The poverty-inequality relationship in Malawi: A multidimensional perspective

Mussa, Richard (2011): The poverty-inequality relationship in Malawi: A multidimensional perspective. Unpublished.

Abstract

This paper looks at the linkage between poverty and inequality by investigating the poverty impacts of changes in within and between inequalities in Malawi. We recognize the multidimensional nature of both poverty and inequality by focusing on monetary (consumption) and non monetary (health and education) dimensions of well being. Two questions are answered namely; what is the contribution of within-group inequalities (vertical inequalities) to total poverty? And what is the contribution of between-group inequalities (horizontal inequalities) to total poverty? The second integrated household survey (IHS2) is used, and the results differ considerably across the three dimensions of well being. The elasticity of poverty with respect to within-region consumption inequalities is positive and higher than that of between-region inequalities, suggesting that reductions in vertical inequalities in consumption would have a higher poverty reducing effect. Between-region inequalities in health have a larger and positive effect on the health poverty headcount; on the other hand within-region inequalities in health have a larger and positive relationship with the health poverty gap and severity. We also find that an increase in both within and between region education inequalities reduce the education poverty headcount, but increase the education poverty gap and severity.

• Item Type: MPRA Paper
• Language: English
• Keywords: Inequality; poverty; Malawi
• Subjects: D - Microeconomics > D3 - Distribution > D30 - General

References

Araar, A. and J.-Y. Duclos (2010), ‘Poverty and Inequality: A Micro Framework’, Journal of African Economies, Vol. 19, pp. 357-398.

Basu, K. and J.E. Foster (1998), ‘On Measuring Literacy’, Economic Journal, Vol. 108, pp.1733-1749.

Donaldson, D. and J. Weymark (1980) ‘A Single Parameter Generalisation of the Gini Indices of Inequality’, Journal of Economic Theory, Vol. 22, pp. 67-86.

Donaldson, D. and J. Weymark (1983) ‘Ethically Flexible Gini Indices for Income Distributions in the Continuum’, Journal of Economic Theory, Vol. 29, pp. 353-358.

Filmer, D and L. Pritchett (2001), ‘Estimating Wealth Effects Without Expenditure Data or Tears: An Application of Educational Enrollment in States of India’, Demography, Vol. 38, pp.115-132.

Foster, J, Greer, J and E.Thorbecke (984), ‘A Class of Decomposable Poverty Measures’, Econometrica, Vol. 52, pp.761-766.

Fosu, A. K. (2009), ‘Inequality and the Impact of Growth on Poverty; Comparative Evidence for Sub-Saharan Africa’, Journal of Development Studies, Vol. 45, pp.726-745.

Fosu, A. K. (2008), ‘Inequality and the growth-poverty nexus: specification empirics using African data’, Applied Economic Letters, Vol.15, pp.563-566.

Mukherjee, S and T. Benson(2003), ‘The Determinants of Poverty in Malawi’, World Development, Vol. 31, pp.339-358.

Mussa, R. (2010), ‘Spatial comparisons of poverty and inequality in living standards in Malawi’, MPRA Working Paper Number 23576, University Library of Munich, Germany.

Østby, G. (2008), ‘Polarization, horizontal inequalities and violent civil conflict,’ Journal of Peace Research, Vol. 45, pp.143-162.

Sahn, D.E and D.C Stifel (2000), ‘Poverty Comparisons over Time and Across Countries in Africa’, World Development, Vol.28, pp.2123-2155.

Sahn, D.E and D.C. Stifel (2002), ‘Robust Comparisons of Malnutrition in Developing Countries’, American Journal of Agriculture Economics, Vol.84, pp.716-735.

Sahn, D.E and D.C. Stifel (2003), ‘Urban-rural Inequality in Living Standards in Africa’, Journal of African Economies, Vol.12, pp.564-597.

Sahn, D.E and S.D,Younger (2006), ‘Changes in Inequality and Poverty in Latin America: Looking Beyond Income to Health and Education’, Journal of Applied Economics, Vol. 9, pp.215-233.

Sen, A, (1985), Commodities and Capabilities, North Holland, Amsterdam.

Sen, A, (1987), ‘The Standard of Living: Lecture II, Lives and Capabilities’ in Hawthorn, G (Ed.), The Standard of Living, Cambridge University Press, Cambridge, MA.

Wagstaff, A., Pierella, P., and E. van Doorslaer(1991), ‘On the Measurement of Inequalities in Health’, Social Science and Medicine, Vol. 33, pp.545-557.

WHO (World Health Organization) (1983), Measuring Change in Nutritional Status: Guidelines for Assessing the Nutritional Impact of Supplementary Feeding Programmes for Vulnerable Groups, WHO, Geneva.

Yitzhaki, S. (1983), ‘On an Extension of the Gini Index’, International Economic Review, Vol.24, pp. 617-628.