Urban–Rural Differences in Costs of Living and Their Impact on Poverty Measures

This note demonstrates empirically the importance of urban-rural price differences and inflation figures in poverty analysis. Using data from the National Socio-Economic Survey (Survei Sosial Ekonomi Nasional, widely known as Susenas), it shows that the urban-rural food price differential during the period 1987–96 was 13–16%, not 28–52% as impli by the ‘official’ food poverty lines. The urban–rural poverty comparisons and the components of change in simulated poverty estimates presented here therefore differ from those based on the ‘official’ figures. They indicate that migration to urban areas between 1987 and 1996 accounts for a significant part of the observed decline in poverty. The paper concludes that it is essential to use accurate urban–rural cost of living differences in deriving aggregate, urban and rural poverty estimates.     

Are Urban Poverty and Undernutrition Growing? Some Newly Assembled Evidence

The population of the developing world is becoming more urban. Are poverty and undernutrition beginning to relocate to urban areas as well? We use survey data on poverty (from eight countries) and on child undernutrition (from 14 countries) to address this question. Using data from the past 15–20 years we find that in a majority of countries the absolute number of poor and undernourished individuals living in urban areas has increased, as has the share of overall poverty and undernourishment coming from urban areas. Given these trends and the current stock of knowledge as to the levels, determinants and solutions to urban poverty and undernutrition, we argue for more research on these issues.     

Structure of Sectoral Decomposition of Aggregate Poverty Changes in Cameroon

Abstract: This paper reviews theoretical frameworks for sectoral decomposition and assesses the within‐ and between‐sector contributions to changes in aggregate poverty in Cameroon informed by the Shapley Value decomposition rule. Between 1984 and 1996 poverty remained a rural phenomenon in Cameroon. It became more widespread, deeper and severer in both rural and urban areas, but more so in urban than rural areas. While the within‐sector effects disproportionately accounted for the increase in poverty in the period 1984–96, the between‐sector contributions in both rural and semi‐urban areas played a mitigating role on the worse effects of the increase in poverty. These findings infer the potential positive feedback effects of migration such as remittances, and/or increases in rural consumption expenditure in the face of rural underemployment, as effective strategies used by migrants to lift their families and villages out of the worse effects of poverty. The implication of this interpretation is that decision‐makers need to better understand the factors that push or pull potential migrants. Rural–urban mobility could, therefore, be viewed as a strategy used by households to moderate the worse effects of poverty and a vector of shared growth. The implications for public policy, in terms of open unemployment and associated social and insecurity problems at the receiving end, point to the wisdom of addressing the push‐factors via targeting more in favour of rural areas.     

Economic growth and poverty reduction in Indonesia before and after the asian financial crisis

This paper assesses the relationship between poverty reduction and economic growth in Indonesia before and after the Asian financial crisis. The annual rate of poverty reduction slowed significantly in the post-crisis period. However, the trend in the growth elasticity of poverty indicates that the power of each percentage point of economic growth to reduce poverty did not change much between the two periods. In both, service sector growth made the largest contribution to poverty reduction in both rural and urban areas. Industrial sector growth largely became irrelevant for poverty reduction in the post-crisis period even though the sector contributed the second-largest share of GDP. Agricultural sector growth, mean-while, remained important, but in rural areas only. The findings suggest the need to formulate an effective strategy to promote sectoral growth in order to speed up the pace of poverty reduction.     

On the Relative Well-Being of the Nonmetropolitan Poor: An Examination of Alternate Definitions of Poverty during the 1990s

Using Foster-Greer-Thorbecke poverty indices, this paper shows that although the incidence of poverty was higher in nonmetropolitan than metropolitan areas throughout the 1990s, the poverty-gap index was only statistically significantly higher in nonmetropolitan areas in six of the 10 years, and the squared poverty-gap index was worse in only three years. This paper also provides design-corrected standard errors for the indices, which result in more than doubling the uncorrected estimates. An examination of the ratio of the poverty-gap to the head count index establishes that the average shortfall of the poor as a fraction of the poverty line was worse in the metropolitan areas during all 10 years of the 1990s. Similarly, the distribution of income divided by the poverty line indicates that disproportionately more of the nonmetropolitan poor subsisted on incomes near the poverty line, whereas the metropolitan poor were relatively more likely to be living in extreme poverty.     

