2010) uses this approach and several countries, such as Mexico, the Philippines, and Bhutan, have made the MPI part of their national development strategies.

The national measure of multidimensional poverty for Armenia uses the Alkire-Foster approach. It was formulated in consultation with domestic stakeholders on what indicators would reflect the experience of poverty or deprivation. This tailored measure is not intended to be used in international comparisons; it is simply representative of the country and its specific development challenges. For every multidimensional measure, the dimensions, weights, and a method for aggregation must be selected. That is why from September 2014 through August 2015 stakeholders were consulted to facilitate the identification of deprivations that reflect how Armenian households experience poverty. For example, higher gas and electricity prices required many households to allocate a larger share of their resources to heating. For the same reason, there has also been a jump in the share of households using wood or coal to heat their homes, intensifying the health risks of indoor air pollution. Where these circumstances help shape the experience of poverty, one of the deprivations measured relates to the lack of a healthy source of heating.

The national measure of multidimensional poverty for Armenia looks closely at overlapping deprivations related to basic needs, housing, education, health, and labor markets, and several findings have emerged: The 2015 national household survey found that between 2010 and 2015 (NSSRA 2016), the share of the population living in households that were multidimensionally poor dropped from 41.2 to 29.1 percent as access to physical infrastructure and labor markets improved. However, regional patterns illustrate that in rural areas, limited access to decent housing and infrastructure and high levels of informal employment in agriculture continue to shape the experience of poverty. In urban areas, such as the capital city Yerevan, labor market problems, particularly low labor force participation and high unemployment, contributed the most to poverty. Multidimensional poverty does overlap with monetary poverty as measured by the national consumption poverty line (29.8 percent in 2015): in 2015, 12.8 percent of the population was both multidimensionally and consumption poor.

# 2. Armenia’s National Poverty Measurement Methodology

The measure of national poverty uses a monetary approach. The NSSRA draws its poverty statistics from its annual national Integrated Living Conditions Survey (ILCS). Poverty is estimated based on consumption expenditures using a poverty line obtained using the Cost of Basic Needs (CBN) approach. Application of the approach can vary with data availability; Armenia adopted its current specification in 2009. The CBN approach determines three different poverty lines: (1) the food poverty line, based on the minimum required number of calories; (2) a lower poverty line; and (3) the upper poverty line. Poverty lines are reported in Armenian drams (AMD) per adult equivalent per month.

In 2015, the monetary poverty rate was estimated to be 29.8 percent. Compared to 2004–08, when poverty in Armenia was substantially reduced, the 2015 rate was higher, poverty reduction was slower, prosperity was not as well shared, and inequality was rising. As growth resumed after the 2009 recession, at first the share of those living below the national poverty line declined, but the slowing of the economy in 2013–15 has meant that poverty has barely budged. The poor and those in the bottom 40 percent are more likely to (1) live in urban areas outside the capital; (2) have larger households with more children; (3) have less education; (4) be out of the labor force or unemployed; (5) live in households headed by women; and (6) be more dependent on income from agriculture.

4