TREND OF POVERTY INTENSITY IN IRAN

Transcription

1 TREND OF POVERTY INTENSITY IN IRAN F. Bagher & M.S. Avazalpour 2 Statstcal Research and Tranng Centre, Tehran, Iran 2 Statstcal Research and Tranng Centre, Statstcal Center of Iran, Tehran, Iran ABSTRACT Income neualty among poor people, average ncome of poor people, poverty lne, total number of the poor and total populaton are the factors that affect poverty ntensty and any dfference n each of them causes dfference n the sze of poverty ntensty. Among them, SST Index s an approprate nstrument to measure the poverty ntensty. Ths ndex can measure the poverty ntensty consderng number of the poor and depth of poverty and neualty among them.in ths paper, frst the absolute poverty lne based on 2300 calores for urban and rural areas, then the SST Index and ts components -the poverty rate, average poverty gap rato of the poor, and a measure that s related to the Gn ndex of poverty gap ratos- are calculated for the perod of Moreover for calculaton of these ndexes the data from the Statstcal Center of Iran s Household Expendture and Income Survey were used The poverty ntensty n 200 compared wth that n 99reduced from 3. to 7.3 percent n urban areas. In rural areas, the poverty ntensty reduced from 28. to 7.5 percent. Intensty of poverty n rural and urban areas n 20 years (99-200) has found a marked reducton and a major cause of ths decrease s due to reducton of poverty rate. In addton, the decrease of poverty ntensty over the 20 years has been hgher n rural areas than n urban areas. JEL Classfcaton: O40, I32, O53, O57 Keywords: Poverty ntensty, poverty ndex, poverty rate, poverty gap. INTRODUCTION Although the poverty has more extended concept than merely not havng money, generally t refers to a percent of people whose ncome or consumpton s below poverty lne acheved n terms of standard ndces of the lfe. However the consderable pont s that the number of the poor and poverty lne solely cannot descrbe the poverty. Because n leu for poverty lne and the number of the poor n two or several socetes, the poverty ntensty of these socetes maybe dfferent, thus there are ndces for percepton of poverty n each socety that ndcates the poverty ntensty. The ncome neualty among poor people, average ncome(or expendture) of the poor, number of the poor, and total populaton are consdered as the elements that affect the poverty ntensty and dfference of each one of them caused to the dfference n the measure of poverty ntensty[2].one of the ntroduced ndex for measurng of poverty ntensty s Sen-Shorrocks-Thon (SST) ndex whch s the product of headcount rato, the poverty gap ndex(appled to the poor only), the Gn coeffcent of the poverty gap ratos [9]. In ths paper, by usng raw data of Household Income and Expendture Survey n rural and urban areas, at frst the absolute poverty lne was calculated based on 2300 calore and then due to ths poverty lne, the SST ndex was computed for a 20-year perod from 99 to 200 and ts varaton rate has been perused. Theoretcal context: In the ntal economc lterature, a lot of recommended poverty factors are derved from the vewpont of Amarta Sen[8]. But many of them are not appled n practce. The most common factors n ths relaton s poverty rate(the rato of ndvduals below poverty lne) whch s wrtten as the followng euaton: H=/N () Where s the number of poor and N s total populaton. But ths factor cannot ndcate the poverty depth; by an eual poverty rate n two poor socetes the average ncome may be dfferent. For nstance f two statstcal socetes and 2 are consdered and n two statstcal socetes 0 famles are studed, f n each socety both famles have an ncome lower than poverty lne, the poverty rate for both socetes wll be eual to 20%. Now ths ueston s rased that f the poverty n both socetes s eual? If n the frst socety the dstance between each famly s ncome and poverty lne s two tmes more than the dstance between each famly s ncome and poverty lne n the second socety, certanly t may not be clamed that the poverty n both socetes s eual. Accordngly, Amarta Sen ndcated that another factor should be n consderaton for specfyng the poverty s the gap between each famly s ncome and poverty lne and he propounded n ths connecton two close to each other factors, the relatonshp between them are as follows: [5] 4

