CHECKING THE CONSISTENCY OF POVERTY IN POLAND:1997 - 2003 EVIDENCE

by

Adam Szulc

Warsaw School of Economics, Poland

Abstract

This study investigates relationships between various types of

poverty in Poland. Monetary poverty is examined together with a

subjective one and with a deprivation, conceived as a lack of

particular resources. The results reveal quite important

discrepancies between those three types of poverty. Though income

and expenditure poverty incidence generally decreased over

investigated period, the rate of persons living in subjective poverty

was higher in 2003 than in 1997, while deprivation substantially

decreased. Moreover, quite large discrepancies at the individual

levels could be observed. Some conflicting results were found

between correlates of poverty of three aforementioned types as

well.

DIMESIONS OF POVERTY EXAMINED:

• current monetary (monthly income and expenditures)

• material resources (assets and durables)

• subjective income evaluations

THE DATA SOURCE:

Household Budget Survey

FORMAL APPROACH TO MULTIDIMENSIONALITY OF POVERTY

(OR SOLVING THE AGGREAGATION PROBLEM):

generally NONE

ANALYSES PERFORMED

1997 – 2003:• Time series on monetary poverty (absolute and relative)

1997, 2000 and 2003:

• Deprivation (lack of particular resources) and subjective poverty: among the monetary poor and in the whole sample

• Asset, subjective and expenditure prosperity: among the monetary poor and in the whole sample

• Overlapping (“core”) poverty rates

• Correlates of three dimensions of poverty

• Correlates of inconsistent poverty

Table 1. Selected economic and social indicators for Poland in 1990 - 2004

Indicator 1990 1995 2000 2001 2002 2003 2004 GDP change, 1990=100

100 111.4 143.1 144.5 146.5 152.1 160.2

18.01 Unemployment rate (December)

6.5 14.9 15.1 17.5 20.02 20.0 19.1

Gross participation in tertiary education

12.9 22.3 40.7 43.6 46.2 - -

Life expectancy at birth

70.8 72.0 - 74.2 74.7 -

Human Development Index

0.802 0.816 0.843 - 0.850 - -

1 Old definition of unemployment 2 New definition of unemployment Source: Statistical Yearbooks (CSO), Human Development Reports (UNDP).

1. Household poverty indices, income plus expenditure(%)

5

10

15

20

25

30

35

1997 1998 1999 2000 2001 2002 2003

absolute 50% median 70% median depth, absolute

2. Subjective poverty and deprivation

0

10

20

30

40

50

60

70

su

bje

ctive

dep

riv. 1

dep

riv. 4

su

bje

ctive

dep

riv. 1

dep

riv. 4

su

bje

ctive

dep

riv. 1

dep

riv. 4

1997 2000 2003

monetary poor

whole sample

3. Asset and subjective prosperity

0

5

10

15

20

25

30

35

40

45

as. p

rosp

.

su

b. p

rosp

exp

. pro

sp

.

as. p

rosp

.

su

b. p

rosp

exp

. pro

sp

.

as. p

rosp

.

su

b. p

rosp

exp

. pro

sp

.1997 2000 2003

whole sample

monetary poor

4. Overlapping poverty rates

5

10

15

20

25

1997 2000 2003

monetary mon. & no prosperitymon. & dep 1 mon. & subject.dep. 1 & subject. core poverty

CONFLICTING RESULTS IN POVERTY CORRELATES

1. NATIONAL INDEX DECOMPOSITION vs. PROBIT REGRESSIONFor household of farmers and farmer-employees, and single-parent households: poverty

incidence above national rates and negative or non-significant estimates of risk of poverty.

For household of pensioners: poverty incidence below national rates and positive, significant estimates of risk of poverty.

2. MONETARY POVERTY vs. DEPRIVATION (IN 2000)• Deprivation of degree 1: lack of one of basic household facilities[1]• Deprivation of degree 4: lack of four basic household facilitiesFor single-parent households: negative estimates of risk of monetary poverty and

positive of deprivation.For households with one child: positive estimates of risk of monetary poverty and

negative of deprivation 1 and 4.For households with two children and large households: positive estimates of risk of

monetary poverty and negative of deprivation 4.

3. MONETARY vs. SUBJECTIVE POVERTYFor single-parent households: negative estimates of risk of monetary poverty and

positive of deprivation•

[1] Bath or shower, inside toilet, running hot water, central heating.

4. CORRELATES OF INCONSISTENT POVERTY

Monetary poverty and:• “prosperity” in terms of household assets and durables, subjective evaluations and

expenditures on non-food items• lack of subjective poverty• lack of deprivation of degree one• lack of deprivation of degree four

The following attributes of the household’s head decrease probability of inconsistency in poverty: blue collar worker, female, pensioner and welfare state recipient. This probability increases with respect to the household size.

CORRELATES OF CONCENTRATION OF POVERTY

Estimated by ordered probit regression with independent variable defined as follows: value 0 means absence of poverty of any type, values from 1 to 7 are obtained by adding successively further types of poverty, namely: i/ income or expenditure poverty, ii/ income and expenditure poverty, iii/ subjective poverty, and iv-vii/ four degrees of deprivation.

Negative and significant estimates were obtained, inter alia, for farmer-employees, and single-parent household. In 1997 also for farmer’s households.

CONCLUSIONS

1. Trends in monetary and subjective poverty, and in deprivation differed

considerably.

2. Presence of one or two children reduces risk of deprivation, though it

increases risk of monetary poverty.

3. Single-parent households face higher than average risk of subjective

poverty and deprivation, in spite of lower risk of monetary poverty.

4. Households headed by blue collar worker, women, pensioner or welfare

state recipient suffering one type of poverty are rather unlikely to avoid

other types.

5. Overlapping (“core”) poverty rates are very low, as compared to other

types of poverty, and decreased between 1997 and 2003.