Determining Poverty Impacts on Lao People's Democratic Republic and Cambodia: Reconciling Household and GTAP Data
This paper presents a method that builds consistency between information in the Lao People's Democratic Republic (PDR) and Cambodian household surveys, and the outputs of the general equilibrium model developed at the Global Trade Analysis Project. The paper stratifies Cambodian and Lao PDR households according to their primary income source. It identifies five household groups that rely almost solely on one source of income, and classifies households that rely on several sources of income as diversified. It further divides them into rural and urban households. This methodology:
- Provides a consistent platform for translating policy changes to changes in poverty headcount across income strata;
- Allows changes in sector outcomes arising from policy reforms or major investments to be traced through changes in factor incomes;
- Allows a connection to be drawn between improvements in sector-specific outcomes and movements of people in and out of poverty.
The paper recommends that governments understand the differing needs of different segments of the poor in order to permanently move people out of poverty. It states that this method will ensure effective policy design when the objective is poverty reduction.
