|**Tool name:**|**PovStat**|
|---|---|
|**What is it?**|An Excel-based software program that simulates the changes in poverty and inequality resulting over<br>time from changes in growth in output and employment.|
|**What can it be used for?**|PovStat may be used to simulate the poverty and inequality impact of policies affecting sector-level<br>output and employment growth rates.|
|**What does it tell you?**|PovStat simulates poverty and inequality measures under alternative growth scenarios. Forecasts of<br>varying levels of complexity may be computed, depending on the availability of reliable data and the<br>extent to which factors influencing poverty levels are incorporated. The simulations vary according to<br>optional projection parameters.|
|**Complementary tools:**|Other software programs that provide poverty and inequality forecasts include SimSIP Poverty (see the<br>table on SimSIP) and DAD (a software for distributive analysis).|
|**Key elements:**|On the basis of household-level data, the software translates differential output and employment<br>growth across sectors into differential growth in the per capita income or consumption of households<br>across those sectors. The tool simulates the impact on poverty of policies affecting output. It does this<br>by using the fact that poverty changes can be decomposed into two parts: a component related to the<br>uniform growth of income and a component due to changes in relative income. The simulations are<br>made under the assumption that the policy analyzed will be distribution neutral, or, conversely, that<br>there is a specific, quantifiable form for the distributional change. Changes in employment distribution<br>are accommodated by reweighing the sample households.|
|**Data/information:**<br>**ments**|This program requires unit record household-survey data. Also, a poverty line, survey year, and<br>forecast horizon are parameters that must be provided by the user. Macroeconomic variables at the<br>nationally aggregated or sectorally disaggregated level and growth rates of income, employment, and<br>population are also required. In addition, the user can input changes in the CPI and GDP deflator,<br>changes in the relative prices of food and the shares of food in CPI, and changes in the poverty line<br>consumption bundle. This allows one to generate different types of forecasts and optional projection<br>parameters such as employment shifts across sectors. The software can be adapted for grouped data.|
|**Time:**<br>**equire**|One or two days to format the household survey data, collate and check exogenous economic variables,<br>and enter everything into PovStat.|
|**Skills:**<br>**R**|Familiarity with Excel and appropriate household data-handling software (such as Stata). Also,<br>familiarity with PovCal if synthetic data from a grouped distribution are to be used.|
|**Supporting**<br>**software:**|Excel.|
|**Financial cost:**|**–**|
|**Limitations:**|PovStat does not capture second-round effects. These may be captured by CGE models.|
|**References and**<br>**applications:**|�<br>For an overview of the technique, see Datt and others (2003).<br>�<br>Datt and Walker (2002).<br>�<br>Software available at www.worldbank.org/psia,“Tools and Methods.”|

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