Understanding Poverty Reduction in Sri Lanka: Evidence from 2002 to 2012/13

45 Pages Posted: 20 Apr 2016

See all articles by Lidia Ceriani

Lidia Ceriani

Bocconi University - Department of Policy Analysis and Public Management

Gabriela Inchauste

World Bank

Sergio Olivieri

Universidad Nacional de La Plata

Date Written: October 19, 2015

Abstract

This paper quantifies the contributions to poverty reduction observed in Sri Lanka between 2002 and 2012/13. The methods adopted for the analysis generate entire counterfactual distributions to account for the contributions of demographics, labor, and non-labor incomes in explaining poverty reduction. The findings show that the most important contributor to poverty reduction was growth in labor income, stemming from an increase in the returns to salaried nonfarm workers and higher returns to self-employed farm workers. Although some of this increase in earnings may point to improvements in productivity, defined as higher units of output per worker, some of it may simply reflect increases in food and commodity prices, which have increased the marginal revenue product of labor. To the extent that there have been no increases in the volumes being produced, the observed changes in poverty are vulnerable to reversals if commodity prices were to decline significantly. Finally, although private transfers (domestic and foreign) helped to reduce poverty over the period, public transfers were not as effective. In particular, the reduction in the real value of transfers of the Samurdhi program during 2002 to 2012/13 slowed down poverty reduction.

Keywords: Poverty Diagnostics, Poverty Monitoring & Analysis, Poverty Lines, Poverty Assessment, Poverty Impact Evaluation, Small Area Estimation Poverty Mapping

Suggested Citation

Ceriani, Lidia and Inchauste Comboni, Maria Gabriela and Olivieri, Sergio, Understanding Poverty Reduction in Sri Lanka: Evidence from 2002 to 2012/13 (October 19, 2015). World Bank Policy Research Working Paper No. 7446, Available at SSRN: https://ssrn.com/abstract=2676415

Lidia Ceriani

Bocconi University - Department of Policy Analysis and Public Management ( email )

Via Roentgen 1
Milan, 20136
Italy

Maria Gabriela Inchauste Comboni (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Sergio Olivieri

Universidad Nacional de La Plata ( email )

7 Nº 776
Buenos Aires, BA 1900
Argentina

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