Growth, Poverty, and Inequality: A Regional Panel
41 Pages Posted: 20 Apr 2016
Date Written: March 1999
Empirical work in Bangladesh shows that growth reduces poverty in both urban and rural areas - and is associated with rising inequality only in urban areas. It appears that promoting growth in rural areas rather than urban areas would reduce poverty more. Most empirical work on how growth affects poverty and inequality has been based on international panel data sets.
Panels can also be used within a country, if the analysis is carried out at the regional level. Wodon does this for Bangladesh, where regional panel estimates indicate that growth reduces poverty in both urban and rural areas. Growth is associated with rising inequality only in urban areas. Simulations based on these estimates indicate how much poverty reduction could increase in the next 10 years if growth were promoted in rural areas rather than urban areas.
This paper - a product of the Poverty Reduction and Economic Management Sector Unit, South Asia Region - was written as part of background work for the Bangladesh poverty assessment.
Keywords: growth, poverty, inequality, Bangladesh, panel data
JEL Classification: I32, D63, O40
Suggested Citation: Suggested Citation