Growth, Poverty, and Income Distribution

Chapter 5

The Growth Controversy: Five Critical Questions What is the extent of relative inequality,

and how is this related to the extent of poverty?

Who are the poor? Who benefits from economic growth? Does rapid growth necessarily cause

greater income inequality? What policies can reduce poverty?

Some Basic Concepts

Size distributions

Some Basic Concepts

Size distributions Lorenz curves

Some Basic Concepts

Size distributions Lorenz curves Dualistic development: some stylized

typologies

Some Basic Concepts

Size distributions Lorenz curves Dualistic development: some stylized

typologies Gini coefficients

Some Basic Concepts

Size distributions Lorenz curves Dualistic development: some stylized

typologies Gini coefficients Functional distributions

Inequality and Absolute Poverty in Third World Countries: A Review of the Evidence

Inequality: variations among countries

Inequality and Absolute Poverty in Third World Countries: A Review of the Evidence

Inequality: variations among countries Absolute poverty: extent and magnitude

Inequality and Absolute Poverty in Third World Countries: A Review of the Evidence

Inequality: variations among countries Absolute poverty: extent and magnitude The human poverty index

Economic Characteristics of Poverty Groups Rural Poverty

Economic Characteristics of Poverty Groups Rural poverty Women and poverty Ethnic minorities, indigenous

populations, and poverty

Income Levels, Growth, and the Extent of Poverty The Kuznets hypothesis

Income Levels, Growth, and the Extent of Poverty The Kuznets hypothesis Economic growth and inequality

Redefining Development Goals: Growth With Improved Income Distribution

Growth is necessary, but not sufficient for poverty reduction

Objective: the generation of broad-based income growth while targeting the incomes of particular groups

The Role of Economic Analysis: Redistribution From Growth Growth versus income distribution GNP growth as a biased index of

national development and well-being Constructing a poverty-weighted index

of social welfare

The Role of Economic Analysis: Redistribution From Growth Growth versus income distribution GNP growth as a biased index of

national development and well-being Constructing a poverty-weighted index

of social welfare Combining the economics of growth and

distribution

The Range of Policy Options

Areas of intervention Policy options

– changing relative factor prices– asset redistribution– progressive taxation– transfer payments and public provision of

goods and services The need for a “package” of policies

Concepts for Review Absolute poverty Asset ownership Character of

economic growth Deciles Disposable income Distributive share

index

Equal-weights index Factor-price

distortions Factor share

distribution of income Factors of production Functional distribution

of income

Concepts for Review, cont’d

Gini coefficient GNP growth rate

index Headcount index Human Poverty Index Income inequality Indirect taxes Kuznets curve

Land reform Lorenz curve Personal distribution

of income Poverty gap Poverty-weighted

index Progressive income

tax

Concepts for Review, cont’d

Public consumption Quintiles Redistribution

policies

Regressive tax Size distribution of

income Subsidy