1. Understanding Poverty
  2. Topics

LAC Equity Lab: Poverty

The World Bank Group aims to end extreme poverty in the world by 2030, defined as decreasing the percentage of people living on less than $2.15 per day (2017 PPP prices) to no more than 3 percent of the global population. By this measure, however, most countries in Latin America and the Caribbean (LAC) have poverty rates that are much lower than their national poverty rates. The level of economic development in the region has therefore led analysts to use the World Bank's Upper Middle-Income and Lower Middle-Income country poverty lines. These correspond to $6.85 and $3.65 per person per day, expressed in 2017 PPPs.

In addition, growing interest on the vulnerable and middle classes has led to the estimation of two other sets of lines. The vulnerable population are those who are not in poverty but have a high probability of falling into poverty given a significant income shock. These are defined as those who earn between $6.85 and $14 per day (2017 PPP). The middle class are households that have a low probability of falling into poverty but are not rich. They have been defined as earning between $14 and $81 per day (2017 PPP). 

The Poverty section of the LAC Equity Lab includes the following data:

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Poverty Rate

Trends in the poverty rate, the poverty gap, and the severity index under various poverty lines for the countries and sub-regions of LAC.
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Regional Distribution

The share of the population under different lines for different sub-regions and by country
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Poverty Drivers

The main drivers of the changes in poverty in the region and by country, under different lines, and for different indicators.
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Contribution of Income

The contribution of different income components to the overall change in either poverty or the Gini, under different poverty lines, different periods, and by country.
Note: An individual is defined as vulnerable if the probability of falling back into poverty over a five-year interval is greater than 10 percent. This yields an upper bound of $14 per person per day in 2017 PPPs. This upper bound also serves as the lower bound for classification of individuals in the middle class. The upper bound for the middle-class is set at $81 per person per day in 2017 PPPs. The key consideration here is to pick an upper bound such that slight changes in this upper bound would not move a significant proportion of people in and out of the middle-class. In contrast, moving the lower bound should significantly affect the percentage of the excluded or included population. All these income classifications are used throughout the LAC Equity Lab. It is very important to note that as countries develop and grow, they update their survey and data collection methodologies. Many countries in LAC including Brazil, Argentina, Chile etc. have incorporated these changes in their household surveys used for poverty and shared prosperity monitoring. This implies that any presentations of trends in a connected series is based on comparable data. By implication, all trend graphs with a break in the series represent non-comparable data displayed on the same figure over time.
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