Changing population weights in a decomposable poverty index

Article type: Research Article

Authors: DeFina, Robert H.^a

Affiliations: [a] Department of Economics, Villanova University, Villanova, PA 19085, USA. Tel.: +1 610 519 4482; Fax: +1 610 519 4496; E-mail: robert.defina@villanova.edu

Abstract: A distribution-sensitive poverty measure developed by Foster, Greer, and Thorbecke has several characteristics which strongly recommend its use in applied poverty analysis. This article expands its usefulness by deriving an analytical expression that exactly decomposes a change in the index into: 1) growth due to population-share changes; and, 2) growth due to within-group poverty changes. It also adjusts the basic index to allow for multiple poverty lines, as are used in the United States. The theoretical framework is applied to Current Population Survey data to examine how U.S. population-share changes in industry, race, and family-structure categories have contributed to growth in the index between 1979 and 1996. The effects of these structural shifts have been a special concern to policy makers throughout the past decade. Resulting computations indicate that these share changes have played only a minor role. Most of index's growth instead stems from within-group poverty increases.

Keywords: poverty index, decomposition

DOI: 10.3233/JEM-2000-0167

Journal: Journal of Economic and Social Measurement, vol. 26, no. 1, pp. 1-10, 2000