Identification of Sources of Variation in Poverty Outcomes
The international community has declared poverty reduction one of the fundamental objectives of development, and therefore a metric for assessing the effectiveness of development interventions. This creates the need for a sound understanding of the...
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| Format: | Policy Research Working Paper |
| Language: | English |
| Published: |
2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20120118105412 http://hdl.handle.net/10986/3238 |
| Summary: | The international community has declared
poverty reduction one of the fundamental objectives of
development, and therefore a metric for assessing the
effectiveness of development interventions. This creates the
need for a sound understanding of the fundamental factors
that account for observed variations in poverty outcomes
either over time or across space. Consistent with the view
that such an understanding entails deeper micro empirical
work on growth and distributional change, this paper reviews
existing decomposition methods that can be used to identify
sources of variation in poverty. The maintained hypothesis
is that the living standard of an individual is a pay-off
from her participation in the life of society. In that
sense, individual outcomes depend on endowments, behavior
and the circumstances that determine the returns to those
endowments in any social transaction. To identify the
contribution of each of these factors to changes in poverty,
the statistical and structural methods reviewed in this
paper all rely on the notion of ceteris paribus variation.
This entails the comparison of an observed outcome
distribution to a counterfactual obtained by changing one
factor at a time while holding all the other factors constant. |
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