Poverty Growth in Scandinavian Countries: A Sen Multi-decomposition

We show in this paper that the growth rate of the Sen index is multi-decomposable, that is, decomposable simultaneously by groups and income sources. The multi-decomposition of the poverty growth yields respectively: the growth rate of the poverty incidence (poverty rate) decomposed by groups, the growth rate of the poverty depth (poverty gap ratios) decomposed by sources and groups, and the growth rate of inequality decomposed by sources and groups. We demonstrate that the multi-decomposition is not unique. It is mainly dependent on poverty lines defined on the space of income sources. An application to Scandinavian countries shows that poverty lines based on non-correlation between the sources of incomes imply serious underestimation of the contribution levels of the different components of the global poverty growth. The main contribution of our paper is to pay a particular attention to the poverty growth and its source components in order to avoid underestimation of poverty growth.