Other Poverty Study

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http://hdl.handle.net/10986/2119

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The Effects of Fiscal Policy on Inequality and Poverty in The Gambia

(World Bank, Washington, DC, 2022-01) Carrasco Nunez, Haydeeliz ; Jawara, Hamidou ; Meyer, Moritz

The overall objective of this study is to assess the impact of the fiscal system on poverty and inequality in The Gambia as of 2015. The study presents the first empirical evidence on the distributional impacts of taxes and social spending on households in The Gambia. Furthermore, it also evaluated the distributional effects of recent fiscal policy reforms in The Gambia. The assessment was based on the Commitment to Equity (CEQ) Methodology with data from the Integrated Household Survey of 2015 and fiscal administrative data from various government ministries, departments, and agencies. The analyses show that while the fiscal system in The Gambia reduces inequality by 1.2 Gini points, it increases the national poverty headcount by 5.3 percentage points as all households (including the poor) are net payers into the fiscal system. Most of the inequality reduction is due to primary education benefits, with a marginal contribution of 0.44 Gini points, and most of the poverty increase is due to custom duties and VAT with marginal contributions of -2.63 percentage points and -2.07 percentage points, respectively. Simulating the effect of changes in the structure of personal income tax (PIT) and the government’s ongoing absorption of the School Feeding Program indicate that these changes reduce inequality but do not offset the impoverishing effect of the fiscal system. Hence, more cashable transfer programs targeted to the poor are needed to offset the impoverishing effect of indirect taxes and make the fiscal system more pro-poor.
The Gradual Rise and Rapid Decline of the Middle Class in Latin America and the Caribbean

(World Bank, Washington, DC, 2021-05-20) World Bank

Latin America and the Caribbean (LAC) reported over 30 million Coronavirus (COVID-19) cases and around 960,000 deaths as of May 2021. Official tracking data shows that Brazil, Colombia, and Argentina have the highest number of reported cases throughout LAC, which in turn is the region with among the highest numbers across all developing regions. Moreover, Brazil is the third-worst affected country worldwide, after the United States and India, with approximately 15.4 million infections. Dramatic declines in economic activity are expected throughout the LAC region due to the global pandemic. Unfortunately, many LAC countries entered the crisis with low potential economic growth and high levels of inequality, following the region’s recent period of stagnant growth. The 2020 COVID-19 crisis will likely reverse in a short time frame many of the social gains that took decades to materialize in Latin America and the Caribbean. In the past two decades, the region has seen a reduction in the number of people living in poverty by nearly half and an increase in the size of its middle class. Income inequality also decreased, as income growth has been primarily pro-poor in recent years. Despite variations across countries, most have experienced positive welfare gains since the early 2000s. However, the growth deceleration of 2014–2019 coupled with the dramatic fall in activity caused by the COVID-19 crisis will negatively impact living standards and well-being across the region. Poverty projections for 2020 suggest that the number of the poor increased in most LAC countries. Brazil, however, implemented a generous emergency transfer program that benefited almost 67 million people and lifted millions out of poverty. As a result, poverty in the LAC region is expected to decline marginally from 22 percent in 2019 to 21.8 percent in 2020. Had no mitigation measures been implemented, the region may instead have seen 28 million new poor in 2020.
Slovakia Catching-Up Regions: Prešov Region - Key Development Dynamics

(World Bank, Washington, DC, 2019-01-01) World Bank Group ; European Commission

Though the European Union (EU) is a development conversion machine for national economies, it is less so for subnational regions. EU accession countries have been catching up to regional averages in terms of economic development since they joined the union. The economic success of the accession countries reduced disparities in national GDP per capita, but since 2005 both EU-wide and in most individual countries the gap between most- and least-developed subnational regions has been widening. This suggests that in accession countries growth, and its benefits are concentrated in a few regions, mostly large cities and national capitals, while many areas fall further behind. Slovakia illustrates the difference between national convergence and subnational divergence. While Slovakia is considered one of the EU’s economic stars, it also has some of the union’s highest regional disparities. Slovakia’s impressive economic gains over the last two decades were led by Bratislava region, which in 2016 became the sixth richest region in the EU by GDP per capita. On the other hand, Eastern Slovakia, which includes Prešov, is among the poorest regions in the EU. This report on the Prešov region of Slovakia, reviews patterns of regional development in Slovakia, discusses opportunities and challenges of the Prešov region, and recommends policy actions for the region.
Fiscal Incidence Analysis for Kenya: Using the Kenya Integrated Household Budget Survey 2015-16

