Suppose that at date 1 the distribution of income is (1, 2, 3), while later, at date 2, it is found to be (2, 3, 4). Verify for yourself that for a poverty line of 2 the reduction in the poverty rate is entirely due to growth in the mean, i.e., that the redistribution component is zero.

Now suppose the distribution at date 2 is (1.5, 1.5, 3).

Is the change in poverty now due entirely to redistribution? Discuss how would your answer depends on what measure of poverty you use.

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In the first scenario we have two income distributions Date 1 1 2 3 Date 2 2 3 4 If we consider a po... View the full answer