Growth, Poverty, and Income Distribution Chapter 5

The Growth Controversy: Five Critical Questions n What is the extent of relative inequality, and how is this related to the extent of poverty? n Who are the poor? n Who benefits from economic growth? n Does rapid growth necessarily cause greater income inequality? n What policies can reduce poverty?

Some Basic Concepts n Size distributions

Some Basic Concepts n Size distributions n Lorenz curves

Some Basic Concepts n Size distributions n Lorenz curves n Dualistic development: some stylized typologies

Some Basic Concepts n Size distributions n Lorenz curves n Dualistic development: some stylized typologies n Gini coefficients

Some Basic Concepts n Size distributions n Lorenz curves n Dualistic development: some stylized typologies n Gini coefficients n Functional distributions

Inequality and Absolute Poverty in Third World Countries: A Review of the Evidence n Inequality: variations among countries

Inequality and Absolute Poverty in Third World Countries: A Review of the Evidence n Inequality: variations among countries n Absolute poverty: extent and magnitude

Inequality and Absolute Poverty in Third World Countries: A Review of the Evidence n Inequality: variations among countries n Absolute poverty: extent and magnitude n The human poverty index

Economic Characteristics of Poverty Groups n Rural Poverty

Economic Characteristics of Poverty Groups n Rural poverty n Women and poverty n Ethnic minorities, indigenous populations, and poverty

Income Levels, Growth, and the Extent of Poverty n The Kuznets hypothesis

Income Levels, Growth, and the Extent of Poverty n The Kuznets hypothesis n Economic growth and inequality

Redefining Development Goals: Growth With Improved Income Distribution n Growth is necessary, but not sufficient for poverty reduction n Objective: the generation of broad- based income growth while targeting the incomes of particular groups

The Role of Economic Analysis: Redistribution From Growth n Growth versus income distribution n GNP growth as a biased index of national development and well-being n Constructing a poverty-weighted index of social welfare

The Role of Economic Analysis: Redistribution From Growth n Growth versus income distribution n GNP growth as a biased index of national development and well-being n Constructing a poverty-weighted index of social welfare n Combining the economics of growth and distribution

The Range of Policy Options n Areas of intervention n Policy options –changing relative factor prices –asset redistribution –progressive taxation –transfer payments and public provision of goods and services n The need for a “package” of policies

Concepts for Review n Absolute poverty n Asset ownership n Character of economic growth n Deciles n Disposable income n Distributive share index n Equal-weights index n Factor-price distortions n Factor share distribution of income n Factors of production n Functional distribution of income

Concepts for Review, cont’d n Gini coefficient n GNP growth rate index n Headcount index n Human Poverty Index n Income inequality n Indirect taxes n Kuznets curve n Land reform n Lorenz curve n Personal distribution of income n Poverty gap n Poverty-weighted index n Progressive income tax

Concepts for Review, cont’d n Public consumption n Quintiles n Redistribution policies n Regressive tax n Size distribution of income n Subsidy