Working Paper: NBER ID: w23739
Authors: Martin Ravallion; Shaohua Chen
Abstract: The paper provides new measures of global poverty that take seriously the idea of relative-income comparisons but also acknowledge a deep identification problem when the latent norms defining poverty vary systematically across countries. Welfare-consistent measures are shown to be bounded below by a fixed absolute line and above by weakly-relative lines derived from a theoretical model of relative-income comparisons calibrated to data on national poverty lines. Both bounds indicate falling global poverty incidence, but more slowly for the upper bound. Either way, the developing world has a higher poverty incidence but is making more progress against poverty than the developed world.
Keywords: Global Poverty; Welfare Measures; Relative Income; Poverty Lines
JEL Codes: I32
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| relative income comparisons (D31) | individual welfare (I30) |
| mean income (D31) | upper bound of global poverty measure (I32) |
| national income levels (F40) | upper bound of global poverty measure (I32) |
| poverty incidence (I32) | upper bound of global poverty measure (I32) |
| absolute poverty (I32) | national poverty lines (I32) |
| national poverty lines (I32) | welfare levels (I30) |
| economic growth (O49) | welfare levels (I30) |
| inequality (D63) | national poverty lines (I32) |
| inequality (D63) | lower national comparison mean (C29) |