# **4. Data**

We analyze poverty spells in 18 countries throughout the world, roughly corresponding to changes in the decade from 2000 to 2010. Most Latin American countries in the sample use income-based measures of poverty and data is taken from a harmonized database of household surveys from Latin American countries compiled in the Socio-Economic Database for Latin America and the Caribbean (SEDLAC)<sup>9</sup> . For countries that use consumption-based measures of poverty, data are taken from household surveys in the case of Bangladesh, Peru, and Thailand. For Moldova and Romania, household surveys were standardized by the World Bank. For Ghana and Nepal, we use the Rural Income Generating Activities (RIGA) datasets, a harmonized database of household surveys compiled in a joint effort by the United Nations Food and Agriculture Organization FAO and the World Bank. Table A1 in the Annex provides more detail of the countries, exact years, and surveys included in this study.

# **5. Results**

Demographics, labor income, public transfers, remittances: Which factor contributes the most to observed reductions in poverty? The key result that emerges is that the most important contributor to the reduction in poverty has been the growth in labor income per adult. In 10 of the 16 countries with substantial declines in moderate poverty, changes in labor income and employment explain more than half of the change in moderate poverty, and in another 4 countries, they account for more than 40 percent of the reduction in poverty (figure 10 and table 7).<sup>10</sup> This is true regardless of the decomposition path that is taken, as these results come out of the Shapley-Shorrocks estimates. Interestingly, in most cases, it was the growth in labor income throughout the decade that contributed the most, rather than an increase in the share of occupied adults.

Although changes in labor income are the main contributors to changes in poverty in most countries, demographics also matter. In particular, a higher share of working-age adults in the household made the largest contribution to poverty reduction in the case of Paraguay and Costa Rica, but was also important for Bangladesh, Chile, and Honduras. Changes in the share of adults per household were also relatively important in explaining declines in moderate poverty in Bangladesh, Chile, Ecuador, and Honduras (table 7). In general, changes in the percentage of adults working had a positive contribution to poverty reduction, but the magnitude of this effect is comparatively smaller. Overall, it is possible to say that the share of working-age adults increased, and that a larger proportion of this larger workforce was able to engage in the labor

> 9 SEDLAC is a joint effort of the _Centro de Estudios Distributivos Laborales y Sociales_ of the Universidad Nacional de La Plata and the World Bank’s Latin American Poverty and Gender Group

> 10 Annex figure A1 shows a similar result when decomposing changes in poverty measured by the US$2.50-a-day poverty rate in all countries, including Mexico and El Salvador, both of which do not meet the requirement of having had a substantial reduction in poverty, defined as instances where there was an average decline in moderate poverty of 1 percentage point per year or more.

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