settlements might be much higher relative to imputed rents for individuals in rural settlements, pushing all urban dwellers above the poverty line. This, in turn, could suggest a need for a re-allocation of anti-poverty funds from urban to rural areas. Again, assessing the distributional impact of imputed rents on socio-economic characteristics of poor individuals is hard to define a priori, and it remains an empirical question.

# **3. Data and Approaches to Rent-Imputation**

This section describes first the data sources used in the analysis and second introduces the empirical strategy adopted for assessing the distributional impact of imputing rent on inequality, poverty, and shared prosperity. Two different rent-imputation models, namely, a log-linear econometric model and self-assessment method will be used in the empirical analysis.

## **3.1. Data and the Preliminary Evidence**

The analysis makes use of data from nationally representative household budget surveys that are used for the computation of official poverty figures in Albania, Bangladesh, Iraq and Peru. The countries were selected following three criteria: (i) completeness of information, (ii) broadness of regional coverage, (iii) heterogeneity in terms of development stage. The analysis requires detailed information on dwelling characteristics, tenancy status, self-assessed rental price for owners and non-market tenants, and the official methodology followed to compile the consumption aggregate used in the official distributional analysis. Further, the four countries belong to different regions and represent different stages of development, maximizing as much as possible the generalizability of the results.<sup>7</sup> The analysis for Albania is based on the 2008 and 2012 waves of the Living Standard Measurement Survey (LSMS). The two surveys are representative at urban and rural level as well as at region and prefecture level. Official poverty figures are consumption-based, and the official consumption aggregate does not include rent or imputed rent. It is important to note that we were not able to access to the methodology for determining the official poverty line. Therefore, in the following, Albania does not appear in some parts of the analysis. Data for Bangladesh come from the 2005 and 2009/10 Household Income and Expenditure Survey (HIES). The surveys are representative by divisions at urban/rural/statistical metropolitan area. Official poverty statistics are based on a consumption aggregate that includes imputed rents, although is not clear which imputation method is adopted in the official methodology. The data sets used for Iraq are the 2007 and 2012 rounds of the Iraq Household Socio Economic Survey (IHSES). IHSES is representative by governorate at urban/rural/statistical metropolitan area. The consumption aggregate for official poverty statistics includes rents following the self-assessment approach. Finally, figures for Peru are based on the 2010 and 2013 rounds of the Peruvian Household Survey on Living Conditions and Poverty ( _Encuesta Nacional de Hogares sobre Condiciones de Vida y Pobreza_ - ENAHO). Official distributional statistics are based on consumption and the official consumption aggregate includes rents following the self-assessment approach with adjustments for nonresponse.<sup>8</sup> Typically, the housing section of household budget surveys contains a question about occupancy status of households, allowing selection of different categories, broadly referable to (i) owners (sometimes specifying whether outright or still paying mortgage), (ii) tenants, (iii) tenants living in subsidized dwellings, (iv) individuals living for free in dwellings provided by relatives or employer. These categories sometimes are more finely

> 7 The World Bank classifies countries by region (East Asia and Pacific; Europe and Central Asia; Latin America & the Caribbean; Middle East and North Africa; South Asia; Sub-Saharan Africa) and by development stages (low-, lower middle-, upper middle-, high-income). The four countries analyzed in this paper belong to four different regions: Europe and Central Asia (Albania), South Asia (Bangladesh), Middle East and North Africa (Iraq), Latin America and the Caribbean (Peru). And two income levels: Upper-Middle Income (Albania, Iraq; Peru); Lower-Middle Income (Bangladesh).

> 8 We do not use officially imputed rents when making our own estimations.

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