Welfare Dynamics Measurement: Two Definitions of a Vulnerability Line and Their Empirical Application

Review of Income and Wealth, Forthcoming

46 Pages Posted: 10 Mar 2016 Last revised: 18 Mar 2016

See all articles by Hai-Anh Dang

Hai-Anh Dang

World Bank - Development Data Group (DECDG)

Peter F. Lanjouw

World Bank - Development Research Group (DECRG)

Multiple version iconThere are 3 versions of this paper

Date Written: March 8, 2016

Abstract

We propose a new approach to develop vulnerability lines that are explicitly anchored to the idea of a sub-set of the population at risk of falling into poverty. We suggest that lines developed in this way can also be applied for the purpose of identifying the middle class (or “secure”). We illustrate that such vulnerability lines can be straightforwardly estimated with panel data, drawing on data from the United States and Vietnam. Importantly, given the relative scarcity of panel datasets, we show further that our method can be applied to synthetic panel datasets. We demonstrate this by means of an illustration using repeated cross-section data from India. Our results indicate that in Vietnam and India during the 2000s, the population shares that can be designated as poor and as secure have, respectively, been falling and expanding, with the vulnerable share of the population remaining fairly stable. Sharply contrasting trends are seen in the United States.

Keywords: welfare dynamics, poverty, vulnerability, middle class, panel data

JEL Classification: C14, D31, I32

Suggested Citation

Dang, Hai-Anh H. and Lanjouw, Peter F., Welfare Dynamics Measurement: Two Definitions of a Vulnerability Line and Their Empirical Application (March 8, 2016). Review of Income and Wealth, Forthcoming, Available at SSRN: https://ssrn.com/abstract=2745048

Hai-Anh H. Dang (Contact Author)

World Bank - Development Data Group (DECDG) ( email )

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HOME PAGE: http://sites.google.com/site/haianhhdang/

Peter F. Lanjouw

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

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
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202-522-1153 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/planjouw

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