2 Bagher & Avazalpour Trend of Poverty Intensty n Iran I y z ( z y ) z And HI N ( z y ) (2) ( z y ) y z z N y z z Where the poverty gap rato for non-poor populaton s zero (Because ther ncome deprvaton s zero).although such crtera show prevalence and mean depth of poverty, they cannot reveal deprvaton rate dfference between poor people. In 976, Amarta Sen proposed a set of conventonal prncples as a bass for poverty measurement. One of the key ponts dscussed by Sen s that all poverty crtera of that tme were nsenstve to how to dstrbute poverty. As he thought, there are seven known prncples to evaluate poverty crtera as follows [6,7]:. Concentraton prncple, 2. Weak unformty prncple, 3. Impartalty prncple, 4. Weak transmsson prncple, 5. Strong transmsson prncple, 6. Contnuty prncple and 7. Invarance replcaton prncple. Among above prncples, poverty rate ndex volates prncples 2 and 4 and ths s why lots of economsts do not approve the poverty rate snce ths ndex s nsenstve to poverty depth. Mean poverty gap rato of the poor people (I) volates both weak and strong transmsson prncples. That s, mean ndex shows poverty depth relatve to poverty gap but t s nsenstve aganst dstrbuton aspect. Due to ths volaton n poverty rate and average poverty gap rato, Sen proposed two versons of the same for poverty measure[5]. The frst one s: S 0 H[ ( I)( y p ))( )] (4) Where y p ) ndcates Gn ndex of poverty dstrbuton of the poor and the greater populaton causes /(+) euaton go towards. The verson s: S H ( I) y )] [ p (5) Immedately after Sen, lots of economsts presented a wde range of poverty measures.among thoseshorrocks (995) proposed an adjusted form of Sen ndex whch was conformed wth Thon ndex (979 & 983) and was called Sen-Shorrocks-Thon (SST) ndex of poverty. Mathematcal euaton of above ndex s as follows: S SST 2 N y z z y (2N 2 )( z ) (6) z y What s consderable n ths euaton s the poverty gap rato that s zero for those who are not poor. z Myles and Pcot (2000)[3] showed that Sen Index especally SST ndex s a strong tool n polcy-makng. Xu and Osberg(999,2002,2000)[4]showed that Sen and SST ndexes can be analyzed nto poverty rate, average poverty gap rato of the poor and the measure of the neualty of the poverty gap ratos of the populaton.so, SST ndex can smplfed as the followng: S SST HI( (7) Where x shows the poverty gap ratos of the total populaton. Ths decomposton ndcates poverty ntensty as a product of poverty rate, the average poverty gap ratos of the poor, and the measure of the neualty of the poverty gap ratos of the populaton. By analyzng SST ndex nto poverty ndexes we can measure welfare reducton due to poverty, poverty ncdence, poverty depth and neualty. We can determne effectve factors n changng poverty ntensty by usng ths euaton. Ths decomposton allows economsts to vew the source of a change n the measure of poverty ntensty n terms of change n the poverty rate, (3) 5

3 Bagher & Avazalpour Trend of Poverty Intensty n Iran the average poverty gap rato, and the neualty of the poverty gap ratos. To do ths, by takng natural logarthm of both sde of euaton (7), gves: LnS SST ln( LnH LnI Ln( (8) s an approxmaton of G (X ) based on the frst-order Taylor seres expanson. If we suppose A s the A measure at the prevous perod, so ths euaton could be applcable to any frst- A=A-A -, where order dfference. Then euaton (8) can be transformed as the followng: LnS SST LnH LnI Ln( (9) Where ln( s an approxmaton of X ). Ths euaton shows that percentage change n SST s the sum of percentage changes H, I and G (x).[6] 2. DATAAND METHODOLOGY In order to measurng poverty lne and poverty ndces, Household Income and Expendture Survey n urban and rural areas have been appled. But n the case of mcro data there s a basc problem n applyng drectly to data, that s, households of dfferent sze face dfferent behavor and utlty from the same amount of ncome. In order to solvng the problem, we wll dvde all varables such as expendture and ncome by the number of household members (famly sze). Therefore we can transform all varables such as consumpton and ncome from households of dfferent sze nto a sngle base [].The perod used n ths paper s from 99 to 200. It s to note that one of needed elements n calculatng SST ndcator s poverty lne whch s based on 2300 calore. 3. FINDINGS The results of SST ndcator and ts component are shown n tables () and (2).The results of tables () and (2) show that poverty ntensty n a 20 year perod (99-200) has sgnfcantly decreased n rural and urban areas, n urban areas t has decreased from 3.% to 7.3% and n rural areas t has decreased from28.% to 7.5%.what s consderable s that poverty reducton n rural areas s more than urban areas. Of course, ths reducton n urban areas had some fluctuaton from 99 to 994 as fgures and 2 show. Investgatng SST ndex elements shows that poverty reducton s manly due to the reducton n poverty rate (H), and proporton of poverty gap ndcators (I) and neualty has a small mpact on ths reducton. 6

