Assessing Progress Toward Greater Equality of Income Distribution

Excerpt] Income distribution is only one indicator of economic well-being useful in gauging improvements in the economic position of the poor; change in income distribution, appropriately conceived and measured, is as good a criterion as any for assessing progress toward the alleviation of poverty. Income is intimately bound up with a family's command over economic resources. Rising modern-sector employment or reduced infant mortality might be suggestive of improvements in the economic position of the poor; gains in real income among low-income groups provide direct evidence that poverty is being alleviated. This chapter answers the following questions: What are the strengths and limitations of alternative income concepts? "Greater equality of income distribution" implies an increase in the incomes of the poor in developing countries relative to the income of the nonpoor. Relative-inequality measures dominate the existing literature on income distribution and economic development. What are the main lessons from these studies? Is it desirable to use relative income measures to assess the welfare of the poor and progress of public policies in meeting objectives of equity? Are indicators based on absolute incomes and poverty possibly more appropriate? Are reliable and accurate data available, on a regular basis, to measure the various indicators? What recommendations, taking into account cost and other considerations, can be made on the reporting of recommended indicators?