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Counterfactual Decomposition of Pro-Poorness Using Influence Functions

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  • B. Essama-Nssah
  • Peter J. Lambert

Abstract

Poverty reduction has emerged as a fundamental social objective of development, and has become a metric commonly used to assess the performance of public policy. This paper adapts the methodology of Firpo, Fortin and Lemieux (2009) [2009. “Unconditional Quantile Regressions.” Econometrica 77 (3): 953--973] to the measurement of the pro-poorness of income growth. The method allows the analyst to identify covariates that affect poverty reduction. The methodology is policy-relevant because policy-makers can better target these covariates than the average level of income, or the level of inequality. We demonstrate this by application to Bangladesh 2000--2010.

Suggested Citation

  • B. Essama-Nssah & Peter J. Lambert, 2016. "Counterfactual Decomposition of Pro-Poorness Using Influence Functions," Journal of Human Development and Capabilities, Taylor & Francis Journals, vol. 17(1), pages 74-92, February.
    • Handle: RePEc:taf:jhudca:v:17:y:2016:i:1:p:74-92
    DOI: 10.1080/19452829.2015.1115392
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    References listed on IDEAS

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    1. Fortin, Nicole & Lemieux, Thomas & Firpo, Sergio, 2011. "Decomposition Methods in Economics," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 1, pages 1-102, Elsevier.
    2. Cowell, Frank A. & Flachaire, Emmanuel, 2007. "Income distribution and inequality measurement: The problem of extreme values," Journal of Econometrics, Elsevier, vol. 141(2), pages 1044-1072, December.
    3. José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
    4. Ravallion, Martin & Chen, Shaohua, 2003. "Measuring pro-poor growth," Economics Letters, Elsevier, vol. 78(1), pages 93-99, January.
    5. Francois Bourguignon & Francisco H.G. Ferreira & Nora Lustig, 2005. "The Microeconomics of Income Distribution Dynamics in East Asia and Latin America," World Bank Publications - Books, The World Bank Group, number 14844.
    6. Frank A. Cowell, 2008. "Income Distribution and Inequality," Chapters, in: John B. Davis & Wilfred Dolfsma (ed.), The Elgar Companion to Social Economics, chapter 13, Edward Elgar Publishing.
    7. Ravallion, Martin, 2001. "Growth, Inequality and Poverty: Looking Beyond Averages," World Development, Elsevier, vol. 29(11), pages 1803-1815, November.
    8. Kraay, Aart, 2006. "When is growth pro-poor? Evidence from a panel of countries," Journal of Development Economics, Elsevier, vol. 80(1), pages 198-227, June.
    9. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721, October.
    10. Cowell, Frank A. & Victoria-Feser, Maria-Pia, 1996. "Poverty measurement with contaminated data: A robust approach," European Economic Review, Elsevier, vol. 40(9), pages 1761-1771, December.
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