4 Bagher & Avazalpour Trend of Poverty Intensty n Iran year SST Index Table- SST ndex & ts component - Urban areas: Decomposton of SST Changes H I +x) ln(sst) ln(h) ln(i) ln ( Gn I H SST Fgure-Trend of SST ndex and ts component n Urban areas:

5 Bagher & Avazalpour Trend of Poverty Intensty n Iran Table 2- SST ndex & ts component - Rural areas: year SST Index Decomposton of SST Changes H I +x) ln(sst) ln(h) ln(i) ln ( Gn Fgure2-Trend of SST ndex and ts component n Rural areas: CONCLUSION Ths paper has tred to examne the poverty ntensty n Iran over a perod of 20 year, begnnng n 99, tll 200.The chosen ndex for examnaton of poverty ntensty, s the SST ndex. Ths ndex s a modfed verson of Sen and Thon ndex whch was proposed by Shorrocks n 995.Ths ndex, calculates the poverty ntensty by measurng, poverty rate, poverty gap and Gn coeffcent of poverty gaps for the populaton. In order to calculate SST, frst the absolute poverty lne was determned by usng HIES mcro data based on Then by usng ths poverty lne we calculated SST and other ndces such as poverty rate, the poverty gap and the poverty ntensty n a 20 years perod from 99 tll 200. The results show that poverty ntensty has decreased consderably n urban and rural areas. The poverty ntensty n urban areas was 3.% n 99, whch has declned to 7.3% n 200. The results also show that t has decreased from28.% to 7.5% n rural areas n ths perod. The I 8

6 Bagher & Avazalpour Trend of Poverty Intensty n Iran most mportant ssue whch could nfluence on the reducton of poverty ntensty s the declne of percent of populaton under the poverty lne. The second nfluencng facts n reducton of poverty ntensty was the poverty gap rate whch decreased n urban area from n 99 to n 200 and n rural areas from to REFERENCES []. Avazalpour,M.S. and Sathe, " Consumpton, Decles and an Economc Experence n Iran and Inda", Lembert Academy Publshng, Germeny, (202). [2]. KhodadadKash, F.and Others, "Poverty Index Measurement n Iran ".Workng paper, Statstcal Research and Tranng Centre, Iran,(2002). [3]. Myles, J. and G. Pcot, "Poverty Indces and Polcy Analyss, "Revew of Income and Wealth, 46, 6-79(2000). [4]. Osberg, L. and K. Xu, "Poverty Intensty: How well Do Canadan Provnces Compare?", Canadan Publc Polcy, Vol, XXV, No.2,(999). [5]. Osberg, L. and K. Xu,"How Should We Measure Global Poverty n a Changng World? Dalhouse Unversty Halfax, Canada,(2005). [6]. Xu, K. and Orsberg, L., "How to Decompose the Sen- Shorrocks-Poverty Index: A Practtoner s Gude", Journal of Income Dstrbuton, Vol.0, No.-2,(200). [7]. Xu, K, and L. Osberg, "On Sen's Approach to Poverty Measures and Recent Developments, "Chna Economc Quarterly, (), 5-70(200). [8]. Zheng, Buhong, "Aggregate Poverty Measures"Journal of Economc Survey, (2), 23-62(997). [9]. "Introducton to Poverty Analyss", World Bank Insttute (2005). 9