- 1815-1949 (en ligne)
The OECD Development Centre links OECD members with developing and emerging economies and fosters debate and discussion to seek creative policy solutions to emerging global issues and development challenges. This series of working papers is intended to disseminate the OECD Development Centre’s research findings rapidly among specialists in the field concerned. These papers are generally available in the original English or French, with a summary in the other language.
On the Relevance of Relative Poverty for Developing Countries
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- Christopher Garroway1, Juan Ramón de Laiglesia
- Author Affiliations
- 1: OECD, France
- 25 sep 2012
- Bibliographic information
Poverty is typically measured in different ways in developing and advanced countries. The majority of developing countries measure poverty in absolute terms, using a poverty line determined by the monetary cost of a predetermined basket of goods. In contrast, most analyses of poverty in advanced countries, including the majority of OECD countries and Eurostat, measure poverty in relative terms, setting the poverty line as a share of the average or median standard of living in a country. This difference in how social outcomes are measured makes it difficult to share experiences in social policy design and implementation. This paper argues that policy analysis should rely on both relative poverty – measured as a share of the median standard of living – and absolute measures. As countries reduce extreme absolute poverty, concerns of social inclusion, better represented by relative poverty lines, become increasingly relevant. Anchoring the poverty line to median welfare makes the poverty line dependent on distributional parameters beyond the mean, thus allowing for poverty lines that differ across countries with the same level of income per capita. The paper derives and presents relative poverty headcount ratios from publicly available grouped data for 114 countries. An examination of the trends in absolute and relative poverty in Brazil, China and the United States uncovers commonalities that are not apparent if the analysis focuses on national poverty lines or different concepts across countries.
- relative poverty, poverty measurement, poverty in developing countries
- Classification JEL:
- I32: Health, Education, and Welfare / Welfare, Well-Being, and Poverty / Measurement and Analysis of Poverty
- O10: Economic Development, Innovation, Technological Change, and Growth / Economic Development / General
- Y10: Miscellaneous Categories / Data: Tables and Charts / Data: Tables and Charts