1

Monitoring Poverty More Regularly: Can labor force surveys and market research

data help?

Joao Pedro AzevedoLCSPP

More Frequent, More Timely & More Comparable Data for Better Results20 April 2011

More Frequent, More Timely & More Comparable Data for Better Results

2

The need

• Food crisis• Environmental shocks• Financial crisis

• Policy makers need to understand the consequences of such crisis to design responses

20 April 2011

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3

How can we handle this?

• Econometrics + Assumptions• inFamous Poverty-Growth Elasticity• Imputation methods

• Collect new data and/or collect old data in different ways• Continuous household surveys• Listening 2 LAC

• Use existing information• Labor force surveys• Market research data• Administrative records (i.e. vital statistics)

20 April 2011

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4

Two examples of using existing data in a different way

• Labor Income Poverty Index (LIPI)– Poverty and Labor Brief

http://lacpoverty/

• Prices and Quantities information from Nielsen on food and beverages

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5

LABOR INCOME POVERTY INDEX

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Labor Income Poverty Index (LIPI)

• How we do it:– Labor Income (70% of total income) – 12 months

moving average or 3 months moving average– Poverty line (national + usd/ppp)– Price data (monthly or quarterly)– Index Q1 2007 (base=1)

• Mexico March,2010 (CONEVAL)

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Labor Income Poverty Index (LIPI)(U$ 2.5 a day)

Jan 2007 - Jul 2010

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Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q42007 2008 2009 2010

0.60

0.70

0.80

0.90

1.00

1.10

1.20

Mexico Peru Brazil

LIPI

(Q1

2007

= 1

)

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MEXICO - Labor Income Poverty Index (LIPI)(U$ 2.5 a day)

Q1 2005 – Q4 2010

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Q1

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Rural Urban Total

LIPI

(Q1

2007

= 1

)

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Testing the validityColombia and Peru

• Continuous household survey

• Design– 2 random samples• Sample 1 : Poverty incidence (full income)• Sample 2 : LIPI (labor income)

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Sensitivity to the welfare aggregate in Colombia

20 April 2011

Poverty 3 ma 12 ma

Extreme 0.933 0.976

Moderate 0.980 0.995

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Sensitivity to the welfare aggregate in Peru

20 April 2011

Total Income Labor Income Total ExpenditureTotal Income 1.00 0.91 0.81Labor Income 0.92 1.00 0.83Total Expenditure 0.84 0.83 1.00

Spearman's correlationSimple Correlation

Family per capita

Family per

capita

Moderate Poverty

Total Income Labor Income Total ExpenditureTotal Income 1.00 0.94 0.83Labor Income 0.93 1.00 0.73Total Expenditure 0.84 0.75 1.00

Spearman's correlationSimple Correlation

Family per capita

Family per

capita

Extreme Poverty

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Sensitivity to poverty and inequality measures

CORRELATIONS Moderate poverty

Level Changefgt (0) 0.83 0.54fgt (1) 0.91 0.75fgt (2) 0.88 0.74 Extreme poverty

Level Changefgt (0) 0.81 0.69fgt (1) 0.75 0.66fgt (2) 0.64 0.56 Inequality

Level Changegini 0.88 0.64

SPEARMAN Moderate poverty

Level Changefgt (0) 0.84 0.47fgt (1) 0.89 0.74fgt (2) 0.86 0.74 Extreme poverty

Level Changefgt (0) 0.80 0.65fgt (1) 0.77 0.59fgt (2) 0.65 0.54 Inequality

Level Changegini 0.85 0.62

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MARKET RESEARCH DATA

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RMS – Nielsen Areas95% Population coverage

Zona no cubierta 5% población

Atlántico: Atlántico, Bolívar, Cesar, Córdoba, Guajira,Magdalena, SucreAtlántico: Atlántico, Bolívar, Cesar, Córdoba, Guajira,Magdalena, Sucre

Antioquia: AntioquiaAntioquia: Antioquia

Oriente: Boyacá, Meta, N. Santander, SantanderOriente: Boyacá, Meta, N. Santander, Santander

Cundinamarca: CundinamarcaCundinamarca: Cundinamarca

Centro: Caldas, Huila, Quindío, Risaralda, TolimaCentro: Caldas, Huila, Quindío, Risaralda, Tolima

Pacífico: Cauca, Nariño, VallePacífico: Cauca, Nariño, Valle

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15More Frequent, More Timely & More Comparable Data for Better Results

Categories included:

20 April 2011

16More Frequent, More Timely & More Comparable Data for Better Results

Countries covered in the LAC Region

• Argentina• Brasil• Chile• Mexico• Venezuela• CAM

– Panama– Nicaragua– Costa Rica– Honduras– Guatemala– El Salvador

• Information included:– Volume sales variation per country– Consumption Price variation per Country– By Item, Outlet and Geographic location

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17More Frequent, More Timely & More Comparable Data for Better Results

TOTAL COLOMBIAESTRUCTURA DE VENTAS EN PESOS POR CANALES - AÑO MOVIL

20 April 2011

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Volume and Price series

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Colombia

Average of volume Average of price

Chan

ge

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Colombia - volume variation

antioquia atlantico centro colombia cundinamarca oriente pacifico

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2020 April 2011

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Colombia - Prices variation

antioquia atlantico centro colombia cundinamarca oriente pacifico

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2120 April 2011

TOTAL COLOMBIAESTRUCTURA DE VENTAS EN PESOS POR CANALES - AÑO MOVIL

TOTAL CANASTA - VARIACION VOLUMEN ANUAL POR CANAL

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2220 April 2011

TOTAL CANASTA - VARIACION PRECIO ANUAL POR CANAL

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Applications

• Tracking of wellbeing, proxy by consumption• Reweighting of the index to better reflect the

consumption patters of the poorer• Better estimation of elasticities and cross-

elasticities of substituion• Distributional analysis

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Final considerations

• Labor income explains most of the poverty variation

• High correlation between income, expenditure and labor income poverty measures

• Highlights the importance to improve income measure in the region

• Market research data can help

20 April 2011