The determinants of rural and urban household poverty in the North West province of South Africa

Based on standard poverty measures, the extent of poverty in the North West province is on average worse than in South Africa. For instance, the poverty gap ratio for North West is twice that of the South African average, and the FGT index is three times as high. This article therefore aims to identify the determinants of rural and urban poverty in the North West province of South Africa. Using data gathered from a survey of 593 black households across the province, probit model estimates suggest that the major significant determinants of household poverty in both rural and urban areas are education and household size. A difference between rural and urban poverty is, first, that extra female adults in a rural household raise the probability of poverty. Secondly, having a migrant (out) worker as head of the household in rural areas lowers the probability of poverty, while this does not apply to urban households. A sensitivity analysis for the robustness of the results over a range of poverty lines reveals that the impact of education is much stronger for poorer households than for more wealthy households.     

Economic growth,inequality, and poverty in Vietnam

This study examines how poverty reduction has been associated with economic growth and inequality in Vietnam. It finds that although the speed of poverty reduction was lower in the 2000s than in the 1990s, economic growth was more pro‐poor in the latter period. During the 1993–98 period, expenditure inequality increased and the poverty reduction during this period was mainly caused by economic growth. During the 2004–08 period, however, expenditure inequality decreased, thereby contributing to poverty reduction. The poverty incidence declined by around 5 percentage points, of which expenditure growth and redistribution contributed 2.8 and 2.2 percentage points of poverty reduction, respectively.     

Changing Sources of Household Income,Poverty, and Sectoral Inequality in Sri Lanka, 1990–2006

Comparing dynamic changes in household income and poverty among urban, rural, and estate sectors in Sri Lanka from 1990 to 2006, this study finds that a shift of household income away from farm to nonfarm sources is accompanied by a significant improvement in household income and reduction in poverty, particularly in the rural sector. Major contributing factors are the rise in returns to labor, in general, and educated labor, in particular, due to the development of the nonfarm labor market. Persistently low income among estate households can be explained primarily by the limited availability of nonfarm employment opportunities and the low education levels of working members.     

The Political Economy of Urban Food Security in Sub-Saharan Africa

Sub-Saharan African cities in the late 1990s face a daunting set of problems including rapid growth, increasing poverty, deteriorating infrastructure, and inadequate capacity for service provision. Even as a renewed debate is shaping up around issues of urban development, there is little attention given to the question of urban food security. Whereas in the 1970s and 1980s, urban food problems in Africa commanded political attention, the nature of urban food insecurity in the 1990s is such that it has tended to lose political importance. This is largely because in the 1970s, the problem was one of outright food shortages and rapid price changes that affected large portions of the urban population simultaneously. The impact of structural adjustment, continued rapid growth, and an increase in poverty make urban food insecurity in the 1990s primarily a problem of access by the urban poor. Under circumstances where the urban poor spend a very large portion of their total income on food, urban poverty rapidly translates into food insecurity. The lack of formal safety nets, and the shifting of responsibility for coping with food insecurity away from the state towards the individual and household level has tended to atomize and muffle any political response to this new urban food insecurity. This paper briefly reviews urban food insecurity and generates a set of empirical questions for an analysis of food and livelihood security in contemporary urban sub-Saharan Africa, and then examines historical and contemporary evidence from Kampala, Uganda, and Accra, Ghana, to suggest some tentative conclusions.     

Constructing migration: Infrastructure,poverty and development in KwaZulu‐Natal

Migration and population movement are probably the most neglected of the significant dynamics behind rural poverty in South Africa. Little is known about how people move from place to place, and much of what we thought we knew may be incorrect. In KwaZulu‐Natal job search is no longer the single dominating reason given for migration. Instead, infrastructure ties with it for first place today, with land close behind. The first article in this two‐part report notes that as many as two thirds of the province's disadvantaged families have broken away from their communities of origin and moved at least once during their lifetimes. Perhaps three million have migrated in the last fifteen years. A second unexpected finding is the predominance of rural‐to‐rural migration. Three quarters of all moves recorded were rural to rural, with many orientated towards advantaged rural areas around small towns and secondary cities. Results show how streams are channelled towards poverty or opportunity, and argue for a review of prevailing concepts of rural‐urban relations which structure delivery efforts. The second article, to follow later, notes that recorded income levels are now higher in some rural destination areas than in the urban shack communities that accommodate rural‐to‐urban migrants. Results of various studies presented show how access to information affects migration patterns, and the article also explores the role of infrastructure as a determining force in the regional distribution of population and as a factor in people's own bootstrap anti‐poverty efforts.     

