A change in the distribution of income can be decomposed into two effects. First, there is the effect of a proportional change in all incomes that leaves the distribution of relative income unchanged, i.e. a growth effect. Second, there is the effect of a change in the distribution of relative incomes which, by definition, is independent of the mean, i.e. a distributional effect.
The following definitions help to clarify these linkages: • “Poverty” is measured by the absolute poverty headcount index, i.e., the proportion of the population below a particular poverty line (e.g. 1$ a day) as derived from household survey data. • “Inequality” (or “distribution”) refers to disparities in relative income across the whole population, i.e., disparities in income after normalizing all observations by the population mean so as to make them independent of the scale of incomes. • “Growth” is the percentage change in mean welfare level (e.g. income or consumption) in the household survey. A change in poverty can then be shown to be a function of growth, distribution and the change in distribution. This is illustrated in Figure 1, where the poverty headcount is simply the area under the density curve at the left of the poverty line (here set at US$1 a day). This figure shows the density of the distribution of income, that is the number of individuals at each level of income represented on a logarithmic scale on the horizontal axis. The move from the initial to the new distribution goes through an intermediate step, which is the horizontal translation of the initial density curve to curve (I). Because of the logarithmic scale on the horizontal axis, this change corresponds to the same proportional increase of all incomes in the population and thus stands for the pure 'growth effect' with no change taking place in the distribution of relative incomes. Then, Absolute poverty and poverty reduction Distribution and distributional changes Aggregate income level and growth "Development strategy " The Poverty-Growth-Inequality Triangle 5 moving from curve (I) to the new distribution curve occurs at constant mean income. This movement thus corresponds to the change in the distribution of 'relative' income, or the 'distribution' effect.3
การเปลี่ยนแปลงในการกระจายรายได้สามารถถูกย่อยสลายไปในสองลักษณะ ครั้งแรก มีผลของการเปลี่ยนแปลงสัดส่วนในรายได้ทั้งหมดที่ทำการกระจายสัมพัทธ์รายได้เปลี่ยนแปลง เช่นผลเจริญเติบโต ที่สอง มีผลของการเปลี่ยนแปลงในการกระจายรายได้สัมพันธ์ที่ โดยคำจำกัดความ เป็นอิสระหมายถึง ลักษณะพิเศษขึ้นเช่นThe following definitions help to clarify these linkages: • “Poverty” is measured by the absolute poverty headcount index, i.e., the proportion of the population below a particular poverty line (e.g. 1$ a day) as derived from household survey data. • “Inequality” (or “distribution”) refers to disparities in relative income across the whole population, i.e., disparities in income after normalizing all observations by the population mean so as to make them independent of the scale of incomes. • “Growth” is the percentage change in mean welfare level (e.g. income or consumption) in the household survey. A change in poverty can then be shown to be a function of growth, distribution and the change in distribution. This is illustrated in Figure 1, where the poverty headcount is simply the area under the density curve at the left of the poverty line (here set at US$1 a day). This figure shows the density of the distribution of income, that is the number of individuals at each level of income represented on a logarithmic scale on the horizontal axis. The move from the initial to the new distribution goes through an intermediate step, which is the horizontal translation of the initial density curve to curve (I). Because of the logarithmic scale on the horizontal axis, this change corresponds to the same proportional increase of all incomes in the population and thus stands for the pure 'growth effect' with no change taking place in the distribution of relative incomes. Then, Absolute poverty and poverty reduction Distribution and distributional changes Aggregate income level and growth "Development strategy " The Poverty-Growth-Inequality Triangle 5 moving from curve (I) to the new distribution curve occurs at constant mean income. This movement thus corresponds to the change in the distribution of 'relative' income, or the 'distribution' effect.3
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