Chapter 2: Income Standards, Inequality, and Poverty
Growth rate of quantile income
Figure 2.10: Growth Incidence Curves
A B
g
gQI(x,y) A′
0
20
B′
gQI(x ′,y ′)
40 60 80 Cumulative population share
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What information do these two growth curves provide? Growth between x and y is pro-poor in the sense that lower quantile incomes have positive growth, whereas the upper quantile incomes have negative growth. Growth between x' and y', in contrast, is not pro-poor because lower quantile incomes have negative income growth, whereas upper quantile incomes have positive growth. In society X, the growth rate of income for the 20th percentile is much higher than that of the 40th percentile, as denoted by point A and point B, respectively. Note that the growths are higher than the mean growth rates. In society X', however, the income growth rate for the 20th percentile is almost the same as that of the 40th percentile, as denoted by point A' and point B', respectively. We will discuss pro-poor growth in greater detail in the poverty section of this chapter. Generalized Lorenz Growth Curve The next growth curve is the generalized Lorenz growth curve. Consider the two income distributions, x and y, used previously. The lower partial means of distribution x and distribution y at percentile p are denoted by WLPM (x; p) and WLPM(y; p), respectively. The growth of partial means at percentile p is denoted by
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