The Real Bottom Line: Benchmarking Performance in Poverty Reduction in Latin America and the Caribbean

This paper makes two contributions. First, it carries out an extensive analysis of episodes of poverty changes and documents the empirical distribution of poverty changes. This is useful for providing some context for assessing whether observed changes in poverty that a country may achieve are good, bad or indifferent and for guiding goals that might be set for poverty reduction. Second, the paper proposes and illustrates an approach to take account of country observable characteristics in assessing what constitutes good and poor performance for a specific country. The approach consists of comparing a country’s actual performance to counterfactual distributions generated using quantile regressions. The paper considers four cases where the type of benchmarking approach being proposed helps facilitate a policy dialogue.