Weakly Relative Poverty

31 Pages Posted: 20 Apr 2016

See all articles by Martin Ravallion

Martin Ravallion

Georgetown University

Shaohua Chen

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

Date Written: February 1, 2009

Abstract

Prevailing measures of relative poverty put an implausibly high weight on relative deprivation, such that measured poverty does not fall when all incomes grow at the same rate. This stems from the (implicit) assumption in past measures that very poor people incur a negligible cost of social inclusion. That assumption is inconsistent with evidence on the social roles of certain private expenditures in poor settings and with data on national poverty lines. The authors propose a new schedule of"weakly relative"lines that relax this assumption and estimate the implied poverty measures for 116 developing countries. The authors find that there is more relative poverty than past estimates have suggested. In 2005, one half of the population of the developing world lived in relative poverty, half of whom were absolutely poor. The total number of relatively poor rose over 1981-2005, despite falling numbers of absolutely poor. With sustained economic growth, the incidence of relative poverty becomes less responsive to further growth. Slower progress against relative poverty can thus be seen as the"other side of the coin"to success against absolute poverty.

Keywords: Rural Poverty Reduction, Population Policies, Achieving Shared Growth, Services & Transfers to Poor

Suggested Citation

Ravallion, Martin and Chen, Shaohua, Weakly Relative Poverty (February 1, 2009). World Bank Policy Research Working Paper Series, Vol. , pp. -, 2009. Available at SSRN: https://ssrn.com/abstract=1348985

Martin Ravallion (Contact Author)

Georgetown University ( email )

Washington, DC 20057
United States

Shaohua Chen

World Bank ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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