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 Assessing the pro-poorness of government fiscal policy in Thailand
Hyun H. Son 5 D ifferentiating (1) and using (8) gives the elasticity of θ w ith respect to iµ as ( ) ( ) � == z ii i i dxxfxg x P 0 1 ∂ ∂ θθ µ ∂µ ∂θηθ (9) For the Foster, G reer and Thorbecke (1984) class of poverty...
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Hyun H. Son 5 D ifferentiating (1) and using (8) gives the elasticity of θ w ith respect to iµ as ( ) ( ) � == z ii i i dxxfxg x P 0 1 ∂ ∂ θθ µ ∂µ ∂θηθ (9) For the Foster, G reer and Thorbecke (1984) class of poverty m easures, the ith incom e com ponent elasticity is derived from (8) as � − � � � � � � − −= z ii dxxfxg z xz z0 1 )()(1 α α α θ αη (10) for α ≠ 0 , w hich can easily be com puted given data on incom e com ponents and the net incom e x. The m ean incom e com ponent
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http://www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=6
www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=6
4 International Poverty Centre W orking Paper nº 15 w hich is the percentage of poor w ho w ill cross the poverty line as a result of 1 percent of grow th in the m ean incom e of the society. Substituting α)(),( z xz xzP −= into (4) gives the elasticity of θα w ith respect to µ as ( ) α αα α α α θ θθα θ µ ∂µ ∂θη −−== −1 (5) for α ≠ 0 , w hich w ill alw ays be negative because θα is a m onotonically decreasing function of α. 2.3 G ROW TH ELASTICITY OF INCOM E <span class="highlight">COM</span> PONENTS The total (or net) incom e
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http://www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=7
www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=7
Hyun H. Son 5 D ifferentiating (1) and using (8) gives the elasticity of θ w ith respect to iµ as ( ) ( ) � == z ii i i dxxfxg x P 0 1 ∂ ∂ θθ µ ∂µ ∂θηθ (9) For the Foster, G reer and Thorbecke (1984) class of poverty m easures, the ith incom e <span class="highlight">com</span> ponent elasticity is derived from (8) as � − � � � � � � − −= z ii dxxfxg z xz z0 1 )()(1 α α α θ αη (10) for α ≠ 0 , w hich can easily be <span class="highlight">com</span> puted given data on incom e <span class="highlight">com</span> ponents and the net incom e x. The m ean incom e <span class="highlight">com</span> ponent
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http://www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=8
www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=8
increase in iµ redistributes incom e in favor of the rich or the poor individuals. In this case, w e m ust <span class="highlight">com</span> pute the redistribution effect of an incom e <span class="highlight">com</span> ponent on poverty. This is accom plished by decom posing the poverty elasticity iθη into tw o <span class="highlight">com</span> ponents: � � � � � � � � −+= θθθθ ηµ µηη µ µη iiii (12) The first term on the right-hand side is the incom e effect, and the second term is the redistribution effect. It is the redistribution effect that tells us w hether an increase in
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http://www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=9
www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=9
Hyun H. Son 7 To derive the elasticity, let us w rite the dem and equations of k <span class="highlight">com</span> m odities as q = q (x, p) w here p and q are the k × 1 vectors of prices and quantities of k <span class="highlight">com</span> m odities, and x is the disposable incom e. It is reasonable to assum e that all individuals face the sam e price vector, w hich m eans that the prices are fixed across individuals. Thus, w e w rite the dem and equation as q = q(x), w hich are the quantities consum ed by an individual w ith disposable incom e x.1 U
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http://www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=10
www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=10
8 International Poverty Centre W orking Paper nº 15 w here µ is the m ean incom e of the disposable incom e and p qi i is the m ean expenditure of the ith <span class="highlight">com</span> m odity. The first term in (17) is the incom e effect of the price increase, w hich is alw ays positive because θη , given in (4), is negative. The second term is the redistribution or inequality effect of price change. It is the redistribution effect that tells us w hether an increase in price pi hurts the poor proportionally m ore than
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http://www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=13
www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=13
Hyun H. Son 11 4 D ATA ANALYSIS 4.1 D ATA SOURCE The data source <span class="highlight">com</span> es from the Socio-Econom ic Surveys (SES) conducted in 1998. The SES data are unit record household surveys conducted every tw o years by the National Statistics Office in Thailand. The survey is nationw ide and covers all private, non-institutional households residing perm anently in m unicipal, sanitary districts, and villages. How ever, it excludes part of the population living in transient hotels or room ing houses
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http://www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=14
www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=14
12 International Poverty Centre W orking Paper nº 15 4.2 ANALYSIS OF EM PIRICAL RESULTS Table 3 presents the values of poverty elasticity and the pro-poor index for different incom e <span class="highlight">com</span> ponents. Public policies can be assessed for different m easures of poverty. The head-count ratio is a crude m easure of poverty because it <span class="highlight">com</span> pletely ignores the gap in incom es from the poverty line and the distribution of incom e am ong the poor. The severity of the poverty index has all the desirable
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http://www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=15
www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=15
Hyun H. Son 13 FIG U RE 1 Pro-Poor index for incom e <span class="highlight">com</span> ponents, poverty gap ratio 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 Wa ge & sa lar y En tre pre ne ur ial inc om e Fa rm inc om e Re nt fro m bo ar de rs La nd re nt fro m far m ing Ot her re nt fro m no n- far m ing Int er es t & div ide nd s Re m itta nc es Pe ns ion s & an nu itie s Te rm ina l p ay & ot her s Fo od as pa rt o f p ay Re nt re ce ive d a s p ay Ot her go od s a s p ay Ho m e pro
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http://www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=23
www.undp-povertycentre.org/pub/IPCWorkingPaper15.pdf#page=23
NOTES 1. Note that w riting the dem and equations in the form q=q(x) does not im ply that all ow n-price and cross-price elasticities of dem and are zero. It only im plies that prices do not vary across individuals. 2. CV= [e(u,p*)-e(u,p)] is the <span class="highlight">com</span> pensation variation, the <span class="highlight">com</span> pensation that should be given to an individual to m aintain his or her utility level the sam e as before the price change. 3. The poverty threshold is set using the calorie requirem ents of individuals that differ by age
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