution of net income into a direct (tax) effect and an indirect effect. The indirect effect is further decomposed into evasion and productivity effects using existing estimates of these respective elasticities. As expected, the direct tax effect increased net income inequality. Changes in the pre-tax distribution (indirect effect), on the other hand, had a large negative impact on inequality thus leading to an overall decline in net income inequality. I also find that the tax-induced evasion response increased reported net income inequality while reducing consumption inequality. To the extent that consumption approximates actual income, these results demonstrate that the flat tax reform had a much smaller effect on actual income inequality than on reported income inequality. More importantly, relative to non-tax factor, the reform had little overall effect on income inequality. This suggests that objection to flatter tax schedules on the grounds of income inequality is mostly misguided, especially in transitional countries with high levels of evasion.     

Defining, measuring and talking about poverty: the case of Finland

Scholars have always disagreed about the definition and measurement of poverty. This article looks at these issues in the light of Finnish poverty research. The chief target of the methodological criticism is the use of equivalence scales or units of individual consumption in the comparison of individual people's disposable income. The main argument against this method is that it tends to be based on the implicit assumption that "people with low incomes need less money". Another major concern is to demonstrate the key significance of the empirical definition of poverty. Different methods of calculation single out very different groups of poor people Furthermore, part of the poor people are excluded from all conventional definitions.     

Poverty, inequality, and development: A distributional approach

Economists have concentrated on aggregate economic growth to measure countries' development progress and in recent years have also considered income distribution performance. This paper reverses the conventional emphasis by placing income distribution at the forefront. I examine what is known about the distributions of income and poverty in the developing countries of the world and probe the correlations between poverty, inequality, and development. I explore the main sources of inequality and the extent to which individual countries have managed to alleviate poverty and reduce inequality in the course of economic growth. Employing evidence from case studies of six developing nations. I suggest some explanations for differing patterns of development and call for development planning founded on a firm commitment to helping the poor.     

收入不平等对中国居民幸福感的影响及其机制研究

本文立足于社会规范视角,以中国综合社会调查(CGSS)数据为基础,考察与分析区域层次的收入不平等对居民幸福感的影响及其机制。结果显示,当前中国的收入不平等会损害个人对幸福的积极体验。与高收入群体相比,低收入群体更容易产生这种负向感知。相对剥夺和关系信任构成的社会心理过程是影响收入不平等与个人幸福感关系的重要机制,资源供给机制未获调查数据的支持。在此基础上,本文认为,国民幸福感的高低并非取决于收入不平等本身,而是分配体系构建的合理性。所以,建立具有公平正义价值导向的收入分配体系是提升中国居民幸福感的发展方向。     

Adult and child deprivation in Hong Kong

There is growing interest in the application of Townsend's deprivation approach to provide estimates of poverty that more directly reflect the living standards of those on low income. The consensual approach is applied here using data from the second wave (conducted in 2015–2016) of the Trends and Implications of Social Disadvantages in Hong Kong survey. The article draws on a related study that identifies separate lists of items deemed “necessary for all” by a majority of adults (aged 18 years or older) and children (aged 10–17 years). Those unable to obtain at least three of these items are identified as deprived, and the profile of household deprivation is examined in terms of the family types most affected, age groups, and numbers of children. Further analysis focuses on the disparity between children identified as living in households identified as deprived according to information provided by adults and children whose deprivation status reflects their own views. Finally, the overlaps between deprivation and four measures of poverty—two objective and income based and two subjective and perception based—are examined and discussed. The results indicate that deprivation and poverty are different but that, however it is measured, more needs to be done to address poverty in Hong Kong, including further improvements in the coverage and adequacy of health service provision and social security benefits.     

The effects of income transfers on poverty reduction in people with disabilities in South Korea

Using a nationally representative sample dataset from the 2016 Korean Welfare Panel Study, we examined the anti‐poverty effects of income transfers in people with disabilities. Our findings indicate that in households with a person with a disability, income transfers decreased by 55.9% and 84.8% of the pre‐transfer poverty rate and poverty gap, respectively. Before income transfers, households with a person with a disability were 1.94 times more likely to be poor compared to those without a person with a disability. When income transfers were offered, the chance of being poor in the disability group was only 1.11 times higher than that in the non‐disability group. Findings from the aggregated data suggest that means‐tested income transfers were more effective in reducing poverty levels than social insurance or private income transfers. At the individual level, the provision of means‐tested programs was also more likely to decrease the likelihood of experiencing poverty than social insurance and private income transfers.     