(World Bank, Washington, DC, 2018-06-29) World Bank

Kenya has made satisfactory progress in reducing poverty and inequality in recent years. Economic growth in Kenya between 2005-06 and 2015-16 averaged around 5.3 percent, exceeding the average growth of 4.9 percent observed for Sub-Saharan Africa. This robust economic growth resulted in a reduction in poverty, whether measured by the national or international poverty line. The proportion of the population living beneath the national poverty line fell from 46.8 percent in 2005-06 to 36.1 percent in 2015-16, showing a modest improvement in the living standards of the Kenyan population. Similarly, poverty under the international poverty line of US$ 1.90 a day declined from 43.6 percent in 2005-06 to 35.6 percent in 2015-16. At this level, poverty in Kenya is below the average in sub-Saharan Africa and is amongst the lowest in the East African Community (World Bank, 2018b). However, the proportion of the population living in poverty remains comparatively high in Kenya and the rate at which growth translated into poverty reduction was lower than elsewhere. At twice the average, Kenya’s poverty rate is still high for a lower-middle income country, a group that Kenya joined only in 2015. In addition, the Kenya’s growth elasticity of poverty reduction, the percentage reduction in the poverty rate associated with a one-percent increase in mean per capita income is only 0.57, lower than in Tanzania, Ghana, or Uganda (World Bank, 2018b). This leads to the obvious question of what can be done to make economic growth more pro-poor in Kenya. This study assesses the distributional consequences of Kenya’s system of taxes and transfers, covering 60 percent of revenue and between 25 and 30 percent of government spending. The analysis of fiscal incidence and distributional consequences of Kenya’s tax and transfer system is an important input for designing pro-poor policies and potentially for influencing the rate at which economic growth translates into poverty reduction. In this study, direct taxes and transfers, indirect taxes (VAT and excise duties), as well as public health and education spending are assessed in terms of their distributional impacts. Overall, these taxes and transfers account for about 60 percent of revenue and between 25 and 30 percent of government spending.
Rethinking Lagging Regions: Using Cohesion Policy to Deliver on the Potential of Europe's Regions

(World Bank, Washington, DC, 2018) Farole, Thomas ; Goga, Soraya ; Ionescu-Heroiu, Marcel

As the World Bank’s 2012 Golden Growth report emphasized, the European Union, since its founding, has been a ‘convergence machine,’ generating wealth and a higher quality of life for the poorest in the 28 EU member states. More recently, the Growing United report highlighted that while the convergence machine still works, it is not working for everyone. And among the fault lines emerging in the convergence machine, regional inequality represents a potent threat to Europe’s economic well-being, and to its social and political cohesion. In this context, Rethinking Lagging Regions highlights the nature and implications of regional inequalities in Europe and recommends how cohesion policy can be leveraged to maximize its impact on lagging regions, and on the businesses and people in these regions. The report has several key messages: regional inequalities are high and likely to rise; Europe’s lagging regions are going in opposite directions, but face common challenges; cohesion policy can maximize its impact on lagging regions by explicitly targeting regional potential and equality of opportunity rather than convergence; cohesion policy priorities can be rebalanced to help deliver on regional potential; and delivery of regional policy needs to engage ever more deeply at the ground level. This report aims to contribute to the debate on the future of cohesion policy, with a specific focus on lagging regions. It calls for a further shift in the objectives of cohesion policy towards an increasingly ‘region-centered’ approach that aims to maximize potential in all regions, while seeking convergence of opportunities for individuals, no matter where they live.
Convergence without Equity: A Closer Look at Spatial Disparities in Russia

(World Bank, Washington, DC, 2017-06) World Bank Group

Addressing regional disparities is key to unlocking Russia’s potential to achieve stronger gains in growth and equity outcomes as well as to improve its institutional environment. While spatial disparities have been an important policy concern in Russia for a long time, inequalities across its vast territory remain stark. This report explores the current state of regional disparities at the macro and micro-level, updating existing literature to reflect recent trends and providing new insights into household-level drivers of welfare. The report stresses that addressing spatial disparities does not necessary imply “balancing” growth across a geographic territory – but rather focusing on creating opportunities for all people, regardless of where they live.
Does Fiscal Policy Benefit the Poor and Reduce Inequality in Namibia?

