LAC Equity Lab: Poverty - Contribution of Income

Increased labor earnings have been the primary driver of poverty reduction in LAC over the last decade. This dashboard presents the contribution of different income components to the overall change in either poverty or the Gini. The results can be seen for different poverty lines, different periods, and by country, sub-region or for LAC as a whole.

Changes in income and its distribution have a direct effect in poverty. Since incomes are composed of several elements, we can analyze the indirect effect of each of these on poverty. In this dashboard, incomes are divided into labor income (for example, wages) and non-labor income (for example, pensions and social programs). Moreover, labor income in a household can be earned by women, man, or both.

This gender break-down implies that total income in a household increases over time either because there are less people in the household, more women (or more men) working, and/or because those people working are earning more.

Hence, we have several components that have an indirect effect in poverty: (i) share of women working, (ii) labor income of the women, (ii)share of men working, (iv) labor income of men, and (v) non labor income.

Calculations of the effects follow a Shapley decomposition. More information on this can be found here.