Poverty Global Practice, The World Bank
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Poverty Global Practice, The World Bank
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Last updated January 31, 2023
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Publication(World Bank, Washington, DC, 2013-02) Allwine, Melanie ; Rigolini, Jamele ; López-Calva, Luis F.Adopted on September 8, 2000, the United Nations Millennium Declaration stated as its first goal that countries "...[further] resolve to halve, by the year 2015, the proportion of the world's people whose income is less than one dollar a day and the proportion of people who suffer from hunger..." Each country committed to achieve the stated goal, regardless of their initial conditions in terms of poverty and inequality levels. This paper presents a framework to quantify how much initial conditions affect poverty reduction, given a level of "effort" (growth). The framework used in the analysis allows for the growth elasticity of poverty to vary according to changes in the income distribution along the dynamic path of growth and redistribution, unlike previous examples in the literature where this is assumed to be constant. While wealthier countries did perform better in reducing poverty in the last decade and a half (1995-2008), assuming equal initial conditions, the situation reverses: the paper finds a statistically significant negative relation between initial average income and poverty reduction performance, with the poorest countries in the sample going from the worst to the best performers in poverty reduction. The analysis also quantifies how much poorer countries would have scored better, had they had the same level of initial average income as wealthier countries. The results suggest a remarkable change in poverty reduction performance, in addition to the reversal of ranks from worst to best performers. The application of this framework goes beyond poverty targets and the Millennium Development Goals. Given the widespread use of targets to determine resource allocation in education, health, or decentralized social expenditures, it constitutes a helpful tool to measure policy performance toward all kinds of goals. The proposed framework can be useful to evaluate the importance of initial conditions on outcomes, for a wide array of policies.
Publication(World Bank, Washington, D.C, 2013-07) Lustig, Nora ; Lopez-Calva, Luis F. ; Ortiz-Juarez, EduardoInequality in Latin America unambiguously declined in the 2000s. The Gini coefficient fell in 16 of the 17 countries where there are comparable data, and the change was statistically significant for all of them. Existing studies point to two main explanations for the decline in inequality: a reduction in hourly labor income inequality, and more robust and progressive government transfers. Available evidence suggests that it is the skill premium -- or, more precisely, the returns to primary, secondary, and tertiary education vs. no schooling or incomplete primary schooling -- that drives the decline in hourly labor income inequality. The causes behind the decline in returns to schooling, however, have not been unambiguously established. Some studies find that returns fell because of an increase in the supply of workers with more educational attainment; others, because of a shift in demand away from skilled labor.
Publication(World Bank, Washington, DC, 2013-12) Enamorado, Ted ; López-Calva, Luis F. ; Rodriguez Castelan, CarlosScholars have often argued that crime deters growth, but the empirical literature assessing such effect is scarce. By exploiting cross-municipality income and crime data for Mexico -- a country that experienced a high increase in crime rates over the past decade -- this study circumvents two of the most common problems faced by researchers in this area. These are: (i) the lack of a homogenous, consistently comparable measure of crime and (ii) the small sample problem in the estimation. Combining income data from poverty maps, administrative records on crime and violence, and public expenditures data at the municipal level for Mexico (2005-2010), the analysis finds evidence indicating that drug-related crimes indeed deter growth. It also finds no evidence of a negative effect on growth from crimes unrelated to drug trafficking.