Analysing post-apartheid poverty trends by geo-type, 1997–2012: The understated role of urbanisation and social grants

This article investigates poverty trends in post-apartheid South Africa with an explicit focus on differences between rural and urban areas. Using nationally representative household survey data from 1997–2012, I first describe changes in population characteristics and household access to different income sources and services, by urban–rural geo-type. Income data are then used to generate poverty statistics, which cast light on divergent trends in rural and urban areas. Next, I employ a poverty decomposition method to further explore some potential reasons why the poverty trends in rural and urban areas have differed. Data from the Afrobarometer are then used to probe how subjective non-monetary welfare has changed over time across geo-types. The evidence from all surveys suggests that the dramatic increase in access to services and social grants in rural areas has played a vital role in poverty reduction.     

Income growth, inequality and poverty reduction: A case study of eight provinces in China

This paper examines the growth performance and income inequality in eight Chinese provinces during the period of 1989–2004 using the China Health and Nutrition Survey data. It shows that income grew for all segments of the population, and as a result, poverty incidence has fallen. However, income growth has been uneven, most rapidly in coastal areas, and among the educated. A decomposition analysis based on household income determination suggests that income growth can largely be attributed to the increase in returns to education and to the shift of employment into secondary and tertiary sectors.     

Dietary Diversity,Food Security and Undernourishment: The Vietnamese Evidence*

As is widely known, Vietnam experienced a rise in living standards and a decline in expenditure poverty during the first half of the 1990s. This paper extends this knowledge by providing evidence on the Vietnamese experience of food security, undernourishment and poverty from the late 1990s to the early part of the new millennium. The results suggest that poor households did not experience increases in food consumption, calorie intake and dietary diversity of the same magnitude as non‐poor households. Nevertheless, Vietnam experienced impressive reductions in both calorie deprivation and expenditure poverty at the turn of the century. Non‐poor households, in particular, experienced spectacular increases in calorie intake and dietary diversity during the period 1997/1998–2004. This paper also reports regression results which point to the role of urbanization and improvement in education levels in promoting dietary diversity and nutrient intake. The present study finds evidence of sharp regional differences in calorie intake and calorie costs, which suggests that the authorities should set provincial poverty lines, contrary to the current practice adopted by Vietnam's General Statistical Office.     

Revisiting Growth‐Poverty Relationship: A Medium‐Term Causality Approach

This article examines the potential medium‐term causal relationship between changes in Gross Domestic Product (GDP) per capita and poverty in developing countries during the 1970s–1990s. For this purpose, we use panel data model evaluation techniques to test the out‐of‐sample forecasting performance of competing models. We conclude that the evidence supports the hypothesis that increases in GDP per capita cause unidirectional poverty reduction, measured by the $1/day poverty rate, in the period 1970s–1980s. The results are similar when analysing low‐ and middle‐income countries and mid‐high‐ and very high‐inequality countries separately. However, in the period 1980s–1990s, it is only statistically significant for low‐income countries.     

Housing inequality and housing poverty in urban China in the late 1990s

This paper discusses housing inequality and housing poverty in urban China in the late 1990s, using original household surveys. Focuses are on the distributive implications of the privatization of public-owned housing and the wave of rural–urban migration. Estimates of the imputed rent function for owned housing purchased at discount prices indicates that meritocracy and political credentialism work differently as determinants of housing inequality. The paper confirms that there has been a large disparity in housing conditions between urban and migrant households, and that a new type of housing poverty has been emerging among migrant households.     

