Inequality and the MDGs

Kevin Watkins

Brookings institution

Why equity should be on the agenda

• There are limits to acceptable disparities – and we are beyond the limits (global + national)

• Equalizing opportunity is a fundamental human development goal

• Inequality is at the heart of MDG shortfalls

• Equity goals can focus policy and public debate on barriers to progress

• Social movements have put inequality on the agenda

Some of the challenges

• Divergence on which inequalities matter – Opportunity versus consumption

– Group versus individual

– Wealth based versus outcome based

• Disagreement on whether equity matters – Why worry about relative distribution when goals are absolute

• Agreeing on what we mean by equity – World Bank ‘bottom 40’ versus Save the Children

• Measurement and metrics – We know less than is usually claimed

– Current measurement tools not fit for purpose

The problem to be tackled

• Inequality is a brake on MDG progress – Income disparities are slowing poverty reduction

– Education progress – stalled because of unequal opportunity

– Differential decline in child death rates

• Interlocking disparities generate multiplier effects for disadvantage

• Failure to recognize that progress at the margins takes above-average effort

• Extreme inequality is self-perpetuating through policies and institutions

0%

10%

20%

30%

40%

50%

60%

70%

1995 2000 2005 2010 2015 2020 2025 2030

He

adco

un

t R

atio

Estimates (WB)

Baseline Projections

Baseline Growth & Declining Inequality

Baseline Growth & Worsening Inequality

2025 (mn) Baseline: 499

Declining inequality: 333 Worsening inequality: 769

2030 (mn) Baseline: 385

Declining inequality: 226 Worsening inequality: 697

World poverty trends – two scenarios to 2030

Source: Brookings 2013

Sub-Saharan Africa – two scenarios

0%

10%

20%

30%

40%

50%

60%

70%

1995 2000 2005 2010 2015 2020 2025 2030

He

adco

un

t R

atio

Estimates (WB)

Baseline Projections

Baseline Growth & Declining Inequality

Baseline Growth & Worsening Inequality

2025 (mn) Baseline: 352

Declining inequality: 295 Worsening inequality: 406

2030 (mn) Baseline: 319

Declining inequality: 219 Worsening inequality: 403

Source: Brookings 2013

Changes in share of national consumption by decile

-2

0

2

4

6

8

10

Ch

ange

in s

har

e o

f co

nsu

mp

tio

n c

on

tro

lled

by

each

dec

ile (

% p

oin

t)

Decile

Zambia (2002-06)

-2

0

2

4

6

8

10

Ch

ange

in s

har

e o

f co

nsu

mp

tio

n c

on

tro

lled

by

each

dec

ile (

% p

oin

t)

Decile

Nigeria (2003-09)

Source: Brookings 2013

Projected and actual change in poverty incidence

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

Pe

rce

nta

ge p

oin

t

Actual change (across two survey periods)

Change projected from initial distribution pattern

0.17 million

6.37 million

0.72 million

0.66 million

Ghana 1998-2005

Poverty fell but should have fallen

further

Tanzania 2000-2007

Poverty fell but should have fallen

further

Zambia 2000-2006

Poverty should have fallen but

increased

Nigeria 2003-2009

Poverty increased more than anticipated

Source: Brookings 2013

Changes in share of national consumption by decile

-2

0

2

4

6

8

10

Ch

ange

in s

har

e o

f co

nsu

mp

tio

n c

on

tro

lled

by

each

dec

ile (

% p

oin

t)

Decile

Zambia (2002-06)

-2

0

2

4

6

8

10

Ch

ange

in s

har

e o

f co

nsu

mp

tio

n c

on

tro

lled

by

each

dec

ile (

% p

oin

t)

Decile

Nigeria (2003-09)

Source: Brookings 2013

Disparities in education

• Progress has stalled because of failure to reach ‘the bottom 61 million’ and more

• Interaction of wealth, gender, location and ethnicity

• Risk factors include – Child labor

– Early marriage

– Disability

– Livelihood factors (e.g. pastoralism)

Richest 20%

Poorest 20%

Poor, rural Hausa girls

Rich, rural girls

Poor, urban boys

Poor, rural girls

Nigeria

Rural Hausa

Rich, urban boys

Urban

Rural

Urban

Rural

Rich, rural boys

C. A. R.

Chad

Bangladesh

Cameroon

Honduras

Indonesia

Bolivia

Cuba

Ukraine

14 A

vera

ge n

um

be

r o

f ye

ars

of

sch

oo

ling

(Age

gro

up

15

-17

ye

ars)

Education poverty

Extreme education poverty

3.3 years

6.4 years

3.5 years

9.7 years

0.5 years

10.3 years

2.6 years

0.3 years

Boys

Girls

6.7 years

10 years

Education disparities in Nigeria

The case of Nigeria

Source: UNESCO GMR

32.4

22.6

16.7

21.1 20.7

23.8 22.5

6.1 4.8

3.3

0

5

10

15

20

25

30

35

Cambodia(2005-2010)

Uganda(2006-2011)

Bangladesh(2007-2011)

Philippines(2003-2008)

Ghana(2003-2008)

Per

cen

tage

(%

)

Richest 20%

Poorest 20%

Source: Calculations based on DHS data

Decline in infant mortality: selected countries by wealth quintile across two DHS survey periods

Equity ‘stepping stone’ approach

• Absolute targets for 2030 are a strong guide to principles – but a weak guide to policy

• Interim equity goals as a catalyst

• ‘Stepping stone’ approach could include: – Halving by 2020 (and again by 2025) wealth-based disparities

in child survival and school attendance/completion

– Eliminating location-related gaps in access to water/sanitation

• Redistributive growth – Targets for share of the poor in any increment to growth

(average + x)

– Gini and Palma targets

Concluding thoughts

• Winning the argument for equity – Avoiding the fog of technicality

– Demonstrating the links to policies that are good for growth, transparency and equal opportunity

• Avoiding polarized debate – recognizing that there are no silver bullets

• Developing a shared research agenda – Strengthening the evidence base to show what equity targets

might look like in application

– Identifying the missing measurement tools