Policy Options for Poverty Alleviation

This work builds on previous research to develop a methodology that simplifies the identification of the best policy options for poverty alleviation in a given country. When a population can be divided into subgroups according to an easily identifiable characteristic, the problem of alleviating poverty through a targeted mechanism can be viewed as one of choosing of three options: (i) provoking a marginal change in the average income of certain subgroups; (ii) changing the resource distribution within marginal subgroups; and (iii) generating a marginal change in the differences between the subgroups. Recent data from Mexico is applied. Note: This paper is published as Chapter 6 in Székely, M. "The Economics of Poverty, Inequality and Wealth Accumulation in Mexico", MacMillan, London, 1998.