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Standard Measures of Poverty and the Poor Standard measures of inequality and poverty are by definition anonymous Could standard measures be leaving out important information on how the poor are affected by “events” (e.g., fiscal policy, rising food prices, trade liberalization, growth, etc.)? =>YES!!! 3
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Fiscal Incidence, Mobility and the Poor: a New Approach
Nora LustigTulane University
CGD and IAD
Symposium on Ultra-Poverty Institute for International Economic Policy,
GWUMarch 22-23, 2012
Washington, DC
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Acknowledgements
• Joint work with Satya Chacravarty and Nachiketa Chattopadhyay to develop theoretical properties
• Joint work with Claudiney Pereira and Sean Higgins on fiscal incidence in Brazil
• Part of the Commitment to Equity project/CIPR and Economics Department at Tulane and Inter-American Dialogue
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Standard Measures of Poverty and the Poor
• Standard measures of inequality and poverty are by definition anonymous
• Could standard measures be leaving out important information on how the poor are affected by “events” (e.g., fiscal policy, rising food prices, trade liberalization, growth, etc.)?
=>YES!!!
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Fiscal Policy and the Poor
• Poverty declines• Income distribution becomes less unequal• The incidence of net taxes can be
progressive • However, some of the poor become poorer=>>> Standard Measures Don’t Capture the “Losing Poor”
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New Concept: Fiscal Mobility Matrix
• Directional mobility literature (Fields, 2008) provides a useful framework
• One can identify which individuals are adversely/favorably impacted by a policy or an event
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New Concept: Fiscal Mobility Matrix
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New Concept: Fiscal Mobility Matrix
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New Concept: Fiscal Mobility Matrix
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New Concept: Fiscal Mobility Matrix
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An Illustration: Brazil
• Extreme Poverty (including severity of poverty) declines; Ultra-poverty declines• Inequality declines• First three deciles are net receivers of
transfers• Reynolds-Smolensky indicates taxes
overall are progressive
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POVERTY DECLINES
12PROGRESSIVE
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An Illustration: Brazil
• HOWEVER:
Around 18 (5) percent of the moderate (extreme) poor become extreme (ultra) poor
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An Illustration: Brazil
• This impoverishment of the poor occurs even after all cash transfers to the poor (Bolsa Familia, BPC, etc.) are considered
• What the government giveth with transfers taketh away with indirect taxes for a significant proportion of the poor.
• How much?
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