(World Bank, Washington, DC, 2017-06) Namibia Statistics Agency ; World Bank

Reducing poverty and inequality continues to be an important national priority in Namibia. Vision 2030 – the country’s guiding development strategy – has a subordinate vision that points to several goals: “Poverty is reduced to the minimum, the existing pattern of income-distribution is equitable and disparity is at the minimum.” Vision 2030 is being implemented via a series of five-year National Development Plans, with the current National Development Plan IV (NDP4) covering 2012 through to 2017. NDP4 sets specific numerical targets. One is reducing the incidence of extreme poverty to less than 10 percent of individuals by the end of FY2016/17, measured at the national lower bound poverty line of N$277.54 in 2009/10. This report demonstrates that Namibia’s progressive income tax and generous social spending programs substantially reduce poverty and inequality, but the analysis also underscores the limits of what redistributive fiscal measures alone can accomplish. The economy must ultimately create more jobs for the poorest members of society to change the underlying distribution of what might be called “pre-fiscal” income; i.e., the income before households pay taxes and receive benefits from social programs. This will require structural transformation through greater investment in activities that create employment for unskilled workers and offer the potential for continuous productivity increases. This report aims to measure the effectiveness of these efforts and draws comparisons to the experiences of other countries. It estimates how major taxes and social spending programs affect individual incomes. It then assesses who benefits from or bears the burden of each instrument and by how much. This way, the analysis estimates the contribution of each instrument to reducing the poverty headcount and the Gini coefficient, a standard measure of inequality. The analysis provides evidence that can shape public debates over government spending and the design of social programs.
The Distributional Consequences of Increasing Tobacco Taxes on Colombia’s Health and Finances: An Extended Cost-Effectiveness Analysis

(World Bank, Washington, DC, 2017) James, Erin ; Saxena, Akshar ; Franco Restrepo, Camila ; Llorente, Blanca ; Vecino Ortiz, Andrés ; Villar Uribe, Manuela ; Iunes, Roberto F. ; Verguet, Stéphane

Since 2008, when Colombia ratified the Framework Convention for Tobacco Control, available evidence of the impact of tobacco consumption, its health effects, and low tax revenues resulting from low tobacco taxation and prices had grown. By 2015, Colombia’s cigarette prices stood higher than only one other country in the region, and smoking had become the second leading modifiable risk factor for premature mortality. At that time, reduced fiscal revenues resulting from a sharp drop in oil prices, accompanied by growing demand for government spending arising partly from a change in legislation that increased health benefits for the lower socioeconomic population, led to a call for tax reform. The preparation of the document was accompanied by technical training, studies, and public fora with national and international experts, civil society, and academia presenting evidences and arguing for increased taxation to lead to a reduction in tobacco consumption and, in the future, a reduction in costs to the health system. The fora and open dialogue helped align strategies of the Ministry of Health and Social Protection, and the Ministry of Finance in presenting the reform to Congress for approval with a larger academic and civil society support for this measure. In December 2016, resulting from the above-mentioned efforts, Colombia passed a major tax increase on tobacco products with the goal of decreasing smoking and improving population health. While tobacco taxes are known to be highly effective in reducing the prevalence of smoking, they are often criticized as being regressive in consumption. This analysis attempts to assess the distributional impact (across income quintiles) of the new tax on selected health and financial outcomes.
Poverty and Shared Prosperity in Brazil's Metropolitan Regions: Taking Stock and Identifying Priorities

(Washington, DC, 2015-07-08) World Bank Group

In the 20th Century, Brazil rapidly urbanized and is now not only an urban nation but a metropolitan one. Brazils sprawling regioes metropolitanas (metropolitan regions, or RMs, which are municipal clusters) are now home to almost 50 million people and much of the countrys economic vitality. The RM spatial level and its supporting governmental institutions have thus become critical to Brazils future development. While challenges remain for tackling deprivation in rural areas, poverty in Brazil is now predominantly urban. More than six in 10 Brazilians in extreme poverty were living in urban settings as of 2012. Of these, over a fourth was concentrated in the 10 largest RMs.
Kyrgyz Republic: Food Prices and Household Welfare

(World Bank, Washington, DC, 2015-05-28) World Bank Group

Between 2008 and 2012 the urban/rural poverty divide substantially narrowed down, which was the result of relatively stable rural and rising urban poverty rates. Over the same period, food inflation spiked, whereby strong links between domestic and global price movements were observed owed to major import dependence on food. The high shares of consumption that households dedicate to food, especially among the poor, leave limited scope to deal with food price surges by economizing on non-food expenditure. Food price increases of 5, 10, and 15 percent are estimated to increase poverty rates between 2 and 5 percentage points in the baseline scenario.