Work detail

New new bottom billion: Poverty and regional differences in price levels around the world

Author: Bc. Marek Šedivý
Year: 2017 - summer
Leaders: Petr Janský Ph.D.
Work type: Bachelors
Language: English
Pages: 73
Awards and prizes:
Abstract: Comparable national price levels are a fundamental instrument for any research attempting to
compare economic indicators of various countries. Nowadays they are produced by a number
of organizations, namely the World Bank, Organization for Economic Cooperation and
Development and the Penn World Tables. However these are provided only on national level
even though significant evidence of inter-regional differences in price levels exists. This could
lead to a bias of income-based economic indicators. Systematic assessment of the impact of
spatial price differences on income-based economic indicators was done in this thesis. On the
basis of the existing research it estimates regional price levels for a sample of 21 high and
middle income countries. By combination of these indicators with income survey data
provided by the Luxembourg Income Study it constructs Gini coefficients and poverty
headcount ratios both adjusted and unadjusted for regional price levels. Significant and
persistent evidence of bias induced by regional price levels is found throughout the sample. In
the majority of cases the failure to adjust for spatial price differences leads to overestimation
of income inequality and incidence of poverty. The overestimation is most significant in the
case of middle income countries.


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