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Pro-Poor Growth And The Lognormal Income Distribution

Date Added: Sep 2009
Format: PDF

A widely accepted criterion for pro-poorness of an income growth pattern is that it should reduce a (chosen) measure of poverty by more than if all incomes were growing equiproportionately. Inequality reduction is not generally seen as either necessary or sufficient for pro-poorness. Because empirical income distributions fit well to the lognormal form, log normality has sometimes been assumed in order to determine analytically the poverty effects of income growth. The authors show that in a lognormal world, growth is pro-poor in the above sense if and only if it is inequality-reducing. It follows that log normality may not be a good paradigm by means of which to examine pro-poorness issues.