Poverty and Inequality in The Soeharto Era: An Assessment

This paper surveys the evidence on trends in poverty and inequality during the years of Soeharto's presidency. That Indonesia saw a decline in the incidence of poverty, and improvements in other welfare indicators such as infant mortality rates and literacy rates over these years, seems indisputable. Comparative studies show that by the latter part of the 1980s, the headcount measure of poverty in Indonesia was below that in the Philippines although above that in Malaysia and Thailand. But relative poverty has declined more slowly, and indeed increased in some urban areas between 1987 and 1996. The paper also examines evidence on the determinants of rural poverty in Indonesia in 1993, and suggests that rural development programs targeted to the specific needs of poor people in poor areas will be essential if rural poverty is to be further reduced in future years.     

Poverty and vulnerability in the Punjab,Pakistan: A multilevel analysis

This study estimates the prevalence and extent of vulnerability to poverty in the Punjab province of Pakistan. A multilevel model is used to analyze survey data of about 90,000 households distributed across 150 towns/tehsils. Empirical estimates show that the vulnerability rate is higher than the rate of poverty, and poverty-induced vulnerability is higher than risk-induced vulnerability. Moreover, idiosyncratic-vulnerability is higher than covariate-vulnerability. Unlike previous studies that find poverty to be a rural phenomenon, this research shows that poverty and vulnerability are equally high in urban areas. A high level of urban vulnerability adds urgency to anti-poverty interventions given a rapid urbanization in Pakistan.     

Poverty in Zambia: Levels,patterns and trends

This article presents the results of the analysis of levels, patterns and trends in the incidence of poverty in Zambia between 1991 and 1998, based on data captured in nationally representative surveys. In 1998, about 73 per cent of the households in Zambia were poor, the majority of which were extremely poor. Most poor households were in rural areas, with wide inter- and intra-provincial and district variations. The incidence of poverty also varied according to employment status and sector, as well as by district, gender, marital status, education and stratum of head of the household. In general, households headed by females, those without any formal education, unpaid family workers, the inactive, the self-employed, and those in agriculture, forestry and fishing recorded the highest incidence of poverty, with those employed in private households being affected the worst. In spite of the general increase in poverty nationally, most rural provinces registered declines while urban areas experienced increases in the incidence of poverty during the period under review. Furthermore, except for the agricultural/forestry, mining and quarrying, and electricity and gas sectors, the incidence of poverty increased in all the other sectors while remaining almost the same in the real estate sector. The direction and magnitude in the incidence of poverty between 1991 and 1998 were also associated with gender, education, employment status, employment sector, and residence of head of the household, as well as size of the household. Based on the analysis, the article strongly recommends revision in the measurement of poverty, investigation of the types of coping strategies adopted by the poor, and the extent to which these impact on the general well-being and productivity of vulnerable households in Zambia. The need for more qualitative data has also been highlighted.     

Labour market dimensions of poverty in Indonesia

This paper focuses on labour market issues relevant to poverty alleviation. Patterns of participation, unemployment and employment are examined among the poor compared with the non-poor in general, among urban and rural households, and among various socio-demographic groups. Using data from the 2002 National Socio-Economic Survey, the paper finds that low participation in the workforce and high unemployment, while important, are less closely related to poverty status than expected, especially among spouses of household heads. However, sector of employment and underemployment are closely associated with poverty, especially for those in informal jobs in urban areas; in rural areas, the poor are heavily concentrated in agriculture. Among the poor, young people and females are more likely to be underemployed and to work in agriculture than prime-age workers. The data suggest that labour market policies that tend to protect those in formal sector employment are unlikely to reduce poverty much, if at all.     

Poverty in Indonesia 1984–2002: the impact of growth and changes in inequality

This paper examines the growth elasticity of poverty across three development episodes in Indonesia between 1984 and 2002, after controlling for inequality. It relies on estimation of panel data from the National Socio-Economic Survey conducted by the central statistics agency. Contrary to expectations, the growth elasticity of poverty was virtually indistinguishable across the three development episodes – a period of far-reaching policy liberalisation (1984–90); a second period of slower liberalisation (1990–96); and the period of recovery from the Asian financial crisis (1999–2002). Growth was pro-poor in all three periods, while the impact of growth on poverty was either augmented or offset by changes in inequality, depending on the period. Only during the first liberalisation period did a reduction in inequality serve to augment the impact of growth on poverty.