How Much Does Reducing Inequality Matter for Global Poverty?
The goals of ending extreme poverty by 2030 and working towards a more equal distribution of incomes are part of the United Nations' Sustainable Development Goals. Using data from 166 countries comprising 97.5 percent of the world's popul...
| Main Authors: | , , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/765601591733806023/How-Much-Does-Reducing-Inequality-Matter-for-Global-Poverty http://hdl.handle.net/10986/33902 |
| Summary: | The goals of ending extreme poverty by
2030 and working towards a more equal distribution of
incomes are part of the United Nations' Sustainable
Development Goals. Using data from 166 countries comprising
97.5 percent of the world's population, we simulate
scenarios for global poverty from 2019 to 2030 under various
assumptions about growth and inequality. We use different
assumptions about growth incidence curves to model changes
in inequality, and rely on a machine-learning algorithm
called model-based recursive partitioning 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 World
Bank forecasts and historically observed growth rates, our
simulations suggest that the number of extreme poor (living
on less than 1.90 US Dollars/day) will remain above 600
million in 2030, resulting in a global extreme poverty rate
of 7.4 percent. If the Gini index in each country decreases
by 1 percent per year, the global poverty rate could reduce
to around 6.3 percent in 2030, equivalent to 89 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 points above forecasts. We also
study the impact of COVID-19 on poverty and find that the
pandemic may have driven around 60 million people into
extreme poverty in 2020. If the virus increased the Gini by
2 pecent in all countries, then more than 90 million may
have been driven into extreme poverty in 2020. |
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