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In the absence of household level data on participation in public programs, spending allocations and poverty measures across regions of Morocco are used to infer incidence across poor and non-poor groups and to decompose incidence within rural and urban areas separately, as well as to decompose improvements in enrollment rates across poor and non-poor children by gender. Programs appear to be well targeted to the rural poor but not to the urban poor. Substantial benefits accrue to the urban non-poor, while benefits largely bypass the urban poor. The analysis also uncovers evidence of impressive progress in primary and secondary school enrollments for the poor, as well as for poor girls since 1994. However, here too, the gains are concentrated on the rural poor. This paper-a product of the Public Services Team, Development Research Group-is part of a larger effort in the group to assess the incidence and targeting of public expenditures.

Health, Nutrition and Population --- Household Level Data --- Poor --- Poor Children --- Poor Girls --- Population Policies --- Poverty --- Poverty Incidence --- Poverty Incidence Across Regions --- Poverty Map --- Poverty Measures --- Poverty Programs --- Poverty Rates --- Poverty Reduction --- Poverty Reduction Strategies --- Rural --- Rural Development --- Rural Infrastructure --- Rural Infrastructure Problem --- Rural Level --- Rural Poor --- Rural Poverty Reduction --- Rural Roads --- Services and Transfers to Poor --- Social Programs --- Targeting --- Transfers

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The authors provide new evidence on the extent to which absolute poverty has urbanized in the developing world, and the role that population urbanization has played in overall poverty reduction. They find that one-quarter of the world's consumption poor live in urban areas and that the proportion has been rising over time. By fostering economic growth, urbanization helped reduce absolute poverty in the aggregate but did little for urban poverty. Over 1993-2002, the count of the "USD 1 a day" poor fell by 150 million in rural areas but rose by 50 million in urban areas. The poor have been urbanizing even more rapidly than the population as a whole. Looking forward, the recent pace of urbanization and current forecasts for urban population growth imply that a majority of the poor will still live in rural areas for many decades to come. There are marked regional differences: Latin America has the most urbanized poverty problem, East Asia has the least; there has been a "ruralization" of poverty in Eastern Europe and Central Asia; in marked contrast to other regions, Africa's urbanization process has not been associated with falling overall poverty.

Absolute Poverty --- Agricultural Production --- Economic Growth --- Global Poverty --- Health, Nutrition and Population --- Income --- International Poverty Lines --- Local Poverty Lines --- Measures --- National Poverty --- Poor --- Poor Living --- Population Policies --- Poverty Assessments --- Poverty Incidence --- Poverty Measures --- Poverty Profile --- Poverty Reduction --- Rural --- Rural Areas --- Rural Development --- Rural Poverty --- Rural Poverty Lines --- Rural Poverty Reduction

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Bourguignon, Ferreira, and Leite develop a microeconometric method to account for differences across distributions of household income. Going beyond the determination of earnings in labor markets, they also estimate statistical models for occupational choice and for conditional distributions of education, fertility, and nonlabor incomes. The authors import combinations of estimated parameters from these models to simulate counterfactual income distributions. This allows them to decompose differences between functionals of two income distributions (such as inequality or poverty measures) into shares because of differences in the structure of labor market returns (price effects), differences in the occupational structure, and differences in the underlying distribution of assets (endowment effects). The authors apply the method to the differences between the Brazilian income distribution and those of Mexico and the United States, and find that most of Brazil's excess income inequality is due to underlying inequalities in the distribution of two key endowments: access to education and to sources of nonlabor income, mainly pensions. This paper is a product of the Research Advisory Staff. The authors may be contacted at fbourguignon@worldbank.org, fferreira@econ.puc-rio.br or phil@econ.puc-rio.br.

Absolute Poverty --- Counterfactual --- Economic Theory and Research --- Finance and Financial Sector Development --- Financial Literacy --- Health, Nutrition and Population --- Household Consumption --- Household Income --- Household Per Capita Income --- Household Survey --- Household Surveys --- Income --- Income Distribution --- Income Inequality --- Inequality --- Labor Policies --- Macroeconomics and Economic Growth --- Population Policies --- Poverty --- Poverty Impact Evaluation --- Poverty Incidence --- Poverty Levels --- Poverty Line --- Poverty Measures --- Poverty Rates --- Poverty Reduction --- Rural --- Rural Areas --- Rural Development --- Rural Income --- Rural Poverty Reduction --- Services and Transfers to Poor --- Social Protections and Labor --- Transfers

