Poverty and Shared Prosperity Series. Poverty and Shared Prosperity Reversals of Fortune For more than two decades, extreme poverty was steadily declining.
Learn More. Focus Areas. Inequality and Shared Prosperity We're working to increase the incomes and welfare of the less well off. Research View All Research. Use Our Data. Browse more poverty and inequality data. Extreme poverty, Here are the top 10 Sub-Saharan African countries that have reduced poverty the most. Top News. COVID casts different shadows over the lives of men and women. March global poverty update from the World Bank. Ruth Hill. Despite the clear advantage of funding and supporting nutrition assistance programs, 58 they have been the target of regulatory attacks 59 and budget cuts.
Lawmakers must also ensure that the WIC program is fully funded and that all of its benefits, including those beyond food assistance such as breastfeeding counseling, are available to all eligible families. Another vital program for ensuring that children are guaranteed the food they need, the National School Lunch and Breakfast programs serve almost 30 million students each day. Those with family incomes at or below percent of the federal poverty level receive free lunch; those with incomes between percent and percent of the poverty level pay a reduced price 30 cents for breakfast and 40 cents for lunch ; and all other students pay full price for their meals.
Instead of a means-tested program that can add burdens for both families and school administrators, with complicated paperwork for applications and reimbursements, lawmakers should enact a universal free lunch program at public schools and child care centers.
Three-quarters of very low-income families pay more than half of their incomes on rent; 67 in , almost 1. To ensure that all children and their families are housed, policymakers must invest in fair and equitable housing policies.
The program is intended to help very low-income people rent, lease, or purchase safe housing in the neighborhoods of their choice, but its potential is marred in part by widespread discrimination against voucher holders and a yearslong waiting list. As a result, millions of low-income families are often left with limited options and impossibly long waits for a voucher to become available.
Children in low-income families tend to have worse health outcomes than other kids, with even short stays in poverty being associated with higher rates of asthma, malnutrition, trauma, and other chronic diseases.
Health care costs also drive millions of families into poverty, forcing them to make difficult financial trade-offs to afford care. The federal government must ensure that all children, no matter their household incomes, have access to comprehensive and affordable health care.
Doing so would not only create better health outcomes and future opportunities for those children but would also remove a financial burden for parents. And for the many low-wage workers who do not receive health care through an employer, stable coverage for their children is even harder to find. Recent attacks on Medicaid and CHIP have increased bureaucratic burdens, narrowed eligibility, and discouraged immigrant families from applying even when eligible—all of which contribute to increasing rates of uninsurance.
Future changes to the health care system must ensure stable, affordable coverage for low-income children and provide early and consistent screening, diagnostic, and treatment services so that children have access to the comprehensive and preventive health services that they need.
While UI programs are intended to help families make up for lost wages, they are often characterized by state variations, burdensome application processes, and inadequate benefit amounts. Despite its flaws, there is proven evidence that the program works.
In , during the Great Recession, UI benefits lifted almost 1 million children out of poverty. The United States is the only industrialized country without a national paid leave program, leaving many low-wage and part-time workers—who are disproportionately women—without a viable option for paid time off in times of need.
A permanent national paid sick leave law would help workers protect their health and care for sick family members without risking their livelihood.
A permanent national paid family and medical leave program, with comprehensive reasons for leave and a progressive wage replacement, would allow workers to take time off to welcome a new child or care for themselves and their families during illness without experiencing a massive decline in income or losing their job completely.
According to a Congressional Budget Office analysis, more than , children would be lifted over the federal poverty line by increasing the minimum wage alone. For poor families, paying for child care can amount to almost one-third of their already limited budgets.
Investing in affordable, high-quality child care and universal preschool is a smart decision—not just for the economy and families as a whole but also as a strategy to reduce child poverty in the coming years. Study after study has shown that cash transfer programs can make a big difference in alleviating poverty. These programs allow people to spend the money where it makes the most sense for their families rather than dictating how or when they can use it. Although it is meant to help offset the cost of raising children, the phase-in structure of the credit means it intentionally excludes the lowest-income families who stand to benefit the most.
