Uncovering the Demographics of the Poorest People in Developing Nations

Global poverty has been decreasing over the past two decades as a result of fast-paced economic growth. The number of people living in extreme poverty, which is defined as a household subsisting on less than $1.90 a day, fell by more than 60 percent over this period. This reduction surpassed the Millennium Development Goal of reducing extreme poverty by 50 percent between 1990 and 2015. However, the current projection for economic growth in developing countries is insufficient to meet the World Bank’s more ambitious target of reducing global extreme poverty to three percent by 2030.

The World Bank recently released a paper offering a demographic profile of global extreme poverty using a household survey conducted in 89 developing countries in 2013. This research provides a better understanding of poverty and could be a useful tool for policymakers to devise effective policies that target populations with certain characteristics. According to this research, the most promising policies a government can implement are financial support for non-agricultural activities, incentives for children of large families to attain education, and access to reproductive health services in rural areas.

The authors outline four main findings from their research:

The world’s poorest people typically live in rural areas. They are also usually young and have large families of three or more children. Those who live in moderate poverty, which is defined as living on a wage that is between $1.90 and $3.10 a day, are more likely to have completed primary education and less likely to work in agriculture than those in extreme poverty. The percentage of people in these groups who live in rural areas is 80 percent for the extreme poor and 75 percent for the moderate poor. Within this proportion of the world’s poor people who live in rural areas, over 45 percent are children who are younger than 15 years old and more than 60 percent come from families with three or more children. The authors did not observe a distinction in poverty rate by gender because poverty is measured on a household basis rather than on an individual basis. The data show a primary school education is not enough to exit extreme poverty, although it can be a useful indicator of whether one is in moderate poverty or extreme poverty.

Industrialized jobs do not guarantee an end to poverty.  A significant number of people who are in extreme or moderate poverty work outside the low-productivity agricultural sector, 24 and 40 percent respectively. After their research the authors state it is still unknown why these people who are in non-agricultural employment remain poor. In that regard, a more in-depth study could be conducted to truly understand the relationship between types of industries and poverty that is underlying extreme poverty in rural areas.

Basic education is not enough to exit poverty. The global illiteracy rate is approximately 15 percent, but within that proportion nearly 25 percent of those who are illiterate live in moderate to extreme poverty and another 33 percent specifically live in moderate poverty. However, a number of adults who are in extreme or moderate poverty do have some secondary education, 27 and 38 percent respectively. This demonstrates that primary and secondary education are not sufficient to exit poverty. In contrast, those who have a higher level of education are almost exclusively non-poor.

There are two key differences between the extreme and moderate poor. The first difference is that moderately poor families do not work in agriculture. The second is the moderate poor are more likely to have completed primary, but not secondary, education. If moving to moderate poverty is the path to a better standard of living for those in extreme poverty, then finding employment in a non-agricultural sector and pursuing higher education are two parts of that path.

Governments in developing countries can utilize these findings to improve their policies for alleviating poverty by supporting households in rural areas, enrolling children in school, and creating more jobs outside of agriculture. This study also shows that the World Bank’s extensive database of household surveys offers researchers a means to better understand global poverty and how educational attainment, urbanization, and labor market outcomes play a role in reducing extreme poverty.

Article source: Castaneda, Andes, et al. “Who Are the Poor in the Developing World?” The World Bank Group (2016).

Featured photo: cc/(poco_bw, photo ID: 144954370, from iStock by Getty Images)

Uranbileg Enkhtuvshin
Prior coming to Harris, Uranbileg worked as the CEO of Mongolia's first private pension fund. Uranbileg is interested in economic development and social welfare. She holds actuarial science and finance joint degree from Drake University.

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