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Testing for poverty dominance: an application to Canada

Author

Listed:
  • Wen-Hao Chen
  • Jean-Yves Duclos
Abstract
The paper proposes and applies statistical tests for poverty dominance that check for whether poverty comparisons can be made robustly over ranges of poverty lines and classes of poverty indices. This helps provide both normative and statistical confidence in establishing poverty rankings across distributions. The tests, which can take into account the complex sampling procedures that are typically used by statistical agencies to generate household-level surveys, are implemented using the Canadian Survey of Labour and Income Dynamics (SLID) for 1996, 1999 and 2002. Although the yearly cumulative distribution functions cross at the lower tails of the distributions, the more recent years tend to dominate earlier years for a relatively wide range of poverty lines. Failing to take into account SLID's sampling variability (as is sometimes done) can inflate significantly one's confidence in ranking poverty. Taking into account SLID's complex sampling design (as has not been done before) can also decrease substantially the range of poverty lines over which a poverty ranking can be inferred.

Suggested Citation

  • Wen-Hao Chen & Jean-Yves Duclos, 2009. "Testing for poverty dominance: an application to Canada," Working Papers 379, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:379
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Frank A. Cowell & Emmanuel Flachaire, 2014. "Statistical Methods for Distributional Analysis," Working Papers halshs-01115996, HAL.
    2. Sırma Şeker & Stephen Jenkins, 2015. "Poverty trends in Turkey," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 13(3), pages 401-424, September.
    3. Tahsin Mehdi, 2020. "Testing for Stochastic Dominance up to a Common Relative Poverty Line," Econometrics, MDPI, vol. 8(1), pages 1-9, February.
    4. Dirk Van de gaer & Joost Vandenbossche & José Luis Figueroa, 2014. "Children's Health Opportunities and Project Evaluation: Mexico's Oportunidades Program," The World Bank Economic Review, World Bank, vol. 28(2), pages 282-310.
    5. Nabil Annabi & Youssef Boudribila & Simon Harvey, 2013. "Labour supply and income distribution effects of the working income tax benefit: a general equilibrium microsimulation analysis," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 2(1), pages 1-33, December.
    6. Hsu, Justine & Majdzadeh, Reza & Mills, Anne & Hanson, Kara, 2021. "A dominance approach to analyze the incidence of catastrophic health expenditures in Iran," Social Science & Medicine, Elsevier, vol. 285(C).
    7. Judith Clarke & Nilanjana Roy, 2012. "On statistical inference for inequality measures calculated from complex survey data," Empirical Economics, Springer, vol. 43(2), pages 499-524, October.
    8. Rami V. Tabri & Mathew J. Elias, 2024. "Testing for Restricted Stochastic Dominance under Survey Nonresponse with Panel Data: Theory and an Evaluation of Poverty in Australia," Papers 2406.15702, arXiv.org.
    9. Jean‐Yves Duclos & Agnès Zabsonré, 2014. "Social evaluations when populations differ in size," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 47(2), pages 605-633, May.

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    More about this item

    Keywords

    Stochastic dominance; empirical likelihood; Canada; income distribution;
    All these keywords.

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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