contribute disproportionably to global poverty: three out of every four poor people belong to this group (see Table 1). So changing economic opportunities in agriculture can significantly affect global poverty and inequality. The specific opportunity considered in detail here is the removal of agricultural trade barriers. Direct effects of this liberalization will be changes in the international prices of agricultural products and in the returns of factors used intensively in agriculture with these changes determining winners and losers. Before considering these effects in detail, this section describes what is at stake by considering the socio-economic characteristics of the agricultural population.

**Table 1: Poverty is higher among agricultural households even if their incomes are less unequal**

||**Gini**<br>**(%)**|**Pop**<br>**Shares**<br>**(%)**|**Average Monthly**<br>**Income**<br>**(2000, US PPP)**|**1-Dollar Poverty**<br>**Incidence (%)**|**Poverty Share**<br>**(%)**|
|---|---|---|---|---|---|
|**Agriculture**|44.9|44.8|65.4|31.7|75.9|
|**Non-Agri.**|62.8|55.2|328.9|8.1|24.0|
|**World**|67.0|1|210.8|18.7|1|

Source: GIDD database This initial descriptive analysis is based on the GIDD (Global Income Distribution Dynamics) dataset that has been recently developed at the World Bank.<sup>3</sup> The GIDD dataset consists of 73 detailed household surveys for low and middle income countries, complemented with more aggregate information on income distribution for 25 high income and 22 developing countries.<sup>4</sup> Together, data on these 120 countries covers more than 90 percent of the global population. Country coverage varies by region: while the GIDD dataset includes more than 97 percent of population in East Asia and Pacific, Eastern Europe and Central Asia, Latin America, and South Asia, coverage in SubSaharan Africa and Middle East and North Africa is limited to 76 and 58 percent of population, respectively. Among the detailed surveys, the majority (54) use per capita consumption as the welfare indicator, while the remaining surveys—all but one for countries in Latin America—include only per capita income as a measure of household welfare. Both income and consumption data are monthly; the data are standardized to the year 2000 and are expressed in 1993 PPP prices for consistency with the 1 and 2 dollar a day poverty lines, which are calculated at 1993 PPP exchange rates.<sup>5</sup>

> 3 The description of the dataset may be found at the following website:

> http://intranet.worldbank.org/WBSITE/INTRANET/UNITS/DEC/INTPROSPECTS/0,,contentMDK:21909 753~pagePK:64161873~piPK:64161126~theSitePK:334935,00.html

> 4 This more aggregate information usually consists of 20 data points for each country, with each data point representing the average per capita income (or consumption) of 5 percent of the country’s population. In the absence of full survey data, using these “vintile” data provides a close approximation to most economywide measures of inequality.

> 5 The adjustment procedure for expressing welfare indicators in 1993 international dollars (PPP) is as follows. First, for countries with a survey year different than 2000, the welfare indicator (household per capita income or consumption) is scaled to the year 2000 using the cumulative growth in real income per capita between the survey year and 2000. Then, the welfare indicator is converted to 1993 national prices by multiplying the welfare indicator by the ratio of CPI in 1993 to the CPI in the survey year. Finally, the

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