More Relatively-Poor People in a Less Absolutely-Poor World

Shaohua Chen

World Bank; World Bank - Development Research Group (DECRG)

Martin Ravallion

Georgetown University

July 1, 2012

World Bank Policy Research Working Paper No. 6114

Relative deprivation, shame and social exclusion can matter to the welfare of people everywhere. The authors argue that such social effects on welfare call for a reconsideration of how we assess global poverty, but they do not support standard measures of relative poverty. The paper argues instead for using a weakly-relative measure as the upper-bound complement to the lower-bound provided by a standard absolute measure. New estimates of global poverty are presented, drawing on 850 household surveys spanning 125 countries over 1981-2008. The absolute line is $1.25 a day at 2005 prices, while the relative line rises with the mean, at a gradient of 1:2 above $1.25 a day. The authors show that these parameter choices are consistent with cross-country data on national poverty lines. The results indicate that the incidence of both absolute and weakly-relative poverty in the developing world has been falling since the 1990s, but more slowly for the relative measure. While the number of absolutely poor has fallen, the number of relatively poor has changed little since the 1990s, and is higher in 2008 than 1981.

Number of Pages in PDF File: 42

Keywords: Rural Poverty Reduction, Regional Economic Development, Achieving Shared Growth, Services & Transfers to Poor

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Date posted: April 20, 2016  

Suggested Citation

Chen, Shaohua and Ravallion, Martin, More Relatively-Poor People in a Less Absolutely-Poor World (July 1, 2012). World Bank Policy Research Working Paper No. 6114. Available at SSRN: http://ssrn.com/abstract=2100291

Contact Information

Shaohua Chen (Contact Author)
World Bank ( email )
1818 H Street, N.W.
Washington, DC 20433
United States
World Bank - Development Research Group (DECRG)
1818 H. Street, N.W.
Washington, DC 20433
United States
Martin Ravallion
Georgetown University ( email )
Washington, DC 20057
United States
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