—Poverty has always occupied a prominent place in the economic development agenda of successive governments in Sri Lanka since independence. However, the economic benefits of development have not been evenly distributed over the whole island. Thus poverty decomposition provides a better picture for analyzing poverty situation in Sri Lanka.
Poverty decomposition has been calculated using the computational tool ‘POVCAL’. National poverty changes were decomposed, using disaggregated household expenditure data from National Income and Expenditure Surveys (HIES) 1990/91 and 2009/10 in Sri Lanka. The decomposition of the poverty change was done using the poverty headcount ratio, the poverty gap index and the severity of poverty in Sri Lanka using national poverty lines for the respective years.
The results show that the mean consumption in Sri Lanka has increased; therefore the growth component has contributed to significant poverty reduction within the period. Further, the results confirm that the significant poverty reduction in Sri Lanka is fully accounted for by the increase in mean consumption. This effect carried through to the other poverty measures as well. Although usually the redistribution component is negative; here it has a positive value, indicating that the redistribution component has dominated the growth component of the change in poverty in Sri Lanka over the last two decades.
—Poverty decomposition, growth effect, distribution effect, POVCAL, Sri Lanka.
Seetha P. B. Ranathunga is with the University of Kelaniya, Sri Lanka
Cite: Seetha P. B. Ranathunga, "Decomposition Analysis of Household Poverty in Sri Lanka: 1990-2010," International Journal of Social Science and Humanity vol. 7, no. 4, pp. 196-199, 2017.