To strengthen the child tax credit, lawmakers must pass legislation to increase the benefit and make it fully refundable, disbursed monthly rather than as a one-time lump sum, and indexed to inflation.
Most importantly, they must eliminate the minimum earnings requirement to ensure that the most vulnerable children are able to receive the benefit.
This would allow the credit to function much like a child allowance that offers cash benefits to families to help them raise children, a policy used in countries that have more successfully reduced child poverty such as Australia, Germany, and Canada.
Fixing existing programs to better serve families in poverty is necessary, but lawmakers must also commit to tackling the deep-rooted racism and inequity that makes poverty possible. They can do that by building a more equitable public education system with strong federal oversight and emphasis on ending the disparities that exist for low-income students and students of color; 96 closing the racial wealth gap with targeted policies and long-overdue reparations for centuries of structural racism and injustice; 97 ending mass incarceration and disenfranchisement; and other changes that address the many causes of systemic and generational poverty.
Child poverty in America is persistent, structural, and solvable, and the COVID pandemic has only made it clearer that the existing structures to address child poverty and protect children from hardship are inadequate. To ensure that all children are able to thrive, policymakers must focus on supporting children and their families by tackling inequality and discrimination in the labor market, strengthening the social safety net, and addressing structural marginalization across policy areas.
Again, we see the Scandinavian countries having the lowest rates of child poverty, with Denmark seeing only 2. Finally, the third column indicates the poverty gap, which is defined as the percentage by which the average income of the poor falls below the poverty line. This gives us an overall gauge of the depth and severity of poverty in each country. Once again we find that the United States is at the very high end in terms of this measure.
Only Italy has a greater poverty gap than the U. Furthermore, the distance of the poor from the overall median income is extreme in the U. At the same time the United States is arguably the wealthiest nation in the world. But it is clear that the world has made progress against it.
What this chart shows is that, no matter what global poverty line you choose, the share of people below that poverty line has declined. The study by Mauro and Hellebrandt 21 on which the above chart is based only has data from onwards. But there is some good data that allows us to go further back in time, as well as looking at absolute numbers of people in poverty rather than shares. Progress against a poverty line of int.
Until a decade decade ago it was only a quarter. The majority of the world population is still very poor. What the cutoff for extreme poverty is helpful for is to focus the attention to those who are the very poorest. This would not be possible if we would only rely on much higher poverty thresholds. A poverty line of int. The chart below answers the question of how the number of people below different poverty lines is changing.
And the number of people above the poverty line has increased rapidly. The number of people who live on more than 10 dollars per day increased by million in the last 10 years. The world is making progress against all poverty lines and with rapid growth in many middle income countries we can hope that this progress against poverty relative to high poverty lines will continue.
But our focus should be on those in the very worst poverty. In recent decades, the share in extreme poverty has declined faster than ever before in human history.
This post asks whether such remarks are true. Is the substantial decline of global poverty only due to the poverty decline in China? First, let us look at the historical evolution of poverty in China. Shown in dark blue is the declining share of the Chinese population living below the International Poverty Line 1. The decline from almost every Chinese person living in extreme poverty to almost no Chinese people living in extreme poverty is of course an exceptional achievement.
But is this the entire story of falling global poverty? To find the answer we recalculated the share of people living in extreme poverty globally and disregarded China entirely — so that we compare a planet with China to a planet without China.
The chart shows the results. In blue is the decline of global poverty, in red the decline of poverty excluding China. We see that the reduction of global poverty was very substantial even when we do not take into account the poverty reduction in China. What is also interesting to see in the chart is that until , the inclusion of China increased the share of the world population living in extreme poverty; but since then, this has reversed, and the inclusion of China is now reducing the global poverty headcount ratio.
We care about people — not about countries, and since more than every 5th person in the world is Chinese , it is a really important achievement for the world that extreme poverty has decreased so substantially in China.
Despite the clear evidence, many people are not aware of the fact that extreme poverty is declining across the world. The chart shows the perceptions that survey-respondents in the UK have regarding global achievements in poverty reductions.
While the share of extremely poor people has fallen faster than ever before in history over the last 30 years, the majority of people in the UK thinks that the opposite has happened, and that poverty has increased. The extent of ignorance in the UK is particularly bad if we take into account that the shown result corresponds to a population with a university degree.
