ABSTRACT
The global incidence of extreme poverty—the percentage of the world population with incomes less than $1 a day—and the absolute numbers of poor people has been falling since 1981. At one extreme, East Asian economies have been extremely successful in tackling poverty as past decades have produced spectacular growth that has increased opportunities for fruitful employment. South Asian trends have been favorable to poverty reduction, but the size of the numbers in poverty will remain large for several years. In principle, poverty reduction occurs through two channels: first, growth raises average incomes and, hence, reduces poverty; second, poverty is reduced even more when the rise in incomes especially benefits the poor. Many of the essays use micro data and innovative techniques to analyze how fiscal policies, structural policies such as financial reforms and trade liberalization, and large shocks and policy responses affect inequality and poverty. The chapter also presents an overview of the key concepts discussed in this book.
