On the Measurement of Chronic Poverty

26 Pages Posted: 8 Aug 2012 Last revised: 15 Dec 2012

Date Written: November 20, 2012


Long term poverty or chronic poverty is defined as poverty where a person has significant deprivation of capabilities for a number of years, and economists have emphasized the need to measure chronic poverty separately from total poverty (Hulme and Shepherd, 2003). There is an existing literature measuring chronic poverty in an area (Bossert et al., 2012; Datta et al., 2011; Duclos et al, 2010; Foster, 2009; Gibson, 2001; Jalan and Ravallion, 1998; Medola et al., 2012; Gradin et al., 2012; Hoy and Zheng, 2012). However, it can be difficult to measure if the well-being of the chronically poor improved using these prevailing measures, because they incorporate past poverty information into current poverty score of an individual. In this paper, I show how chronic poverty can be measured using an existing uni-dimensional poverty measure. It identifies the individuals who are currently in poverty and who remained in poverty for x or more years, where x>1, and then uses their current income to aggregate their poverty score. One advantage of this measure is that it can also be used to see if chronic poverty levels have changed over time, by using the method of stochastic dominance (Davidson and Duclos, 2010). Using PSID dataset as an example, I show how this method can be implemented on a panel dataset.

Keywords: Chronic poverty, measurement, stochastic dominance

Suggested Citation

Islam, T. M. Tonmoy, On the Measurement of Chronic Poverty (November 20, 2012). Available at SSRN: https://ssrn.com/abstract=2126175 or http://dx.doi.org/10.2139/ssrn.2126175

T. M. Tonmoy Islam (Contact Author)

Elon University ( email )

Elon, NC 27244
United States

HOME PAGE: http://www.tmtonmoyislam.com

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