See the Gapminder Ignorance Project for more evidence. Not only in the UK are many wrongly informed about how poverty is changing globally. The share of correct answers differs substantially across countries. The countries I marked with a star are those that were a low-income or lower-middle-income countries a generation ago in In these poorer countries more people understand how global poverty has changed.
People in rich countries on the other hand — in which the majority of the population escaped extreme poverty some generations ago — have a particularly wrong perception about what is happening to global poverty.
While this is a great achievement, there is absolutely no reason to be complacent: a poverty rate of Where do they live? The following visualization provides a breakdown of this figure by continent and country. These figures come from multiplying estimates of poverty rates by the corresponding estimates of total population in those countries. The poverty rate estimates come from the World Bank PovCal release, using household survey data ; 26 and total population estimates come from the World Development Indicators.
As usual with World Bank estimates, poverty measures are adjusted to account for differences in price levels between countries. As we can see, today, Africa is the continent with the largest number of people living in extreme poverty. The breakdown by continent is as follows:. We can also see that India is the country with the largest number of people living in extreme poverty million people , with Nigeria and the Congo DRC following with 86 and 55 million people, respectively.
These figures are the result of important changes across time. As we mentioned above in our discussion of regional trends, in Asia was the world region with the largest number of poor people million in South Asia, plus million in East Asia and the Pacific.
However, with rapid economic growth in Asia over the past two decades, poverty in Asia fell more rapidly than in Africa. The World Bank Group recently published a new set of poverty estimates, as part of their report Poverty and Shared Prosperity These estimates, explained in detail in two related background papers Newhouse et al.
In order to produce disaggregated estimates, the World Bank relied on new data from the Global Micro Database that augments survey data in 89 countries, by providing a set of harmonized household characteristics, enriching the other survey instruments used by the World Bank to measure poverty.
According to the World Bank, the sample of 89 countries included in the Global Micro Database contains an estimated As the authors point out, while not every country is covered, this new set of estimates is the most updated and comprehensive source currently available to researchers and policymakers trying to understand the demographics of poverty.
The following visualization uses this source to provide a characterization of those who live in extreme poverty. As we can see, across all world regions the poor tend to be young and live in rural areas.
In the background paper accompanying the data, Castaneda et al. Interestingly, and perhaps also surprisingly, we can see from this visualization that those with no education are now a distinct minority of the population.
Global estimates of child poverty are unfortunately not available. However, as we mentioned above, we can have a reasonable picture of this issue by looking at the estimates recently published by the World Bank using the Global Micro Database.
For measurement purposes, children are considered to be poor if they live in a poor household i. A household is considered poor, in turn, if the per capita consumption of its members or per capita income, depending on the country , falls below 1.
This is the standard definition of absolute extreme poverty used by the World Bank. The following chart summarizes the available data. The height of each bar in this plot shows the share of people living in extreme poverty by age group, while the width of the bars reflects the total size of each age group in the overall population.
The area of each bar height times width gives the number of individuals living in extreme poverty within each age bracket—these are the numbers written inside each bar. By looking at the total number of people in extreme poverty area of the bars we can also see another important fact: virtually half of the people living in extreme poverty are under 18 years of age.
This is a large share if we consider that those under 18 account for only around a third of the general population as shown by the width of the bars. The above-mentioned data from the Global Micro Database allows us to study poverty across age groups for various poverty lines—not just the International Poverty Line.
The following chart shows the cumulative distribution of welfare for different age groups. Each of the lines in this plot shows, for each age group, the share of the population living below a given level of per capita daily income or consumption after accounting for differences in prices across countries. Following this logic, we can read the poverty rates at any poverty line.
As we can see, the distribution of consumption for adults is always to the right of the distribution for children. In economics lingo, what we observe is that the distribution for adults stochastically dominates that of children. This means that poverty rates for children are higher at any poverty line. Bear in mind that these are estimates of household per capita income. That means that children living in households with rich adults are also assumed to be rich.
The methodology used by the World Bank to measure poverty relies on income and consumption. While informative, this methodology certainly leaves out many important aspects of welfare.
