POVERTY & INCOME DISTRIBUTION


CONTENTS:


INTRODUCTION & BACKGROUND

"Poverty signifies the inability of people to realise their potential as human beings" (Ellis, p 77), see, also, Sen, 1997, Human Capital and Human Capability.  See, especially, World Bank, Millennium Development Goals site for current data measuring the extent of global poverty. Current data suggest that 70% of the world's poor live in rural areas.  Ellis notes (p78) that the effects of Structural Adjustment Programmes in Africa has been to narrow the gap between  urban and rural incomes per head,  but mostly because of declining incomes in the urban areas.

Poverty signifies a lack of assets and resources - too many people trying to earn or make a living from too few resources, or inefficiently mobilised resources. Not enough land, inadequate education and skills, and poor health are the key factors in characterising poverty world-wide. "The proportion of rural people in poverty rises markedly in locations that are marginal in terms of agricultural productivity, remote from services, and prone to natural disasters."  (Ellis, p 78).

Ellis notes that a "New poverty agenda" was established in the early 1990s, "a three prong strategy comprising the promotion of labour-intensive economic growth; access by the poor to social services; safety nets targeted at those unable to secure a minimally acceptable survival level of living." (p 79).  This has now progressed to the 8 Millennium Development Goals, of which Eradication of Extreme Poverty and Hunger is the number one goal.

POVERTY MEASUREMENT & DIVERSE LIVELIHOODS

Measured in absolute terms - numbers falling below a predetermined poverty line, supposed to define minimum material necessities for healthy survival (and reproduction).
Or in relative terms, as those falling significantly below some average level of income and well being, and who may thus be excluded from the customary activities and services enjoyed by the majority.  Clearly, in relative terms, the poor are always with us - just failing to keep pace with the majority for some reason.
Ellis notes three somewhat different absolute poverty measures, almost always based on expenditure rather than income, since the latter data tend to be more unreliable and inaccurate measures of resource capacities, and are typically collected at the household level by survey:
A problem associated with measuring poverty by expenditure levels rather than income (see Ellis, p 84/5 and Chapter 9) is that income sources tend to be under-researched, yet are clearly critical for any analysis and understanding (as opposed to measurement) of poverty.  In addition, today's static measure of poverty incidence, depth or severity tells us little or nothing about the dynamics - the changes in individual or household poverty levels over time. What, for instance, happens to our measures of poverty when family members are sent away, or choose to migrate, to other  locations and activities?  What do they tell us about gender differences in the effects of poverty?

Ellis (p. 85) refers to Chambers (1983) distinction  between poverty  types (as an illustration of the aspects which can only be discovered through  more intensive research methods than conventional household surveys):
It is, perhaps, obvious that interpretations of  measurement of poverty will depend heavily on what is measured, when it is measured (during what season), and  even on who is actually doing the measuring (and for what purpose) (p. 87)

Diversification and income distribution

Highly unequal income (and hence  poverty) distributions amongst local populations make policies and strategies to alleviate poverty especially difficult to implement and deliver - risking the real possibility that aid and assistance schemes reach the wrong (rich) people rather than the poor.

Does income diversification help or hinder progress towards more equitable income distributions? One argument is that it helps, by allowing households to mobilise and utilise their own resources (primarily land and labour) more fully and effectively than if they restrict their efforts to only one activity (such as subsistence farming). In this case, connectedness, both geographical and social, is likely to be important in reducing poverty, as is the development of  a significant non-farm sector. There is a considerable body of empirical evidence to support this argument.

On the other hand, perhaps only the richer households (those with more assets, especially skills and education) are able to diversify effectively, in which case, diversification may exacerbate poverty amongst the very poor. There is also some empirical evidence in support of this hypothesis.

Three major types of relationship between income (or asset) levels  and the extent of  diversification (typically the extent of off-farm income sources)
It follows that any attempt to relieve poverty by actions relating to, e.g. improving agriculture, or improving off-farm work opportunities, has to take account of the relationships which hold in the particular instance.   Improving agricultural returns will do little to alleviate poverty if the principle asset is land, since  the (already rich) landowners will reap most of the benefits.   In short, the key is to identify the asset shortages  of the very poor and seek to alleviate these.

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