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Labour Markets, Education, Health And Nutrition Notes

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LABOUR MARKETS, EDUCATION, HEALTH AND NUTRITION 'Development Economics' Ray 1998 (Ch. 8, 13) Chapter 8 -Poverty and Undernutrition

Poverty measurement issues o Overall expenditure or item-by-item consumption?
- Nutrition levels may not unambiguously ↑with income
- 'Income represents the capacity to consumers not consumption itself.' o Absolute or relative?
- 'although poverty lines should (and do) incorporate relative notions of what constitutes 'necessity' or 'basic needs', we must still think of them as fulfilling some absolute notion of the ability to function in a society.' E.g. number of people living <50% of mean income BUT, say all incomes ↓by 50% →measure of poverty would not change. o Temporary or chronic?
- Significant fluctuations
- Very different policies for temporary or chronic poverty.
- Expenditure often thought to be more reliable to assess chronic poverty o Households or individuals?
- Often only household data available
- Females and elderly
- Children consume less than adults o Why a poverty line, anyway?
- 'always approximation to a threshold that is truly fuzzy'
- 'basically (important) pointers to a deeper and less quantifiable concept.' o Poverty measures y=income p=poverty line m=mean income of the economy
- HCR = HC=no. of people below poverty line n=total population BUT fails to capture extent to which individual income falls below the poverty line. Biases policy in favour of individuals who are very close to the poverty line.
- Poverty gap ratio = PGR =
Ratio of the average of income needed to get all poor people to the poverty line, divided by the mean income. Might give a misleading impression of poverty in highly unequal societies with a large number of poor people.
- Income gap ratio = IGR =
o Captures more directly the acuteness of poverty
- Good idea to use measures of each type jointly'

2 reasons to doubt the high degree of observed correlation between household size and poverty:

1. Larger households have a greater fraction of children (consume less) so expenditure overestimates amount of poverty

2. Larger households enjoy significant economies of scale

'Just as the paucity of assets leads to poverty, a condition of poverty leads to the sale of assets.' Nutrition o 'In adults, chronic undernutrition diminishes muscular strength, immunity to disease, and the capacity to do productive work.' o Incidence of poverty and incidence of undernutrition may be ordinally related (poor person more likely to be undernourished than a rich person)
- BUT 'relationship between increases in income and increases in nutrition may or may not be strong.' o Direct nutrition supplements may have a greater impact on undernutrition than an↑in income:
- Nutrition is useful in a functional sense - to earn income.
- Individual preferences for food

Branded food

High status food e.g. meat o Overall, ↑in income has significant effect on nutrition if nutrition measured by the consumption of calories o 'some evidence that pure nutritional concerns do not entirely drive household decision making.' o Estimated elasticities are high in the slack (non-harvest season). The functional impact of poverty o 'Economic poverty is the worst curse there is.'

Nutrition and the labour market: o Energy balance
- Energy input
- Resting metabolism

A significant proportion of the body's requirements
- Energy required for work

'The labour of the poor is often physical labour, and physical labour requires significant amounts of energy.'
- Storage and borrowing

'In the short or medium run, excesses or deficits can be cushioned (to some extent) by the human body.' o Capacity curve
- At first, most nutrition goes into maintaining resting metabolism, and so sustaining the basic frame of the body

Little energy left for work o 'Although low incomes create low nutrition, low nutrition is capable of creating low incomes.'

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