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Incomes of the poorest are growing in 3 of every 4 economies

Maria Ana Lugo's picture

In much of the world today, the incomes of the poor are growing. The World Bank calls this concept shared prosperity, defined as the average annual growth in income or consumption of the poorest 40 percent (the bottom 40) within each country. So, if shared prosperity in a country is positive, the poor are getting richer.

In addition, the shared prosperity premium is defined as the difference between the annual income or consumption growth rate of the bottom 40 and the annual growth rate of the mean in the economy. A positive premium indicates that the bottom 40 are getting a larger share of overall income in the economy.

Shared prosperity was positive in 70 out of the 91 economies for which data is available. That is, those at the bottom of the distribution experienced positive income growth in most countries during 2010-15. In addition, among economies with positive shared prosperity, 49 out of 70 also have a positive shared prosperity premium (see Panel A of the chart for selected economies), while in less than a third the income growth of the bottom 40 is lower than for the mean (Panel B).

However, the inverse is also true. Nineteen out of the 21 economies with negative shared prosperity have a negative shared prosperity premium (Panel C). This means that in these countries, not only are incomes among the bottom 40 shrinking rather than growing, but also that the decline is more profound among the bottom 40 than across the rest of the distribution. To view the complete list of economies with available data, visit http://www.worldbank.org/en/publication/poverty-and-shared-prosperity#data.

This is a partial view because data needed to assess shared prosperity is weakest in the very countries that most need it to improve. Only one in four low-income countries and four of the 35 recognized fragile and conflict-affected states have data that allow us to monitor shared prosperity over time. Since a lack of reliable data is associated with slow average income growth for the poorest, the situation could even be worse than currently observed.

To learn more, read the recently released Poverty and Shared Prosperity report 2018, “Piecing Together the Poverty Puzzle.”

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Submitted by Icdhingra on

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