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This chapter presents a poverty simulation as a critical pedagogical tool that breaks down preconceptions and provides information about real-life challenges experienced by those who are poor. It allows students to develop the critical thinking skills, perspective-taking, and empathy. It provides an opportunity to take social and intellectual risks, and motivates civic engagement for positive social change. As such, this chapter contributes to the volume’s focus on curriculum and pedagogical changes using education to promote social change. Simulation participants attempt to successfully negotiate four 15-minute weeks within families of various sizes and resources. At the conclusion of the simulation, participants take a few minutes to reflect in writing on their experience. Students identify and discuss the social structures that they felt helped to perpetuate their poverty, as well as how micro-level interactions (i.e., with service providers, teachers, police, people in their neighborhood) affected their outcomes. Results show students increased understanding of the social issues contributing to poverty as well as consequences of poverty, and they report an increased desire to take action to affect positive social change in their community. The chapter concludes with thoughts and recommendations on how students from various disciplines could benefit from this poverty simulation.

Brazil, a large developing economy whose main exports consist of primary commodities, benefited greatly from the boom in commodity prices during the first decade of the current century. However, with a large share of its population with low and very low incomes, there is a potential for some adverse redistributive effects. The purpose of this paper is to address this issue by simulating the ex ante effects using a mixed endogenous–exogenous social accounting matrix (SAM) price model.

The methodology consists of two parts. First, using a mixed endogenous–exogenous SAM price model, the authors obtain the elasticities of domestic prices (goods, services and factors) in response to the increase in international prices of three types of commodities: agricultural, oil/gas and minerals. Second, the authors run micro-simulations at the household level on welfare effects, as well as on some distributive indices. Analysis at the regional level is also carried out.

Following increases in the international prices of primary commodities, the responses of internal prices (goods, services and factors) mean a welfare loss all over the entire distribution of household per capita expenditure; the least affected are those households at the low end and around the median of the distribution. However, the differences among households are not very important. Moreover, once we take into account government transfers and payments from social security, the magnitude of the effects reduces even further. Also, inequality indices and poverty rates show little responsiveness to the simulated shocks. Finally, poorer regions are the most likely to be affected, but also the distribution of effects across households shows differences between regions.

Economies with comparative advantages in the production of primary commodities can benefit at a macro-level from the increase in the international prices of such commodities. However, when a large part of the population spends a high proportion of its income on goods whose prices may be affected by the increase in commodity prices, there is a room for some undesirable effects from a redistributive standpoint. This study provides valuable results about such potential effects for Brazil, a large developing economy.

In-work transfers are often seen as a good trade-off between redistribution and efficiency as they alleviate poverty among low-wage households, while increasing financial incentives to work. In the context of the recent economic downturn, they have been advocated to offset the disincentive effect of wage cuts and to cushion the negative redistributive impact of earnings losses and cuts in the minimum wage. We study this double effect for Ireland, a country deeply affected by the economic crisis, and for which existing in-work support policies are of limited scope. The employment and poverty effects of alternative policies are analysed thanks to counterfactual simulations built using a micro-simulation model, the Living in Ireland Survey 2001 and labour supply estimations. We focus on an extension of the existing scheme, the Family Income Supplement and its replacement by the refundable tax credit in force in the United Kingdom.

The purpose of this paper is to quantify the impact of social or government transfers on income inequality and poverty in South Africa.

A top-down, bottom-up (TD-BU) model which combines an econometrically estimated labor supply model, a detailed tax-benefit module and a computable general equilibrium model is used in order to analyze the impact of government transfers on income inequality and poverty in South Africa. The paper uses a merged South African income and expenditure household survey and labor force survey for the year 2000, and a South African social accounting matrix as the main data sets.

Simulation results suggest that doubling of government transfers lead to a 5.5 percent reduction in poverty if a relative poverty measure is used and a 7 percent reduction if an absolute poverty line is used. In addition, simulation results show differences in poverty and inequality measures between the MS-only model and the linked TD-BU model confirming the importance of linking the two models.

The TD-BU approach is important since it explicitly accounts for the following aspects: that labor supply should adjust to changes in the tax-benefit model, general equilibrium effects and the heterogeneity of economic agents. This allows for a richer micro-household modeling.

The global energy market has been facing lower prices of crude oil in recent years. Lower fuel price leads to lower transport cost and cheaper agricultural inputs (such as pesticides and chemical fertilizer), resulting in lower prices of agricultural commodities in the international markets. On the other hand, lower global oil price reduces the oil revenues of oil exporting countries, resulting in a decrease in government expenditures. Therefore, the purpose of this study is to examine the impacts of lower global oil and agricultural commodity prices and government expenditure on the entire economy and poverty level of Malaysia.

This study used a computable general equilibrium model (CGE) to investigate four simulation scenarios based on the latest Malaysia’s input-output table belonging to 2010. The first scenario is a 30 per cent fall in the export and import prices of agricultural commodity prices, while the second is a 50 per cent decline in the export and import prices of crude oil, and the third combines them. In the fourth scenario, government operating expenditure declines by 4 per cent because of the fall in government’s oil revenues as a result of the decline in global oil prices.

The simulation results suggest that lower international oil price decreases real gross domestic product (GDP) and investment in Malaysia and influences positively the output and employment of some agriculture sectors. However, lower agricultural commodity price increases real GDP and investment in the country and negatively influences the output, employment and exports of all agriculture sectors. The decline in government expenditures also increases the output and the employment in the economy, whereas it decreases household consumption. In conclusion, results show that the agriculture sector losses from the current decline in international agricultural commodity prices, while it benefits from lower oil and government expenditure.

