Decomposition of Change in Poverty by Growth and Redistribution Components

This paper provides a robust nonparametric methodology for decomposition of change in poverty into growth and redistribution components. The decomposition is symmetric and free of residual terms. It presents an empirical application of the proposed methodology to recent data on consumption in rural and urban areas conducted by Statistical Centre of Iran (SCI) in 2000 and 2004 (the initial and the final year of the Islamic Republic’s third five-year plan). We find that both ‘pure growth’ and ‘redistribution’ components directly contributed to a striking reduction in poverty, especially among rural households.