Understanding Poverty Reduction in Sri Lanka: Evidence from 2002 to 2012/13

Ceriani, Lidia ; Inchauste, Gabriela ; Olivieri, Sergio

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Abstract

This paper quantifies the contributions to poverty reduction observed in Sri Lanka between 2002 and 2012/13. The methods adopted for the analysis generate entire counterfactual distributions to account for the contributions of demographics, labor, and non-labor incomes in explaining poverty reduction. The findings show that the most important contributor to poverty reduction was growth in labor income, stemming from an increase in the returns to salaried nonfarm workers and higher returns to self-employed farm workers. Although some of this increase in earnings may point to improvements in productivity, defined as higher units of output per worker, some of it may simply reflect increases in food and commodity prices, which have increased the marginal revenue product of labor. To the extent that there have been no increases in the volumes being produced, the observed changes in poverty are vulnerable to reversals if commodity prices were to decline significantly. Finally, although private transfers (domestic and foreign) helped to reduce poverty over the period, public transfers were not as effective. In particular, the reduction in the real value of transfers of the Samurdhi program during 2002 to 2012/13 slowed down poverty reduction.

Document type: Working paper
Publisher: The World Bank
Place of Publication: Washington, D.C.
Date: 2015
Version: Secondary publication
Date Deposited: 6 December 2015
Number of Pages: 43
Faculties / Institutes: Miscellaneous > Individual person
DDC-classification: "Social services; association"
Controlled Subjects: Sri Lanka, Armut, Bekämpfung, Geschichte 2002-2013
Uncontrolled Keywords: Sri Lanka, Armutsbekämpfung, Geschichte 2002-2013 / Sri Lanka, Poverty Reduction, History 2002-2013
Subject (classification): Sociology
Countries/Regions: Sri Lanka
Additional Information: © World Bank. https://openknowledge.worldbank.org/handle/10986/22877 License: CC BY 3.0 IGO
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