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Research Highlights 2010: Poverty and Inequality

Themes |  Highlights |  Team |  Notes |  Current Research Program  |  2010 Publications

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Global poverty has been declining, but a billion people will still be likely to live on less than $1.25 a day in 2015. Improving welfare outcomes depends on collecting better data, improving methods to analyze living standards and understanding better the processes that determine the extent of poverty and inequality.

Themes

Research on poverty and inequality supports the World Bank's goal of alleviating poverty. Building on insights from the 2006 World Development Report, entitled Equity and Development, the team’s central research themes have focused on two areas: better data for describing inequity, and research on understanding and breaking poverty and inequality traps.  The goal is to offer rigorous new thinking and evidence in these two important areas where the development report was more speculative and where the evidence base was more limited.

The team has been active on multiple fronts, producing new household-level survey data, monitoring poverty and inequality using household-level data (including the global poverty monitoring task, which produces the Bank’s official “$1.25 a day” poverty counts), developing improved tools for the analysis of poverty and inequality, and studying in detail some of the processes that govern whether and how individuals are able to escape poverty.   As the ongoing global economic crisis continues to evolve, efforts are also firmly focused on gauging its impact on distributional outcomes in the developing world.

The long-standing Living Standards Measurement Study (LSMS) continues its program of research to improve the quality of household-level measurement of key concepts in poverty and policy analysis. Through new data collection, methodological experiments, field validations, as well as reviews of existing knowledge, the program aims to provide sound advice for improving LSMS and other surveys in developing countries.

Highlights

Improving child labor statistics

Child labor statistics are critical for assessing the extent and nature of child labor activities in developing countries, but widespread variation on the way child labor is measured can create problems of comparability.

A randomized experiment tested two common survey designs—the level of detail in the questionnaire and the choice of respondent—to estimate the effects of these survey features on the labor statistics they generate. An experiment in Tanzania focused on how to classify children’s work and proxy responses versus self-reporting. The results suggest that a short module compared with a more detailed questionnaire has a statistically significant effect, especially on child labor force participation rates, and, to a lesser extent, on working hours. Proxy reports did not differ significantly from a child’s self-report. The results suggest that low-cost changes to questionnaire design to clarify the concept of work for respondents can improve the quality and consistency of the data collected.[1]

Historians have much to contribute to development policy

The consensus among scholars and policy makers that “institutions matter” for development has led inexorably to a conclusion that “history matters,” since institutions clearly form and evolve over time. Unfortunately, the next logical step—to recognize that historians (and not only economic historians) might also have useful and distinctive insights to offer—has not yet been taken. A constructive dialogue is needed between history—understood as both “the past” and “the discipline”—and development policy by clarifying what the craft of historical scholarship entails, especially as it pertains to understanding causal mechanisms, contexts, and complex processes of institutional change; providing examples of historical research that support, qualify, or challenge the most influential research (by economists and economic historians) in contemporary development policy; and offering some general principles and specific implications that historians, on the basis of the distinctive content and method of their research, bring to development policy debates.[2]

A new approach to estimating HIV prevalence: an application to Malawi

Sub-national estimates of HIV prevalence can inform the design of policy responses to the epidemic. In recent years, several African countries have implemented household surveys (such as Demographic and Health Surveys) that include HIV testing of the adult population, providing estimates of HIV prevalence rates at the sub-national level.

These surveys are thought to represent a marked improvement over prevailing alternatives such as sentinel (health post) surveys. However, most countries cannot afford to regularly field such household surveys. Moreover, even where they are possible, these surveys are not necessarily immune from biases associated with household non-response.

A new approach based on small-area estimation procedures is proposed in settings where national population-based surveys of prevalence are not available. It combines sentinel survey data with data from generic household surveys to overcome difficulties with deriving HIV prevalence estimates directly from sentinel surveys.[3]

Mapping natural disasters and their welfare impacts in Vietnam

Costs of natural disasters remain primarily based on estimates of infrastructure damage. But disasters affect the wider economy and households cope through asset depletion and reliance on safety nets. When occurring regularly, they further undermine the coping capacity of households leaving them often with low risk, low return portfolios as the only viable alternative.

To better understand both the immediate and long-run welfare effects, natural disaster and hazard maps derived from geo-referenced meteorolo-gical data are linked to a series of national living standard measurement surveys from Vietnam. The results confirm the potentially devastating nature of natural disasters, with riverine floods causing immediate welfare losses of up to 23 percent and hurricanes reducing welfare by up to 52 percent inside large cities. Households prove more adept at handling droughts, largely due to irrigation. There are also important long-run negative effects from the frequent exposure to disasters, mostly for droughts, flash floods, and hurricanes—where households have learned to exploit moderate riverine flooding. Differences in the welfare effects across space and disaster appear partly linked to the functioning of the disaster relief system, which has so far largely eluded households in hurricane-prone regions.[4

A conditional cash transfer program reduced sexual activity among female students 

Recent evidence suggests that Conditional Cash Transfer Programs (CCTs) for schooling are effective in raising school enrolment and attendance, and other outcomes, such as the sexual behavior of their young beneficiaries.

An ongoing CCT experiment in Malawi, which offered US$10/month conditional on satisfactory school attendance—plus direct payment of secondary school fees—led to significant declines in early marriage, teenage pregnancy, and self-reported sexual activity among the young female beneficiaries after one year. Among young women who were out of school at baseline, the probability of getting married declined by more than 40 percent, and becoming pregnant by more than 30 percent. In addition, the incidence of onset of sexual activity was 38 percent lower among all program beneficiaries. Finally, program beneficiaries significantly reduced the frequency of their sexual activities. CCTs for young women in Sub-Saharan African countries with high HIV rates are likely to be “win-win” programs.[5

Peter Lanjouw, Research Manager

Kathleen Beegle

Calogero Carletto

Shaohua Chen

Quy-Toan Do

Francisco H.G. Ferreira

Jed Friedman

Emanuela Galasso

Markus Goldstein

Kristen Himelein

Talip Kilic

Michael Lokshin 
Branko Milanovic

Siobhan Murray
Gbemisola Oseni

Berk Özler

Sergiy Radyakin

Vijayendra Rao

Zurab Sajaia

Prem Sangraula

Katherine Scott

Diane Steele

Roy van der Weide

Michael Woolcock

 

 

 

 

 

 

 

 

Notes

1.Dillon, Andrew, Elena Bardasi, Kathleen Beegle, and Pieter Serneels. 2010. “Explaining Variations in Child Labor Statistics.” Policy Research Working Paper  5414, World Bank, Washington, DC.
2.Woolcock, Michael, Simon Szreter, and Vijayendra Rao. 2010. “How and Why Does History Matter for Development Policy?” Policy Research Working Paper 5425, World Bank, Washington, DC.
3.Ivaschenko, Oleksiy, and Peter Lanjouw. 2010. “A New Approach to Producing Geographic Profiles of HIV Prevalence: An Application to Malawi.” Policy Research Working Paper 5207, World Bank, Washington, DC.
4.Thomas, Timothy, Luc Christiaensen, Quy-Toan Do, and Le Dang Trung. 2010. “Natural Disasters and Household Welfare–Evidence from Vietnam.” World Bank Policy Research Working Paper 5491, December. 
5.Baird, Sarah, Ephraim Chirwa, Craig McIntosh, and Berk Özler. 2010. “The Short-Term Impacts of a Schooling Conditional Cash Transfer Program on the Sexual Behavior of Young Women.”  Health Economics 19(S1):55-68.

 




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