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How to Use Labor Force Surveys to Estimate Poverty

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Official poverty statistics rely on costly household expenditure surveys collected several years apart. As a result, policy makers often don’t have up-to-date poverty estimates.

 In a recent working paper, Mohamed Douidich, Abdeljaouad Ezzrari, and Roy Van der Weide show how labor force surveys can be used with cross-survey prediction methods to provide provisional estimates of poverty rates. Labor force surveys are carried out at least every year in most countries and the data correlate well with household income, making it possible to make more up-to-date poverty estimates. Combining two rounds of household expenditure surveys (2001 and 2007) with labor force survey data for Morocco, the authors estimate quarterly poverty rates for the period 2001-2010. These estimates gave the Moroccan government an idea of how poverty has evolved since 2007, with large global and domestic shocks to the economy. The method accurately reproduces official poverty statistics by comparing the prediction-based estimates with the official estimates for 2001 and 2007. Although the focus is on head-count poverty, the method can be applied to any welfare indicator that is a function of household income or expenditure, such as the poverty gap or the Gini index of inequality. Click here to read the working paper.