The main contribution of this study is comparing the impacts of recent falls in global oil and agricultural prices on the entire economy and agriculture sector of Malaysia. Investigating the impacts of these issues on the poverty level of Malaysian households is another contribution to the study. Another contribution is analyzing the impact of a reduction in government expenditures because of the decline in global oil price on the economy and welfare of Malaysia. Therefore, this study makes a useful contribution to the small literature of the topic.

This chapter uses a global trade model, supplemented with household survey data, to explore the potential impact of ASEAN trade liberalization on poverty in Cambodia, Lao PDR, Thailand, and Vietnam. Our tentative results suggest that ASEAN liberalization is likely to bring substantial gains to the region and lead to significant reductions in poverty. In a simulation of full removal of intra-ASEAN tariffs, we find 320,000 people are moved out of extreme poverty, with a further 1.4 million lifted above the $2 per day poverty line. Poverty reductions are particularly significant in the case of agricultural and rural diversified households and for Cambodia. Under broader ASEAN+3 and ASEAN+6 liberalizations, we find a similar pattern of poverty reduction and the overall reduction in poverty is much higher.

This paper investigates the effect of household size, and in particular of the number of children of different age groups, on poverty, defined as being in a situation of low income. We apply various static and dynamic probit models to control for the endogeneity of the variables of interest and to account for unobserved heterogeneity, state dependence, and serially correlated error components. Using Luxembourg longitudinal data, we show that the number of children of different age groups significantly affects the probability of being poor. However, the magnitude of the effect varies across different specifications. In addition, we find strong evidence of true poverty persistency due to past experience, spurious poverty persistency due to individual heterogeneity, and transitory random shocks.

This study is the first attempt to analyze the effectiveness of recent two major tax policies, the reductions in personal and corporate income taxes and a rise in indirect tax and their combine, under both balanced and unbalanced budget conditions, on the economy and social aspects of Malaysia.

This study uses a computable general equilibrium model to investigate the impacts of all simulation scenarios on the key macro and micro indicators. Further, based on the 2012 Malaysia Household Income and Expenditure Survey, it uses a micro-data with a significant number of households (over 56,000 individuals) to analyze the impacts of tax policies on poverty and income inequality of Malaysian.

Simulation results show that, under the balanced budget condition, personal and corporate income tax reductions increase economic growth, household consumption, and investment, while the rise in indirect tax has adverse impacts on these variables. However, in the unbalanced budget condition, all tax policies, except indirect tax policy, reduce real GDP and investment in the economy and the indirect tax policy has insignificant impacts on all indicators. All policy reforms reallocate resources, especially labor, in the economy. In both budget conditions, the reductions in corporate and personal income taxes, particularly the corporate income tax, decrease poverty level of Malaysian households. Results also indicate that both tax policies are unable to influence income inequality in Malaysia.

This study recommends that the government can increase its revenue by increasing indirect taxes as it does not have any impact on household welfare. In order to increase government revenues, initial increases in personal and corporate income taxes are suggested as they may have small negative impacts on the economy and welfare of households.

One of the significant features of this paper is that it examines both expansionary and contractionary fiscal policies in a country that government budget depends on oil exports. Since the literature on this subject is limited, particularly in the Malaysian context, the authors used Malaysia as a case to show how tax reform policies affect the economy and poverty level of such countries. Distinguishing the Malaysian households into 10 deciles and analyzing the distributional impacts of tax policies on these categories are the most significant contributions of this study.

Poverty reduction remains one of the main goals of development efforts, as evidenced by the adoption of the Millennium Development Goals by most developing countries and international agencies. The purpose of this paper is to explore the relationship between trade (exports) and employment and how the relationship reduces poverty through the instrumentality of employment, with a focus on Nigeria.

The paper takes the form of descriptive analysis.

Evaluating the case for Nigeria, the authors find that oil exports which drives economic growth do not provide the needed employment to reduce poverty, while agricultural trade, particularly exports, are capable of reducing poverty and inequality in Nigeria through the channel of employment and agricultural productivity growth.

The paper makes a link between export trade, employment and poverty reduction in Nigeria.

The purpose of this paper is to identify bank deserts in the USA in 2009 and 2015, separately for inner city, suburban, and rural areas. It also identifies correlations between bank deserts, population characteristics, market competition, and payday lending restrictions, both cross-sectionally and over time.

FDIC data on bank office locations are used to identify bank deserts, defined as the 5 percent of census tracts with the greatest distance from the centroid to the nearest office. Those data are matched to both American Community Survey data to identify population characteristics, to a list of states with payday lending prohibitions, and to levels of market competition. An alternative measure of bank deserts corrects for population density. Geography is analyzed, mean characteristics compared, and random effects regressions capture static and dynamic correlates.

Population density explains approximately half of bank distance variance. Bank deserts appear more often in southern and western states, and expanded significantly in inner cities while contracting in rural areas. Regression results suggest that African Americans were overall and increasingly likely to live in bank deserts and Native Americans were overall more likely to live in rural bank deserts. Rural poverty is linked to bank deserts, and the effects of competition are complex.

The space for policy intervention exists in African American inner cities and Native American rural communities.

The relative measure of bank deserts is novel, as are dynamic estimates and random effects analysis of correlates.