Welfare-Consistent Global Poverty Measures

By: Martin Ravallion ; Shaohua Chen
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.
JEL: I32
URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:23739&r=ltv
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