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THE OECD APPROACH TO MEASURE AND MONITOR INCOME POVERTY ACROSS COUNTRIES Horacio Levy OECD Social Policy Division and Nicolas Ruiz OECD, Household Statistics.

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Presentation on theme: "THE OECD APPROACH TO MEASURE AND MONITOR INCOME POVERTY ACROSS COUNTRIES Horacio Levy OECD Social Policy Division and Nicolas Ruiz OECD, Household Statistics."— Presentation transcript:

1 THE OECD APPROACH TO MEASURE AND MONITOR INCOME POVERTY ACROSS COUNTRIES Horacio Levy OECD Social Policy Division and Nicolas Ruiz OECD, Household Statistics and Progress Measurement Division 1 UNITED NATIONS ECONOMIC COMMISSION FOR EUROPE Seminar “The way forward in poverty measurement” (Geneva, 2 ‑ 4 December 2013)

2 Approaches to poverty measurement OECD Income Distribution Database (IDD) Poverty monitoring: recent results Current and upcoming challenges 2 Outline

3 Variable: single dimensional indicator (Income) Identification : Poverty line Aggregation : FGT (Econometrica, 1984) Example Incomes = (7,1,4,8) Poverty line z = 5 Deprivation vector g0 = (0,1,1,0) Headcount ratio P0(y;z) = µ(g0) = 2/4 Normalized gap vector g1 = (0, 4/5, 1/5, 0) Poverty gap = P1(y;z) = µ(g1) = 5/20 Squared gap vector g2 = (0, 16/25, 1/25, 0) FGT Measure = P2(y;z) = µ(g2) = 17/100 3 General (and traditional) approach to poverty measurement

4 Absolute (WB, developing countries) Relative (NSOs, OECD, developed countries) Anchored (OECD) Subjective (Developed countries) Weakly relative (WB), Hybrid All lines are essentially set at the national level… …but they have a strong economic gradient: richer countries tend to have higher poverty lines) 4 Which poverty line?

5 Data collection Income distribution indicators based on micro-data Network of national consultants Harmonization Questionnaire and TOR (http://www.oecd.org/els/soc/IDD-ToR.pdf)http://www.oecd.org/els/soc/IDD-ToR.pdf Consistent and comparable definitions – DI = E + KI + SEI + (TRRSS + TRRER + TRROT – (TA + TRPER + TRPOT) – MI = DI – TRRSS + TA + TRPER – Unit of analysis and equivalisation – Poverty indicators » Headcount ration, poverty gap ratio » Relative and anchored poverty line (50%, 60% median) 5 OECD Income Distribution Database (IDD,

6 6 Poverty monitoring: in first phase of the crisis, relative market income poverty rose widely Source: OECD Income Distribution Database, Percentage point changes in relative income poverty of household market and disposable income,

7 7 Source: OECD Income Distribution Database, Percentage point changes in anchored income poverty of household market and disposable income, Poverty monitoring: similar, but slightly sharper, picture using anchored poverty line

8 Timeliness Regional breakdown of poverty figure Wealth beyond income: Multidimensional poverty: 8 Current and upcoming challenges

9 9 Thank you for your attention ! Contacts: Policy Brief: Crisis squeezes income and puts pressure on inequality and poverty: Inequality-and-Poverty-8p.pdf OECD work on income distribution and poverty, via: distribution-database.htm


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