Poverty and Shared Prosperity 2016: Poverty Simulations

October 2, 2016

Poverty headcount ratios are simulated under different assumptions about the growth in average incomes as well as the distributional effects of a given growth rate. The simulations illustrate the connections between the World Bank’s twin goals – (1) Reduce global extreme poverty to 3 percent by 2030; (2) promote shared prosperity defined as the income growth of the poorest 40 percent of the population within every country. In the simulations, growth is pro-poor if the poorest 40 percent is growing faster than the rest of the population.

For every country available, the tool simulates the poverty headcount ratio (at the international extreme poverty line of US$1.90-a-day) until 2030. Users select an annual growth rate in average incomes and a shared prosperity premium (the difference between the growth of the poorest 40 and the total population) (see detailed documentation).

The simulations illustrate how pro-poor growth is important for the goal of ending extreme poverty. This tool has been created as part of the World Bank’s Poverty and Shared Prosperity 2016, based on the original work by Lakner, Negre and Prydz (2014). Users can also run their own simulations using povsim.ado (Stata ado file).