At Our World in Data, we believe that it is important to track progress in dimensions of well-being spanning beyond standard economic indicators. This is why we make an effort to study a wide range of aspects, including education, health, human rights, etc. If you are interested in understanding poverty through these other lenses, you are welcome to explore our website—the content menu at the top of the page links to all of our entries on these topics.
Tracking various indicators of well-being independently can make comparisons difficult, since different indicators move in different directions across time and space. Because of this, researchers and policymakers often construct synthetic indicators that aggregate various dimensions of deprivation, by attaching welfare weights to a set of key underlying metrics of well-being.
Different from other indexes like the Human Development Index , the MPI is not aggregated at the country level, but instead at the individual level—it measures how one and the same individual is deprived in different dimensions. The MPI is constructed from ten indicators across three core dimensions: health, education and living standards. This table specifies how the different indicators are defined and aggregated. And you can find a more technical discussion of the MPI and its properties in Alkire and Foster In the following map, we show the share of MPI poor people country by country i.
As we can see, this alternative metric shows that poverty is also particularly acute in sub-Saharan Africa. As we mentioned above, poverty is multidimensional in nature, and it is therefore useful to try to measure poverty through alternative instruments that capture deprivation beyond income and consumption. The former is the same metric we have discussed extensively throughout this entry.
As we can see, there is a positive correlation between these two measures of deprivation, but they are clearly not identical. This highlights the usefulness of tracking deprivation across multiple dimensions of well-being, including both standard and non-standard economic indicators.
National prosperity is a strong predictor of extreme poverty at the individual level. The following graph shows this relationship between average incomes GDP per capita and the share of the population living in extreme poverty. The chart shows that today there is no country with a GDP per capita higher than 15, int. And in most countries with GDP per capita below 4, int.
The scatter plot is interactive—by moving the time slider under the plot, you can see the change over time. How poverty changes is not only a consequence of economic growth, it also depends on the distribution of incomes and how this inequality changes during the growth process.
If growth only lifts the incomes at the top, poverty levels will remain unchanged. On the other hand, if growth is inclusive and lifts all boats, the economy is able to reduce absolute poverty over time. As discussed in our entry on income inequality , income inequality has developed quite differently in different countries.
In India, for example, inequality has increased , while in most Latin American countries, inequality has fallen. Researchers have compared how much changes in inequality matter for poverty reduction relative to economic growth. David Dollar and Aart Kraay studied this link between growth, inequality and poverty reduction in a widely cited paper in Twelve years later the same two authors and Tatjana Kleineberg revisited the question on the consequences of growth and changes in inequality.
In their newer paper, they broadened the scope of the research question to study social welfare. This approach—using the concept of social welfare—takes into account not just poverty, but also the change in living standards of individuals above the poverty line. As in their earlier research, Dollar, Kleineberg, and Kraay 34 studied a large number of countries over the past 40 years.
In contrast, the contribution of changes in relative incomes to social welfare growth is on average much smaller than growth in average incomes, and moreover is on average uncorrelated with average income growth. The following chart focuses on the population living in extreme poverty. It plots the change of national average income against the change in extreme poverty levels over time.
Each country is shown here over a succession of points, one for each yearly observation of GDP and poverty. As countries like India, Brazil, Indonesia, and China got richer, the share of their population living in extreme poverty has fallen.
One way to think about this is to consider how low prosperity is before an economy achieves sustained economic growth that lifts the majority of the population out of poverty. India in had a GDP per capita of 1, int. At the end of the period in the connected scatter plot, average income was more than 4-times higher at 4, int.
Persistent economic growth really is a very powerful force, and the findings of Dollar, Kleineberg, and Kraay and the chart make this very clear. What is true for the recent decades is also true for the long-run perspective on a global scale.
Without the increase in productivity that brought economic growth , it would not have been possible to lift hundreds of millions of people out of extreme poverty.
Seen from the long historical perspective, it is clear that countries have to be extraordinarily rich to have the possibility to end extreme poverty for the majority of their population. The idea is simple: poverty today causes poverty in the future, so households that start poor, remain poor. Insufficient nutrition, for example, can lead to a poverty trap. More precisely, if physical capacity to work increases nonlinearly with food intake at low levels i.
