1. Poverty, Inequality, and Development
Chapter 5
Poverty, Inequality, and Development

2. The Growth Controversy: Seven Critical Questions
What is the extent of relative inequality, and how is this related to the extent of poverty?
Who are the poor?
Who benefits from economic growth?
Does rapid growth necessarily cause greater income inequality?
Do the poor benefit from growth?
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3. The Growth Controversy: Seven Critical Questions
Are high levels of inequality always bad?
What policies can reduce poverty?
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4. Measuring Inequality and Poverty
Size distributions (quintiles, deciles)
Lorenz curves
Gini coefficients
Functional distributions
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5. Table 5.1 Typical Size Distribution of Personal Income in a Developing Country by Income Shares—Quintiles and Deciles
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6. Figure 5.1 The Lorenz Curve
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7. Figure 5.2 The Greater the Curvature of the Lorenz Line, the Greater the Relative Degree of Inequality
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8. Figure 5.3 Estimating the Gini Coefficient
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9. Figure 5.4 Four Possible Lorenz Curves
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10. Properties of Lorenz Curves
Anonymity Principle
Scale Independence Principle
Population Independence Principle
Transfer Principle
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11. Figure 5.5 Functional Income Distribution in a Market Economy: An Illustration
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12. Measuring Inequality and Poverty
Measuring Absolute Poverty
Headcount Index
Total poverty gap
Where Yp is the absolute poverty line
Yi is income of person I
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13. Figure 5.6 Measuring the Total Poverty Gap
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14. Measuring Inequality and Poverty
Measuring Absolute Poverty
Average poverty gap
Where H is number of persons
TPG is total poverty gap
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15. Measuring Inequality and Poverty:
Measuring Absolute Poverty
The Human Poverty Index (HPI)
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16. Poverty, Inequality, and Social Welfare
What’s so bad about inequality?
Economic inefficiency
Undermines social stability and solidarity
Generally viewed as unfair
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17. Table 5.2 Selected Income Distribution Estimate
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18. Economic Characteristics of Poverty Groups
Rural Poverty
Women and poverty
Ethnic minorities, indigenous populations, and poverty
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19. Table 5.6 Poverty: Rural versus Urban
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20. Table 5.7 Indigenous Poverty in Latin America
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21. The Range of Policy Options: Some Basic Considerations
Areas of intervention
Altering the functional distribution
Mitigating the size distribution
Moderating (reducing) the size distribution at upper levels
Moderating (increasing) the size distribution at lower levels
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