Teenage Pregnancy and Opportunities in Latin America and the Caribbean : On Teenage Fertility Decisions, Poverty and Economic Achievement(World Bank, Washington, DC, 2012) Azevedo, Joao Pedro ; Favara, Marta ; Haddock, Sarah E. ; Lopez-Calva, Luis F. ; Muller, Miriam ; Perova, ElizavetaThe pregnancy project sought to expose the existence, and challenge the validity, of stereotypes about Hispanic women. The charade explored the underlying motivations of the many who responded with a wide range of reactions. The specific objectives of this regional study are: to establish a thorough description of the magnitude of the issue and its potential implications for social advancement; to advance the understanding of the risk factors, motivations and impacts at the household level-as a determinant of poverty and a cause of intra-and intergenerational poverty traps; to illuminate the coping mechanisms and their individual and social implications; to highlight the gender-related issues that have historically provoked asymmetric costs to boys and girls; and to provide elements that support specific policies on this matter. In the last decade, Latin America and the Caribbean (LAC) have been moving in the right direction and the region has experienced important gains in gender equality of endowments (assets) and economic opportunities. In most LAC countries, girls have been achieving gender parity in primary school enrollment and even outperforming boys at the secondary and tertiary level. The present report reviews the factors associated with teenage pregnancy and early childbearing and builds a framework to explore these issues systematically, towards the design of effective policy interventions in LAC. Teen pregnancy and early childbearing remain a challenge in the region, particularly given the association of these phenomena with poverty and lack of opportunities, and the concern that it may prevent women from taking full advantage of their human development assets and opportunities. The main message of the report is that poverty and lack of opportunities are key factors associated to early childbearing.
Publication(Washington, DC: World Bank, 2014-04-09) Bussolo, Maurizio ; Lopez-Calva, Luis F.The World Bank has recently defined two strategic goals: ending extreme poverty and boosting shared prosperity. Shared prosperity is measured as income growth among the bottom 40 percent of the income distribution in the population. The two goals should be achieved in a way that is sustainable from economic, social, and environmental perspectives. Shared Prosperity: Paving the Way in Europe and Central Asia focuses on the second goal and proposes a framework that integrates both macroeconomic and microeconomic elements. The macro variables, particularly changes in relative prices, affect income growth differentially along the income distribution; at the same time, the microeconomic distribution of assets at the bottom of the distribution determines the capacity of the bottom 40 to take advantage of the macroeconomic environment and contribute to overall growth. Growth and the incidence of growth are thus understood as jointly determined processes. Besides this integration, the main input of the framework is the finding that the trade-off between growth and equity may be an issue only in the short run. Over the long run, redistribution policies that increase the productive capacity of the bottom 40 percent enhance the overall growth potential of the economy. This report considers shared prosperity in Europe and Central Asia and concludes that the performance in sharing prosperity during the period 2000–10 was good, on average, but heterogeneous across countries and that sustainability is unclear. It also describes examples of the application of the framework to selected countries in the region. Finally, the report provides a tool to structure the policy discussion around the goal of shared prosperity and explains that specific policy links associated with the goal can be established only after a thorough analysis of the country-specific context.
Publication(World Bank, Washington, DC, 2012) Lopez-Calva, Luis F. ; Rocha, SoniaAfter decades of persistent disparities, inequality in Brazil has fallen steadily over the last fifteen years. This robust rate of decline has surpassed the pace of the Latin American region as a whole, and is taking place as inequality rises in several rapid-growth emerging economies in other regions. This document examines the recent trend in income inequality in Brazil, its key policy drivers and some of the challenges ahead. It aims at capturing some of the lessons behind Brazil?s experience to share with other economies in the region and beyond.
Publication(Washington, DC: World Bank, 2013) Ferreira, Francisco H.G. ; Messina, Julian ; Rigolini, Jamele ; López-Calva, Luis-Felipe ; Lugo, Maria Ana ; Vakis, RenosAfter decades of stagnation, the size of Latin America's middle class recently expanded to the point where, for the first time ever, the number of people in poverty is equal to the size of the middle class. This volume investigates the nature, determinants and possible consequences of this remarkable process of social transformation. We propose an original definition of the middle class, tailor-made for Latin America, centered on the concept of economic security and thus a low probability of falling into poverty. Given our definition of the middle class, there are four, not three, classes in Latin America. Sandwiched between the poor and the middle class there lies a large group of people who appear to make ends meet well enough, but do not enjoy the economic security that would be required for membership of the middle class. We call this group the 'vulnerable'. In an almost mechanical sense, these transformations in Latin America reflect both economic growth and declining inequality in over the period. We adopt a measure of mobility that decomposes the 'gainers' and 'losers' in society by social class of each household. The continent has experienced a large amount of churning over the last 15 years, at least 43% of all Latin Americans changed social classes between the mid 1990s and the end of the 2000s. Despite the upward mobility trend, intergenerational mobility, a better proxy for inequality of opportunity, remains stagnant. Educational achievement and attainment remain to be strongly dependent upon parental education levels. Despite the recent growth in pro-poor programs, the middle class has benefited disproportionally from social security transfers and are increasingly opting out from government services. Central to the region's prospects of continued progress will be its ability to harness the new middle class into a new, more inclusive social contract, where the better-off pay their fair share of taxes, and demand improved public services.
