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Exercise2-08Solutions

# Exercise2-08Solutions - EEP151/Econ171 Fall 2008 Alain de...

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EEP151/Econ171 Alain de Janvry and David Roland-Holst Fall 2008 Alan Fuchs and Paul Wassenich Exercise 2 Doing a poverty assessment for Brazil and Indonesia Due October 2, 2008 Brazil and Indonesia are two large countries with large segments of their populations still in poverty. You are asked to make a comparative assessment of poverty in these two countries. For this, you are given data on per capita consumption expenditures for each population percentile (one percent of the population) for each country in the spreadsheet “Poverty Brazil-Indonesia”. Each percentile has 1.637 million people in Brazil and 2.004 million people in Indonesia. These data are in PPP\$ and so they are directly comparable across the two countries. The poverty line is for that reason the same across the two countries, set at z = \$300. Part 1. Poverty analysis [30 points] 1. Data description [10 points] [1 point] What is the size of the total population in each country? Which is larger? Brazil has 163.7 million, and Indonesia has 200.4 million, so Indonesia has the larger population . [-0.5 point if Brazil population outside [163 mil, 165 mil] range, or if Indonesia population outside [199 mil, 201 mil] range.] [-0.5 point if said Brazil larger or did not say which larger.] [1 point] What is the average per capita expenditure in each country? Which population is on average better off? The average per capita expenditure in PPP\$ is \$476 in Brazil and \$285 in Indonesia, so on average, the Brazilians are better off. [-0.5 point if Brazil per capita expenditure not \$476, or if Indonesia per capita expenditure not \$285.] [-0.5 point if said Indonesians better off or did not say which better off.] [2 points] What is the average per capita expenditure of the poor in each country? Where are the poor on average less poor? It is \$140 in Brazil and \$180 in Indonesia, the Indonesian poor are less poor than the poor in Brazil, on average. [-1 point if Brazil per capita expenditure among poor not \$140, or if Indonesia per capita expenditure among poor not \$180.] [-1 point if said Brazilian poor are less poor or did not say which poor are less poor.] [2 points] What is the average per capita expenditure of the non-poor in each country? Where are the non-poor on average better-off? In Brazil, it is \$922 and in Indonesia it is \$506, so the non-poor are better off in Brazil

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on average. [-1 point if Brazil per capita expenditure among non-poor not \$922, or if Indonesia per capita expenditure among non-poor not \$506.] [-1 point if said Indonesian non-poor are better off or did not say which non-poor are better off.] [4 points] Draw the poverty profile (as defined in Chapter 5 of the class notes) for each of the two countries on a same graph (you can truncate the vertical axis of your graph at say \$800 so you see better what is happening below the poverty line). Make sure to carefully label your axes. What do these poverty profiles tell you about the differential structure of poverty in the two countries?
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