Ceriani, LidiaInchauste, GabrielaOlivieri, Sergio2015-11-052015-11-052015-10https://hdl.handle.net/10986/22877This paper quantifies the contributions to poverty reduction observed in Sri Lanka between 2002 and 2012/13. The methods adopted for the analysis generate entire counterfactual distributions to account for the contributions of demographics, labor, and non-labor incomes in explaining poverty reduction. The findings show that the most important contributor to poverty reduction was growth in labor income, stemming from an increase in the returns to salaried nonfarm workers and higher returns to self-employed farm workers. Although some of this increase in earnings may point to improvements in productivity, defined as higher units of output per worker, some of it may simply reflect increases in food and commodity prices, which have increased the marginal revenue product of labor. To the extent that there have been no increases in the volumes being produced, the observed changes in poverty are vulnerable to reversals if commodity prices were to decline significantly. Finally, although private transfers (domestic and foreign) helped to reduce poverty over the period, public transfers were not as effective. In particular, the reduction in the real value of transfers of the Samurdhi program during 2002 to 2012/13 slowed down poverty reduction.en-USCC BY 3.0 IGOAVERAGINGAGRICULTURAL SELF-EMPLOYMENTTAXESINCOME DISTRIBUTIONRENTWELFAREPRODUCTIVITY INCREASESEQUATIONSPOVERTY RATEMEASURESWAGE RATESOUTCOMESPOORMARGINAL REVENUEPOVERTYSAVINGSCONSUMPTION EXPENDITURESPURCHASING POWERPOVERTY LINESFINANCIAL CRISISEMPLOYMENT INCOMEPOVERTY LINECONSUMPTION DATAINEQUALITYGDPHOUSEHOLD CONSUMPTION PER CAPITAPOVERTY ASSESSMENTVALUE OF OUTPUTFARM ACTIVITIESCASH TRANSFERSFARM INCOMESHOUSEHOLD HEADSCENTRAL BANKCONSUMPTION PER CAPITAPOVERTY REDUCTIONTHEORYDAILY WAGEPRIVATE TRANSFERSREGIONSDECOMPOSITION METHODOLOGYHOUSINGINCOME GROWTHECONOMIC GROWTHFARM INCOME GROWTHPOVERTY INDICESENDOGENOUS VARIABLESUTILITYGROWTH RATENET INCOMEDISTRIBUTIONMEASUREMENTDEVELOPMENT POLICYDECLINE IN POVERTYTRANSFERSEMPLOYMENT SOURCESELF-EMPLOYMENTNATIONAL POVERTYHOUSEHOLD CONSUMPTIONHOUSEHOLD SIZEPOVERTY RATESTOTAL POVERTYDURABLE GOODSHUMAN CAPITALVARIABLESPOVERTY DYNAMICSIMPACT ON POVERTYBASE YEARLOTTERYVALUE ADDEDCASH RECEIPTSHOUSEHOLD INCOMEHOUSEHOLD INCOMESEMPLOYMENT STATUSREDUCTION IN POVERTYDIVIDENDSINCOME TAXESHOUSEHOLD HEADPER CAPITA CONSUMPTIONCOUNTERFACTUALCHOICEFOOD PRICEINSURANCECHANGES IN POVERTYPOVERTY GAPECONOMIC EQUILIBRIUMRURALGOODSCONSUMPTION AGGREGATEREVENUEECONOMIC INEQUALITYFOOD CONSUMPTIONWAGE DIFFERENTIALSPOVERTY INDICATORTRANSFERS IN KINDAGRICULTURAL WORKERSFARM SECTORFARM WORKERSINTERNATIONAL POVERTY LINESINDEX NUMBERSPOVERTY LEVELPOVERTY INDICATORSWAGE DISCRIMINATIONPOLITICAL ECONOMYFARM WORKREGIONAL VARIATIONSWAGE PREMIUMFARM INCOMEDEVELOPMENT ECONOMICSFARM HOUSEHOLDSFOOD PRICESREGIONCONFLICTINCOMEDOMESTIC LABORHOUSEHOLD WELFAREINTERNATIONAL POVERTY LINEFARMERSINVENTORYAGRICULTURETARGETINGPRODUCTIVITYBUDGET CONSTRAINTSPRICESNATIONAL POVERTY LINEVALUEINCOME GENERATIONACCESS TO FACILITIESFOOD CONSUMPTION DATAPOVERTY MEASURESPRICE INCREASESCONSUMPTIONWAGESTRADEPER CAPITA INCOMECONSUMER PRICE INDEXEXOGENOUS VARIABLESWorking PaperWorld Bank10.1596/1813-9450-7446