Publication(World Bank, Washington, DC, 2012-05) Azevedo, Joao Pedro ; Lopez-Calva, Luis F. ; Perova, ElizavetaTeenage pregnancy has been a cause of concern for policy makers because it is associated with a complex and often adverse social context for women. It is seen as the cause of lower social and economic achievement for mothers and their children, and as the potential determinant of inter-generational poverty traps. However, the question of whether pregnancy -- and the subsequent rearing of a child -- is actually the trigger of poverty, higher dependence on social welfare and/ or other undesirable social and economic consequences has not been studied in developing countries with enough rigor to establish a causal relation. This paper follows a methodology previously applied in the United States, using Mexican data from the National Survey of Demographic Dynamics, to exploit information about miscarriages as an instrument to identify the long-term consequences of early child bearing. Thus, the paper takes the advantage of a natural experiment: it compares the outcomes of women who became pregnant in adolescence, and gave birth, to outcomes of women who became pregnant in adolescence and miscarried. This approach only allows for estimating the costs of adolescent childbearing for teenagers in a risk group, that is, teenagers who are likely to experience a pregnancy. The results are consistent with findings in the United States, suggesting that, contrary to popular thinking, adolescent childbearing does not hamper significantly the lifelong opportunities of the young mothers. Actually, women who gave birth during their adolescence have on average 0.34 more years of education, and are 21 percentage points more likely to be employed, compared with their counterparts who miscarried. The results also suggest, however, greater dependence on social welfare among women who gave birth during adolescence: their social assistance income is 36 percent higher, and they are more likely to participate in social programs, especially the conditional cash transfer program Oportunidades.
Publication(World Bank, Washington, DC, 2012-10) Lustig, Nora ; Lopez-Calva, Luis F. ; Ortiz-Juarez, EduardoBetween 2000 and 2010, the Gini coefficient declined in 13 of 17 Latin American countries. The decline was statistically significant and robust to changes in the time interval, inequality measures, and data sources. In-depth country studies for Argentina, Brazil, and Mexico suggest two main phenomena underlie this trend: a fall in the premium to skilled labor and more progressive government transfers. The fall in the premium to skills resulted from a combination of supply, demand, and institutional factors. Their relative importance depends on the country.
Publication(World Bank, Washington, DC, 2014-06) Enamorado, Ted ; López-Calva, Luis-Felipe ; Rodriguez Castelan, Carlos ; Winkler, HernánThe relationship between income inequality and crime has attracted the interest of many researchers, but little convincing evidence exists on the causal effect of inequality on crime in developing countries. This paper estimates this effect in a unique context: Mexico's Drug War. The analysis takes advantage of a unique data set containing inequality and crime statistics for more than 2,000 Mexican municipalities covering a period of 20 years. Using an instrumental variable for inequality that tackles problems of reverse causality and omitted variable bias, this paper finds that an increment of one point in the Gini coefficient translates into an increase of more than 10 drug-related homicides per 100,000 inhabitants between 2006 and 2010. There are no significant effects before 2005. The fact that the effect was found during Mexico's Drug War and not before is likely because the cost of crime decreased with the proliferation of gangs (facilitating access to knowledge and logistics, lowering the marginal cost of criminal behavior), which, combined with rising inequality, increased the expected net benefit from criminal acts after 2005.