Measuring Poverty in a Multidimensional Perspective: a Review of Literature

Recent pioneer papers of Sen (1981, 1985, 1992) have emphasized that poverty is a multidimensional issue. Hence, it should be seen in relation to the lack of important "basic needs" or "basic capabilities". This recommendation has motivated many researchers to focus on the way multidimensional aspect of poverty should be measured and aggregated. This survey synthesizes the contribution of the main approaches to measuring poverty in its various dimensions to better understand the theoretical framework and the limitations of each. This should help one choose which approach to adopt based on the circumstances and the constraints of the study to be conducted.Multidimensional Poverty Measures, Robustness Analysis

On the Impact of Better Targeted Transfers on Poverty in Tunisia

This paper describes the effects of general food subsidies on poverty in Tunisia, as revealed by household survey data for 1990. The analysis indicates that the poorest certainly take advantage of this system, but at the price of considerable leakages to non-poor people and at a sizeable economic efficiency loss resulting from relative price distortions. Further, non-parametric estimations suggest that there are no commodities predominantly consumed by the poor. This implies that targeting by commodities is not an effective way to fight against poverty and so, it is unlikely that restructuring the current scheme would improve significantly the living standards of the less well-off members of society. We then investigate the impact on poverty of a more targeted transfer scheme, based on proxy means-tests, using an appropriate econometric technique to model it. Simulations show that this design would be more effective in reducing poverty than the use of general food subsidies. Finally, dominance tests show that this design would first-order-dominate food subsidies scheme within a range of poverty lines including all those estimated and generally used for Tunisia.Poverty, Targeting, Subsidies, Transfers

Comparing Multidimensional Poverty between Egypt and Tunisia

It is common to argue that poverty is a multidimensional issue. Yet few studies have included the various dimensions of deprivation to yield a broader and fuller picture of poverty. The present paper considers the multidimensional aspects of deprivation by specifying a poverty line for each aspect and combines their associated one-dimensional poverty-gaps into multidimensional poverty measures. An application of these measures to compare poverty between Egypt and Tunisia is illustrated using robustness analysis and household data from each country.Multidimensional poverty indices, Robustness analysis, Egypt, Tunisia

When is Economic Growth Pro-Poor? Evidence from Tunisia

Many empirical studies have shown that economic growth generally leads to a drop in poverty. These studies have also pointed out that a given growth rate is compatible with a large range of outcomes in terms of poverty reduction. This means that growth is more pro-poor in certain cases than in others. Using complete and partial poverty orderings, this paper suggests a measure which captures the extent to which economic growth is pro-poor. This measure decomposes poverty changes into two components: the relative variation in the average income of the poor and the relative variation in the overall inequality within the poor. Evidence from Tunisia shows that economic growth was to a large extent pro-poor during the last two decades.Poverty measurement, robustness analysis, economic growth, Tunisia

Poverty-Decreasing Indirect Tax Reforms: Evidence from Tunisia

This paper suggests a methodology to identify socially-desirable directions for poverty-alleviating tax reforms. The cost-benefit ratio of increasing any commodity-tax rate is derived from the minimization of a poverty measure subject to a revenue requirement for the government. Further, to avoid the arbitrariness of choosing a poverty line and a poverty measure, the search for a poverty-reducing tax reform is done "robustly", among other things by increasing progressively the ethical content of a pre-defined class of poverty measures. The methodology is illustrated using data from Tunisia. The results suggest that poverty could be dropped for a large class of poverty indices and a wide range of poverty lines by raising -at constant fiscal revenue- the subsidy rate on hard wheat and mixed oils and by decreasing the one on sugar and milk.Poverty alleviation, Indirect taxation, Targeting, Tunisia

Equity and Policy Effectiveness with Imperfect Targeting

We propose a general cost-of-inequality approach that jointly integrates horizontal and vertical equity criteria in the assessment of poverty alleviation programs, with the strength of each criterion being captured through its own inequity-aversion parameter. This contrasts with the assessment of poverty alleviation programs done with simple under-coverage and leakage ratios or with other methods that do not take into account the heterogeneity of the poor and that do not address directly the social benefits of achieving normative criteria. Our methodology is illustrated using Tunisian data and two alternative poverty alleviation policies. We find inter alia that the social ranking of commodity and socio-demographic targeting in Tunisia depends on the policymaker's comparative preference for vertical and horizontal equity.Poverty, Vertical Equity, Horizontal Inequity, Transfers, Targeting, Tunisia

When is Economic Growth Pro-Poor? Evidence from Tunisia

Many empirical studies have shown that economic growth generally leads to a drop in poverty. These studies have also pointed out that a given growth rate is compatible with a large range of outcomes in terms of poverty reduction. This means that growth is more pro-poor in certain cases than in others. Using complete and partial poverty orderings, this paper suggests a measure which captures the extent to which economic growth is pro-poor. This measure decomposes poverty changes into two components: the relative variation in the average income of the poor and the relative variation in the overall inequality within the poor. Evidence from Tunisia shows that economic growth was to a large extent-pro-poor during the last two decades

Decomposing Poverty Changes into Vertical and Horizontal Components

Variations in aggregate poverty indices can be due to differences in average poverty intensity, to changes in the welfare distances between those poor of initially unequal welfare status, and/or to emerging disparities in welfare among those poor of initially similar welfare status. This note uses a general cost-of-inequality approach that decomposes the total change in poverty into a sum of indices of each of these three components. This decomposition can serve inter alia to integrate horizontal and vertical equity criteria in the poverty alleviation assessment of social and economic programs. The use of these measures in briefly illustrated using Tunisian data.Poverty, Vertical Equity, Horizontal Equity, Targeting, Tunisia

A Comparison of the Poverty Impact of Transfers, Taxes and Market Income across Five OECD Countries

This paper compares the poverty reduction impact of income sources, taxes and transfers across five OECD countries. Since the estimation of that impact can depend on the order in which the various income sources are introduced into the analysis, it is done by using the Shapley value. Estimates of the poverty reduction impact are presented in a normalized and un-normalized fashion, in order to take into account the total as well as the per dollar impacts. The methodology is applied to data from the Luxembourg Income Study (LIS) database.poverty reduction, transfers, taxes, Shapley value, OECD countries