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...

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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 2020
Subjects:	GLOBAL POVERTY INEQUALITY INCLUSIVE GROWTH SUSTAINABLE DEVELOPMENT GOALS SDGs FORECASTING MACHINE LEARNING EXTREME POVERTY POVERTY LINE COVID-19 PANDEMIC IMPACT CORONAVIRUS
Online Access:	http://documents.worldbank.org/curated/en/765601591733806023/How-Much-Does-Reducing-Inequality-Matter-for-Global-Poverty http://hdl.handle.net/10986/33902

id	okr-10986-33902
recordtype	oai_dc
spelling	okr-10986-339022021-05-25T09:55:18Z How Much Does Reducing Inequality Matter for Global Poverty? Lakner, Christoph Mahler, Daniel Gerszon Negre, Mario Prydz, Espen Beer GLOBAL POVERTY INEQUALITY INCLUSIVE GROWTH SUSTAINABLE DEVELOPMENT GOALS SDGs FORECASTING MACHINE LEARNING EXTREME POVERTY POVERTY LINE COVID-19 PANDEMIC IMPACT CORONAVIRUS 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. 2020-06-12T16:14:23Z 2020-06-12T16:14:23Z 2020-06-01 Working Paper http://documents.worldbank.org/curated/en/765601591733806023/How-Much-Does-Reducing-Inequality-Matter-for-Global-Poverty http://hdl.handle.net/10986/33902 English Global Poverty Monitoring Technical Note; CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & 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	GLOBAL POVERTY INEQUALITY INCLUSIVE GROWTH SUSTAINABLE DEVELOPMENT GOALS SDGs FORECASTING MACHINE LEARNING EXTREME POVERTY POVERTY LINE COVID-19 PANDEMIC IMPACT CORONAVIRUS
spellingShingle	GLOBAL POVERTY INEQUALITY INCLUSIVE GROWTH SUSTAINABLE DEVELOPMENT GOALS SDGs FORECASTING MACHINE LEARNING EXTREME POVERTY POVERTY LINE COVID-19 PANDEMIC IMPACT CORONAVIRUS Lakner, Christoph Mahler, Daniel Gerszon Negre, Mario Prydz, Espen Beer How Much Does Reducing Inequality Matter for Global Poverty?
relation	Global Poverty Monitoring Technical Note;
description	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.
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	2020
url	http://documents.worldbank.org/curated/en/765601591733806023/How-Much-Does-Reducing-Inequality-Matter-for-Global-Poverty http://hdl.handle.net/10986/33902
_version_	1764479763658833920

How Much Does Reducing Inequality Matter for Global Poverty?

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