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August 1995 - In urban areas of Cote d'Ivoire, human capital is the endowment that best explains welfare changes over time. In rural areas, physical capital - especially the amount of land and farm equipment owned - matters most. Empirical investigations of poverty in developing countries tend to focus on the incidence of poverty at a particular point in time. If the incidence of poverty increases, however, there is no information about how many new poor have joined the existing poor and how many people have escaped poverty. Yet this distinction is of crucial policy importance. The chronically poor may need programs to enhance their human and physical capital endowments. Invalids and the very old may need permanent (targeted) transfers. The temporarily poor, on the other hand, may best be helped with programs that complement their own resources and help them bridge a difficult period. Results from analyses of panel surveys show significant mobility into and out of poverty and reveal a dynamism of the poor that policy should stimulate. Understanding what separates chronic from temporary poverty requires knowing which characteristics differentiate those who escape poverty from those who don't. In earlier work, Grootaert, Kanbur, and Oh found that region of residence and socioeconomic status were important factors. In this paper they investigate the role of other household characteristics, especially such asset endowments as human and physical capital, in the case of Cote d'Ivoire. In urban areas of Cote d'Ivoire, human capital is the most important endowment explaining welfare changes over time. Households with well-educated members suffered less loss of welfare than other households. What seems to have mattered, though, is the skills learned through education, not the diplomas obtained. Diplomas may even have worked against some households in having oriented workers too much toward a formal labor market in a time when employment growth came almost entirely from small enterprises. In rural areas, physical capital - especially the amount of land and farm equipment owned - mattered most. Smallholders were more likely to suffer welfare declines. Households with diversified sources of income managed better, especially if they had an important source of nonfarm income. In both rural and urban areas, larger households suffered greater declines in welfare and households that got larger were unable to increase income enough to maintain their former welfare level. Households whose heads worked in the public sector maintained welfare better than other households, a finding that confirms earlier observations. The results also suggest that government policies toward certain regions or types of household can outweigh the effects of household endownments. Surprisingly, migrant non-Ivorian households tended to be better at preventing welfare losses than Ivorian households, while households headed by women did better than those headed by men (after controlling for differences in or changes in endowment). The implications for policymakers? First, education is associated with higher welfare levels and helps people cope better with economic decline. Second, targeting the social safety net to larger households - possibly through the schools, to reach children - is justified in periods of decline. Third, smallholders might be targeted in rural areas, and ways found to encourage diversification of income there. This paper - a joint product of the Social Policy and Resettlement Division, Environment Department, and the Africa Regional Office, Office of the Chief Economist - is the result of a research project on The Dynamics of Poverty: Why Some People Escape Poverty and Others Don't, A Panel Analysis for Cote d'Ivoire (RPO 678-70).

Chronically Poor --- Communities & Human Settlements --- Debt Markets --- Economic Policies --- Economic Theory and Research --- Farm Size --- Finance and Financial Sector Development --- Financial Literacy --- Household Income --- Household Size --- Household Welfare --- Housing and Human Habitats --- Human Capital --- Incidence Of Poverty --- Income --- Investment and Investment Climate --- Macroeconomics and Economic Growth --- New Poor --- Nonfarm Income --- Old Age --- Poor People --- Poverty --- Poverty Diagnostics --- Poverty Incidence --- Poverty Lines --- Poverty Monitoring and Analysis --- Poverty Reduction --- Rural --- Rural Areas --- Rural Development --- Rural Poverty Reduction --- Targeting --- Temporarily Poor --- Transfers

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October 1999 - During the turbulent years 1976-96, aggregate data for Brazil appear to show only small changes in mean income, inequality, and incidence of poverty - suggesting little change in the distribution of income. But a small group of urban households - excluded from formal labor markets and safety nets - was trapped in indigence. Based on welfare measured in terms of income alone, the poorest part of urban Brazil has experienced two lost decades. Despite tremendous macroeconomic instability in Brazil, the country's distributions of urban income in 1976 and 1996 appear, at first glance, deceptively similar. Mean household income per capita was stagnant, with minute accumulated growth (4.3 percent) over the two decades. The Gini coefficient hovered just above 0.59 in both years, and the incidence of poverty (relative to a poverty line of RD 60 a month in 1996 prices) remained effectively unchanged over the period, at 22 percent. Behind this apparent stability, however, a powerful combination of labor market, demographic, and educational dynamics was at work, one effect of which was to generate a substantial increase in extreme urban poverty. Using a decomposition methodology based on microsimulation, which endogenizes labor incomes, individual occupational choices, and decisions about education, Ferreira and de Barros show that the distribution of income was being affected by: Three factors that tended to increase poverty - a decline in average returns to education and experience, a negative growth effect, and unfortunate changes in the structure of occupations and participation in the labor force; Two factors that tended to reduce poverty - improved educational endowments across the board, and a progressive reduction in dependency ratios; The net effect was small and negative for measured inequality overall, and negligible for the incidence of poverty (relative to high poverty lines). But the net effect was to substantially increase extreme poverty - suggesting the creation of a group of urban households excluded from any labor market and trapped in indigence. Above the 15th percentile, urban Brazilians have stayed put only by climbing hard up a slippery slope. Counteracting falling returns in both self-employment and the labor market required substantially reduced fertility rates and an average of two extra years of schooling (which still left them undereducated for that income level). This paper - a product of the Poverty Division, Poverty Reduction and Economic Management Network - is part of a larger effort in the network to understand the determinants of urban poverty. Francisco Ferreira may be contacted at fferreira@econ.puc-rio.br.

Economic Growth --- Economic Theory and Research --- Extreme Poverty --- Finance and Financial Sector Development --- Financial Literacy --- Formal Safety Nets --- Health, Nutrition and Population --- Household Composition --- Household Income --- Household Per Capita Income --- Income --- Income Distribution --- Income Inequality --- Inequality --- Labor Markets --- Labor Policies --- Macroeconomics and Economic Growth --- Measures --- Poor --- Poor Households --- Population Policies --- Poverty Incidence --- Poverty Indices --- Poverty Line --- Poverty Lines --- Poverty Measures --- Poverty Reduction --- Pro-Poor Growth --- Rural --- Rural Development --- Rural Poverty Reduction --- Services and Transfers to Poor --- Social Protections and Labor --- Unemployment