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The joint determination of aggregate economic growth and distributional change has been studied empirically from at least three different perspectives. A macroeconomic approach that relies on cross-country data on poverty, inequality, and growth rates has generated some interesting stylized facts about the correlations between these variables, but has not shed much light on the underlying determinants. "Meso-" and microeconomic approaches have fared somewhat better. The microeconomic approach, in particular, builds on the observation that growth, changes in poverty, and changes in inequality are simply different aggregations of information on the incidence of economic growth along the income distribution. This paper reviews the evolution of attempts to understand the nature of growth incidence curves, from the statistical decompositions associated with generalizations of the Oaxaca-Blinder method, to more recent efforts to generate "economically consistent" counterfactuals, drawing on structural, reduced-form, and computable general equilibrium models.

Achieving Shared Growth --- Counterfactual --- Distributional dynamics --- Economic growth --- Economic Theory & Research --- Higher inequality --- Household income --- Household survey --- Income --- Income distribution --- Income dynamics --- Income inequality --- Inequality --- Insurance --- Insurance markets --- Macroeconomics and Economic Growth --- Market failures --- Political economy --- Poor --- Poverty dynamics --- Poverty line --- Poverty measurement --- Poverty Reduction --- Public spending --- Rural Poverty Reduction --- Services & Transfers to Poor

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August 2000 - Between 1987 and 1998, the incidence of poverty fell in Asia and the Middle East and North Africa, changed little in Latin America and Sub-Saharan Africa, and rose in Eastern Europe and Central Asia. Too little economic growth in the poorest countries and persistent inequalities (in income and other measures) are the main reasons for the disappointing rate of poverty reduction. Drawing on data from 265 national sample surveys spanning 83 countries, Chen and Ravallion find that there was a net decrease in the total incidence of consumption poverty between 1987 and 1998. But it was not enough to reduce the total number of poor people, by various definitions. The incidence of poverty fell in Asia and the Middle East and North Africa, changed little in Latin America and Sub-Saharan Africa, and rose in Eastern Europe and Central Asia. The two main proximate causes of the disappointing rate of poverty reduction: too little economic growth in many of the poorest countries, and persistent inequalities (in both income and other essential measures) that kept the poor from participating in the growth that did occur. This paper-a product of Poverty and Human Resources, Development Research Group-is part of a larger effort in the group to monitor progress against poverty in the developing world. The authors may be contacted at schen@worldbank.org or mravallion@worldbank.org.

Absolute Poverty --- Aggregate Poverty --- Consumer Price Index --- Consumption --- Consumption Basket --- Consumption Expenditure --- Consumption Expenditures --- Consumption Per Capita --- Consumption Poverty --- Debt Markets --- Finance and Financial Sector Development --- Health Systems Development and Reform --- Health, Nutrition and Population --- Higher Inequality --- Household Living Standards --- Household Size --- Incidence Of Poverty --- Income Distribution --- Inequality --- Poor Countries --- Population Policies --- Poverty Diagnostics --- Poverty Line --- Poverty Lines --- Poverty Measures --- Poverty Monitoring and Analysis --- Poverty Rate --- Poverty Reduction --- Poverty Reduction Strategies --- Pro-Poor Growth --- Rural Development --- Rural Poverty Reduction --- Services and Transfers to Poor