Poverty and the functional distribution of income in the input–output framework: in pursuit of strategies for inclusive growth

Abstract

The eradication of poverty as proposed by the first Sustainable Development Goal is one of the main challenges faced by all countries, especially the underdeveloped and developing nations. In this paper, we develop an approach for integrating the input–output framework with a microsimulation model where consumption and income data are highly disaggregated and along with Miyazawa linkages. This allows us to identify how sectoral economic structure affects income distribution. This, in turn, provides information relevant to the inclusive growth policies that can create work opportunities for the low-income population and, thereby eliminating poverty. Results show how labor-intensive sectors might be important in ending poverty and in reducing inequality. They even show the set of activities that could best contribute to this goal via changes in the productive structure.

KEYWORDS:

• Poverty
• income distribution
• inclusive growth
• Miyazawa

Acknowledgement

We would like to thank anonymous reviewers for their valuable comments and suggestions.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 From Portuguese ‘Instituto Brasileiro de Geografia e Estatística’.

2 From Portuguese ‘Pesquisa de Orçamentos Familiares’.

3 From Portuguese ‘Pesquisa Nacional por Amostra de Domicílios’.

4 For them, microsimulation refers to a wide variety of modeling techniques that operate at the level of individual units.

5 From Portuguese ‘Classificação Nacional de Atividades Econômicas’.