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Global poverty estimates based on 2011 purchasing power parity

Working Paper 2015-371

Abstract

This paper calculates a new global poverty line based on 2011 PPP. It moves away from the World Bank’s method of anchoring a single global poverty line on the national poverty lines of the poorest countries. To calculate a new global poverty line based on 2011 PPP, the paper proposes the use of equivalent poverty lines. Each country has a different equivalent poverty line. The paper demonstrates that there is no single poverty line in 2011 PPP that is equivalent to $1.25 in 2005 PPP. Single poverty lines vary for each region since countries have experienced different inflation rates and have different PPP conversion rates between 2005 and 2011. To calculate a single poverty line in 2011 PPP, the paper measures the weighted average of equivalent poverty lines of 66 countries in Asia and Sub-Saharan Africa with weights proportional to their populations. The corresponding poverty line is calculated at $1.78 in 2011 PPP. Using the proposed global poverty line of $1.78 in 2011 PPP, the number of poor is reduced by 58.06 million with the reduction largely occurring in Asia.

Authors: Nanak Kakwani, Hyun H. Son.

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