For example, low-income countries might lack the good growth fundamentals e. Such policies are meant to trigger a virtuous cycle of more savings, more investment, and economic growth. As we discuss below, although unidimensional poverty traps such as those caused by single factors are conceptually appealing e. The following chart provides some evidence regarding the cross-country evolution of incomes over time.
It plots, for each country, the national income in against the corresponding national income in The latter are the countries which experienced income growth over these 54 years. And a couple of countries such as Niger and the Democratic Republic of Congo have even experienced negative growth over the reference period.
But the large majority of countries, all those above the blue line, have experienced growth. Those countries that are far above the blue line had the strongest growth. Botswana fold increase , South Korea fold , Romania fold , China fold , and Thailand fold are some of the countries with the strongest growth over these 54 years.
A closer look at the data suggests that the typical poor country grew at least as fast as the global average over this period. Of course, what we see in this chart is only part of the story, since the micro and macro dynamics of incomes can be very different.
It is possible, for example, that country-level average incomes are not stagnant, but household-level incomes lag for particular segments of the population within those countries.
Indeed, in the US there is evidence of stagnating incomes for those at the bottom of the distribution. Thus, a proper test for the existence of poverty traps requires a more sophisticated econometric analysis. Kraay and McKenzie 37 provide such an analysis in an interesting and detailed review of the available studies testing for the existence of mechanisms leading to poverty traps.
They argue that there is limited evidence for most of the mechanisms when operating in isolation; except perhaps for spatial poverty traps individuals being trapped in low-productivity locations , and behavioral poverty traps individuals being stuck in situations where they devote the most mental effort to meeting daily needs, leaving little attentional resources for solving other problems that could raise their incomes.
Other, less traditional policies might work better. Below we discuss some examples, such as encouraging migration, and implementing multifaceted programs that relieve joint constraints at the household level.
Around the world, most government programs hope to reduce poverty through short-term interventions that have lasting effects. While this is not an easy task, there is concrete evidence suggesting that it is possible. In six different countries, a multifaceted program offering short-term support along various household dimensions has been shown to cause lasting progress for the very poor.
The intervention in question consists of six elements: 1 a productive asset grant, 2 temporary cash consumption support, 3 technical skills training, 4 high frequency home visits, 5 a savings program, and 6 health education and services. The light blue bars show the impact of this intervention, measured by the yearly average increase in household consumption, three years after the productive asset transfer and one year after the end of the program intervention.
Although the costs of this intervention are substantial, we can see that the net benefits are still positive and large—precisely because impacts are sustained into the future.
This is also the idea behind medical trials, and has become increasingly popular in development research. The full study and results are explained in Banerjee et al. They find statistically significant impacts on all of these outcomes. The evidence most consistent with poverty traps comes from poor households in remote rural regions—these are households that are trapped in low-productivity locations, but which could enjoy a rising standard of living if they were somehow able to leave see Kraay and McKenzie 39 for a review of the evidence.
There are many possible mechanisms—one is the lack of financial resources. Bryan, Chowdhury, and Mobarak 40 argue that households close to subsistence are often unwilling to take the risk of migration; but they become more willing to do so if insured against this risk.
This relaxes the liquidity constraint and opens a window of possibility for policies aiming to promote migration, both within and across countries. How large are the potential gains from migration to a high productivity country such as the United States?
Clemens, Montenegro, and Pritchett 41 offer a tentative answer. Specifically, they provide a lower bound estimate on the annual wage gain of low-skilled male workers migrating to the United States from various low-income countries. The following visualization plots their results, and compares them to the benefits from the successful multifaceted anti-poverty intervention we discussed above.
As we can see, the effect of migration for the poor is remarkably high. These figures suggest that the total lifetime value of the most successful anti-poverty program is less than a quarter of the gain every year from letting a worker work in a high productivity environment, in this case the United States.
Targeted transfer programs have become an increasingly popular policy instrument for reducing poverty in low-income countries. Gentilini et al. Cash transfer programs have been shown to reduce poverty across a variety of contexts.
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