Comparing Poverty Rates Internationally: Lessons from Recent Studies in Developed Countries

Abstract

Studies comparing poverty in different countries frequently inform the evaluation of past policies and the formulation of future policies for reducing poverty. If the comparisons are to be a valid foundation for such assessments, in particular if they are to be a guide to the effective allocation of funds, the underlying concepts must be examined and defined. This article discusses four issues that are critical in this respect: the choice of poverty indicator, the determination of the poverty line, the unit of anlysis, and the choice of equivalence scale. A selection of studies of poverty in countries that belong to the Organisation for Economic Co-operation and Development is used to show how the choices made in defining these indicators affect the findings about the extent and composition of the poor population. Although the context is different, the experience of rich countries may yield useful lessons for developing countries.

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