TodaroSmith_EconDev_ch05

7/24/2019 TodaroSmith_EconDev_ch05

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Copyright 2009 Pearson Addison-Wesley. All rights reserved.

Chapter 5

Poverty,Inequality, andDevelopent


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Copyright 2009 Pearson Addison-

Wesley. All rights reserved. 5-2

!he "ro#th Controversy$%even Criti&al 'uestions

What is the e(tent o) relative inequality, andho# is this related to the e(tent o) poverty*

Who are the poor* Who +ene)its )ro e&onoi& gro#th*

Does rapid gro#th ne&essarily &ause

greater in&oe inequality*

Do the poor +ene)it )ro gro#th*


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!he "ro#th Controversy$%even Criti&al 'uestions

Are high levels o) inequality al#ays +ad*

What poli&ies &an redu&e poverty*


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easuring Inequality andPoverty

easuring Inequality

%ie distri+utions quintiles, de&iles/

oren &urves "ini &oe))i&ients

1un&tional distri+utions


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!a+le .3 !ypi&al %ie Distri+ution o)Personal In&oe in a Developing Country +yIn&oe %hares4'uintiles and De&iles


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1igure .3 !he oren Curve


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1igure .2 !he "reater the Curvature o) theoren ine, the "reater the 5elativeDegree o) Inequality


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Wesley. All rights reserved. 5-

1igure .6 7stiating the "iniCoe))i&ient


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1igure .8 1our Possi+le orenCurves


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Wesley. All rights reserved. 5-!0

1igure . 1un&tional In&oeDistri+ution in a aret 7&onoy$ An

Illustration


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easuring A+solute Poverty

:ead&ount Inde(

!otal poverty gap

WhereYpis the a+solute poverty line

Yiis in&oe o) person I

TPG Y Y p iiH

= = " #!


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1igure .; easuring the !otalPoverty "ap


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Average poverty gap

Where: is nu+er o) persons

!P" is total poverty gap

APGTPG

H=


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1oster-"reer-!hor+e&e easure

!

! H p i

i p

Y YP

N Y

=

=


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easuring Inequality andPoverty$


!he :uan Poverty Inde( :PI/


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Poverty, Inequality, and %o&ialWel)are

What/

odern se&tor enlargeent see 1igure .9/


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1igure .= Iproved In&oeDistri+ution under the !raditional-

%e&tor 7nri&hent "ro#th !ypology


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Wesley. All rights reserved. 5-!

1igure .> Worsened In&oeDistri+ution under the odern-%e&tor

7nri&hent "ro#th !ypology


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1igure .9 Crossing oren Curves inthe odern-%e&tor 7nlargeent

"ro#th !ypology


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?unets< inverted-@ hypothesis


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Wesley. All rights reserved. 5-2!

1igure .30 !he Inverted-@B?unets Curve


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!a+le .2 %ele&ted In&oeDistri+ution 7stiate


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!a+le .6 In&oe and Inequality in%ele&ted Countries


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1igure .33 ?unets Curve #ithatin Aeri&an Countries Identi)ied


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1igure .32 Plot o) Inequality Data)or %ele&ted Countries


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"ro#th and inequality


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1igure .36 ong-!er 7&onoi&"ro#th and In&oe Inequality, 39;-

399;


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1igure .38 Change in Inequality in%ele&ted Countries, #ith or #ithout

"ro#th


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A+solute Poverty$ 7(tent andagnitude

7(tree Poverty

3-a-day head&ount sho#s soe progress

In&iden&e o) e(tree poverty is uneven


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!a+le .8 5egional PovertyIn&iden&e, 2008


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!a+le . Poverty In&iden&e in%ele&ted Countries


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!a+le . Poverty In&iden&e in%ele&ted Countries &ontinued/


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A+solute Poverty$ 7(tent andagnitude

"ro#th and poverty Ipa&t on per &apita gro#th

iited saving and investent +y ri&h in poor&ountries

Ipa&t on produ&tivity

a& o) hoe deand

In&entives )or pu+li& parti&ipation in thedevelopent pro&ess


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7&onoi& Chara&teristi&s o)Poverty "roups

5ural Poverty

Woen and poverty %ee &hapter > )or

ore detail/ 7thni& inorities, indigenous populations,

and poverty


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!a+le .; Poverty$ 5ural versus@r+an


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!a+le .= Indigenous Poverty inatin Aeri&a


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!he 5ange o) Poli&y ptions$%oe Easi& Considerations

Areas o) intervention

Altering the )un&tional distri+ution

itigating the sie distri+ution oderating redu&ing/ the sie distri+ution at

upper levels

oderating in&reasing/ the sie distri+ution atlo#er levels


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!he 5ange o) Poli&y ptions$%oe Easi& Considerations

Poli&y options

Changing relative )a&tor pri&es

Progressive redistri+ution o) asset o#nership Progressive ta(ation

!rans)er payents and pu+li& provision o)

goods and servi&es


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%uary and Con&lusions$ !heFeed )or a Pa&age o) Poli&ies

Poli&ies to &orre&t )a&tor pri&e distortions

Poli&ies to &hange the distri+ution o) assets,

po#er, and a&&ess to edu&ation andasso&iated eployent opportunities

Poli&ies o) progressive ta(ation and dire&tedtrans)er payents

Poli&ies designed to +uild &apa+ilities andhuan and so&ial &apital o) the poor


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Case %tudy$ Eangladesh


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Con&epts )or 5evie#

A+solute poverty

Asset o#nership

Chara&ter o) e&onoi&gro#th

De&iles

Disposa+le in&oe 7lasti&ity o) )a&tor

su+stitution

1a&tor-pri&e distortions

1a&tor sharedistri+ution o) in&oe

1a&tors o) produ&tion

1oster-"reer-!hor+e&e 1"!/ inde(

1un&tional distri+utiono) in&oe


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Con&epts )or 5evie# &ont


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Con&epts )or 5evie# &ont


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Appendi( .3$ Appropriate !e&hnology and7ployent "eneration$ !he Pri&eIn&entive odel

Choi&e o) te&hniques

1a&tor Pri&e distortions and appropriate

te&hnology Possi+ilities o) a+or-Capital su+stitution


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1igure A.3.3 Choi&e o) !e&hniques$!he Pri&e In&entive odel


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Appendi( .2$ !he Ahlu#alia-Chenery Wel)are Inde(

Constru&ting poverty-#eighted inde( o)so&ial #el)are

! +l A 2 3 I Di t i+ ti d


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!a+le A.2.3 In&oe Distri+ution and"ro#th in the !#elve %ele&ted

Countries

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