Low income and ‘poverty lines’ in Norway: a comparison of three concepts

Borgeraas E, Dahl E. Low income and ‘poverty lines’ in Norway: a comparison of three concepts
Int J Soc Welfare 2010: 19: 73–83 © 2008 The Author(s), Journal compilation © 2009 Blackwell Publishing Ltd and the International Journal of Social Welfare. In this article we address the question of how well three concepts of ‘poverty’ correspond with each other. We have compared three different measures of ‘poverty’ in Norway: income poverty and two measures of a minimum budget standard, one scientifically and one politically defined. The three measures rest on different underlying concepts, serve different purposes and yield significantly different poverty lines. If followed by the municipal social services, the governmental norms for social benefits will, paradoxically, leave the beneficiaries in income poverty as defined by that same government. The most generous poverty line of all three measures is provided by the minimum budget standard developed by the National Institute for Consumer Research in Norway, which rests on the assumption that a household's income has to give a sustainable financial situation in the longer run. Neither of the two other poverty measures have this property. All numbers pertain to the year 2005. Some political and practical implications of the findings are discussed.     

The breadth and depth of multidimensional child poverty in China

This study analysed the multidimensional child poverty status in China between 1989 and 2009, using the China Health and Nutrition survey data. Based on the Alkire–Foster method for measuring poverty, a multidimensional poverty index was calculated and further decomposed into seven deprivation dimensions: nutrition, water, sanitation, health, education, shelter and information. The study has four main findings: (1) The multidimensional child poverty rate in China declined gradually where the sanitation facility was most severely deprived; (2) The poverty gap between rich and poor provinces remained over the years; (3) The urban–rural disparity was reduced in all seven dimensions; (4) The poorest of the poor climbed out of ultra‐poverty and became the moderately poor or even the non‐poor.     

Making ends meet: perceptions of poverty in Sweden

During the era after the Second World War, Sweden has built a welfare system based on labor market participation and income maintenance. Low unemployment and decent wages are supposed to guarantee people a labor market income or income maintenance, which in turn should provide a proper standard for everyone. However, a rapid increase in unemployment and economic problems have made the future of the Swedish welfare state more uncertain than ever. These circumstances have, among other things, led to the suggestion that Sweden should abandon the income maintenance policy and create a social policy system with the more limited ambition of guaranteeing everyone a minimum income. In that case, one central question must be answered: what constitutes a decent minimum income in today's Sweden? Where should we draw the poverty line under which people will not be forced to live? These questions are central in the current debate. The consensual poverty line method is used in this article to derive a poverty line relevant for today's Sweden. The results shows that more than every fifth household has an income below the consensual poverty line. That is, they have an income that most Swedes would argue is too low to make ends meet. The level of the consensual poverty line was compared with the National Board of Health and Welfare's guidelines for social assistance. The consensual poverty line was shown to be more generous to small households and the norm for social assistance was more generous to larger households. Finally, the expenditure for guaranteeing all Swedish household a minimum income equal to the consensual poverty line was estimated: more than SEK 25 billion per year. The results in the article casts serious doubt on the ability of the Swedish welfare state to secure a decent income to all citizens.     

Cross-national comparisons of poverty: reconsidering methods

This paper discusses methods by which indicators of poverty can be compared between different countries. Comparisons of this type are important politically; they may affect the ability of developing countries to attract funding from international organisations. Poverty, however, is a complex, disputed concept. No simple comparison, such as a headcount based on a measure of income, can cover the major areas of concern. Composite indices are widely used, but they have problems with the quality of basic indicators and the assumptions required for quantification. This paper offers a worked example of a different approach, intended to avoid some of the major pitfalls: the use of poverty profiles. The method makes it possible to compare a range of issues in different countries. It can also be used to examine the implications of redistributive policies and social protection in different contexts.     

Closing the gap: the growing divide between poverty research and policy in Australia

This paper reviews major developments in Australian poverty research in the 50 years since the Melbourne poverty study established the Henderson measurement framework. It focuses on the limitations of the dominant, but narrow income (poverty line) approach used in Australia, contrasts it with the deprivation approach pioneered and refined in the United Kingdom, and shows how this provides more compelling evidence that poverty exists. Against the background of recent developments in international poverty research, the paper identifies existing gaps in Australia, and explores what needs to be done to address this situation. It then draws on international experience to examine how anti‐poverty policy has evolved, focusing on the role of poverty targets in producing better data and promoting debate between policy makers, researchers and community sector practitioners about developing better measures. Australia lags behind these developments: a new approach is needed that engages researchers, policy makers, and other key stakeholders in positive dialogue aimed at setting a new framework for poverty measurement and an achievable anti‐poverty policy agenda.