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3.2  Poverty Measures (continued)

When is increased over low values, the concentration effect causes the distribution of equivalent income to become less skewed as inequality falls. At the same time poverty rises, as a greater area of the distribution falls below the poverty line. The behaviour of the distribution of equivalent income, , over low values of is shown in Figure 25.

Figure 25: Behaviour of the Frequency Distribution of Equivalent Income, ,
When is Increased over Low Values

Once reranking (associated with the negative correlation between equivalent income and household size, discussed above) takes effect, increases in cause inequality to rise, and the distribution of equivalent income becomes increasingly skewed. Again, poverty rises as the distribution continues to shift leftwards. Figure 26 shows how the distribution of equivalent income changes as is increased over higher values.

Figure 26: Behaviour of the Frequency Distribution of Equivalent Income, ,
When is increased over High Values
It is also of interest to consider whether poverty is higher where the child, as opposed to the individual, is used as the unit of analysis. From the figures, it is clear that poverty is indeed higher at the higher ranges of. It is known that over the higher ranges there is a negative correlation between the equivalent income and the household size. Therefore larger households, those with more children, are likely to have lower equivalent incomes over the relevant range. A focus on only the children as the population group thus places relatively more units below any given poverty line. However, for lower values of  it has been seen above that there is a positive correlation between equivalent income and household size. Hence it is possible for poverty to be lower when the focus is on children only, compared with the use of all individuals. An example is shown in Figure 27, in which the  poverty measure is provided for both the individual and child units of analysis for a poverty line of $195 where the weight attached to children is .

Figure 27 – Poverty Measures,  and
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