How Much Does Reducing Inequality Matter for Global Poverty?

The goals of ending extreme poverty by 2030 and working toward a more equal distribution of income are prominent in international development and agreed upon in the United Nations' Sustainable Development Goals 1 and 10. Using data from 164 co...

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Main Authors:	Lakner, Christoph, Mahler, Daniel Gerszon, Negre, Mario, Prydz, Espen Beer
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2019
Subjects:	POVERTY INEQUALITY INCLUSIVE GROWTH POVERTY REDUCTION SIMULATION MACHINE LEARNING INCOME DISTRIBUTION SUSTAINABLE DEVELOPMENT GOALS SDG 1 SDG 10 ECONOMIC GROWTH HOUSEHOLD INCOME EXTREME POVERTY
Online Access:	http://documents.worldbank.org/curated/en/328651559243659214/How-Much-Does-Reducing-Inequality-Matter-for-Global-Poverty http://hdl.handle.net/10986/31796

id	okr-10986-31796
recordtype	oai_dc
spelling	okr-10986-317962022-09-20T00:13:31Z How Much Does Reducing Inequality Matter for Global Poverty? Lakner, Christoph Mahler, Daniel Gerszon Negre, Mario Prydz, Espen Beer POVERTY INEQUALITY INCLUSIVE GROWTH POVERTY REDUCTION SIMULATION MACHINE LEARNING INCOME DISTRIBUTION SUSTAINABLE DEVELOPMENT GOALS SDG 1 SDG 10 ECONOMIC GROWTH HOUSEHOLD INCOME EXTREME POVERTY The goals of ending extreme poverty by 2030 and working toward a more equal distribution of income are prominent in international development and agreed upon in the United Nations' Sustainable Development Goals 1 and 10. Using data from 164 countries comprising 97 percent of the world's population, this paper simulates a set of scenarios for global poverty from 2018 to 2030 under different assumptions about growth and inequality. This allows for quantifying the interdependence of the poverty and inequality goals. The paper uses different assumptions about growth incidence curves to model changes in inequality and relies on the Model-based Recursive Partitioning machine-learning algorithm to model how growth in GDP is passed through to growth as observed in household surveys. When holding within-country inequality unchanged and letting GDP per capita grow according to International Monetary Fund forecasts, the simulations suggest that the number of extreme poor (living below $1.90/day) will remain above 550 million in 2030, resulting in a global extreme poverty rate of 6.5 percent. If the Gini index in each country decreases by 1 percent per year, the global poverty rate could reduce to around 5.4 percent in 2030, equivalent to 100 million fewer people living in extreme poverty. Reducing each country's Gini index by 1 percent per year has a larger impact on global poverty than increasing each country's annual growth 1 percentage point above the forecasts, suggesting an important role for inequality on the path to eliminating extreme poverty. 2019-06-06T14:16:40Z 2019-06-06T14:16:40Z 2019-05 Working Paper http://documents.worldbank.org/curated/en/328651559243659214/How-Much-Does-Reducing-Inequality-Matter-for-Global-Poverty http://hdl.handle.net/10986/31796 English Policy Research Working Paper;No. 8869 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	POVERTY INEQUALITY INCLUSIVE GROWTH POVERTY REDUCTION SIMULATION MACHINE LEARNING INCOME DISTRIBUTION SUSTAINABLE DEVELOPMENT GOALS SDG 1 SDG 10 ECONOMIC GROWTH HOUSEHOLD INCOME EXTREME POVERTY
spellingShingle	POVERTY INEQUALITY INCLUSIVE GROWTH POVERTY REDUCTION SIMULATION MACHINE LEARNING INCOME DISTRIBUTION SUSTAINABLE DEVELOPMENT GOALS SDG 1 SDG 10 ECONOMIC GROWTH HOUSEHOLD INCOME EXTREME POVERTY Lakner, Christoph Mahler, Daniel Gerszon Negre, Mario Prydz, Espen Beer How Much Does Reducing Inequality Matter for Global Poverty?
relation	Policy Research Working Paper;No. 8869
description	The goals of ending extreme poverty by 2030 and working toward a more equal distribution of income are prominent in international development and agreed upon in the United Nations' Sustainable Development Goals 1 and 10. Using data from 164 countries comprising 97 percent of the world's population, this paper simulates a set of scenarios for global poverty from 2018 to 2030 under different assumptions about growth and inequality. This allows for quantifying the interdependence of the poverty and inequality goals. The paper uses different assumptions about growth incidence curves to model changes in inequality and relies on the Model-based Recursive Partitioning machine-learning algorithm to model how growth in GDP is passed through to growth as observed in household surveys. When holding within-country inequality unchanged and letting GDP per capita grow according to International Monetary Fund forecasts, the simulations suggest that the number of extreme poor (living below $1.90/day) will remain above 550 million in 2030, resulting in a global extreme poverty rate of 6.5 percent. If the Gini index in each country decreases by 1 percent per year, the global poverty rate could reduce to around 5.4 percent in 2030, equivalent to 100 million fewer people living in extreme poverty. Reducing each country's Gini index by 1 percent per year has a larger impact on global poverty than increasing each country's annual growth 1 percentage point above the forecasts, suggesting an important role for inequality on the path to eliminating extreme poverty.
format	Working Paper
author	Lakner, Christoph Mahler, Daniel Gerszon Negre, Mario Prydz, Espen Beer
author_facet	Lakner, Christoph Mahler, Daniel Gerszon Negre, Mario Prydz, Espen Beer
author_sort	Lakner, Christoph
title	How Much Does Reducing Inequality Matter for Global Poverty?
title_short	How Much Does Reducing Inequality Matter for Global Poverty?
title_full	How Much Does Reducing Inequality Matter for Global Poverty?
title_fullStr	How Much Does Reducing Inequality Matter for Global Poverty?
title_full_unstemmed	How Much Does Reducing Inequality Matter for Global Poverty?
title_sort	how much does reducing inequality matter for global poverty?
publisher	World Bank, Washington, DC
publishDate	2019
url	http://documents.worldbank.org/curated/en/328651559243659214/How-Much-Does-Reducing-Inequality-Matter-for-Global-Poverty http://hdl.handle.net/10986/31796
_version_	1764475088442228736

How Much Does Reducing Inequality Matter for Global Poverty?

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