International Poverty Comparisons on Unit Record Data of Developing and Developed Countries (original) (raw)

2002, Australian Economic Papers

Cross country poverty comparisons on unit records have, rarely, involved both developing and developed countries. The present study attempts to fill this gap by comparing poverty across fourteen nations with diverse economic and demographic characteristics and at vastly different stages of economic development. The study contains evidence on (a) cross country variation in the equivalence scales estimated in the presence of both household size economies and adult/child relativities, (b) impact of demographic adjustment of the poverty line, that incorporate household size and composition changes, on the poverty rates, and (c) sensitivity of the poverty estimates and their rankings to the 'equivalence elasticity'. The study finds that country rankings based on per capita GNP bear very little resemblance with that based on the aggregate poverty rates. The latter hide substantial variation in the poverty estimates across different household types. I. I n t r o d u ct i o n With the World Development Report, 2000/2001, focussing on 'Poverty and Development', the subject is back on the main agenda of the World Bank and other multilateral agencies. The increasing availability, in recent years, of high quality micro expenditure data sets, in their original unit record form, has made possible meaningful cross country comparisons of poverty. Such comparisons are useful in keeping the poverty dimensions of a particular country in an international perspective. Not surprisingly, there exists a large literature on cross national poverty comparisons. Examples include Buhmann et al (1988), Ravallion et al (1991), Hanratty and Blank (1990) and Blackburn (1998). Of these, while the study by Ravallion et al (1991) deals only with developing countries, the others are restricted to developed countries. The present study extends these poverty comparisons to include simultaneously both developing and developed countries. The data sets involve countries spanning a wider range in the spectrum of economic development than considered in most previous studies. We build on our earlier study [Lancaster et al (1999a)] and extend it in, principally, three respects. First, we augment the earlier data sets by including, in the poverty comparisons, three additional countries at opposite ends of the spectrum of economic development. Second, instead of assuming identical equivalence scales across countries in adjusting for differences in family size and composition in the poverty calculations, we * The research for this paper was funded by an Australian Research Council (Large) grant. An earlier version was presented at the Annual Conference of Economists held in The Gold Coast in July, 2000. Helpful comments from the Conference participants and from two anonymous referees are, also, gratefully acknowledged. The disclaimer applies.