Absolute v relative poverty
This week I shall follow up on three matters related to last week’s discussion of poverty and inequality in the context of Guyana’s growth, joblessness and the minimum wage. These are: absolute versus relative poverty measures; the huge spread in wage and salary earnings; and the impact of the phantom economy on inequality and poverty.
As regards the first (absolute and relative poverty), readers need to be aware that there is a raging international debate among social scientists as to whether poverty and inequality can truly be determined absolutely or are these concepts strictly society-specific and therefore can only be culturally defined and specified. In other words can absolute poverty lines be trusted or should analysts rely exclusively on relative indicators. Importantly, readers should carefully note that without absolute poverty indicators comparisons across countries would no longer be methodologically reliable.
While I have the utmost respect for the protagonists in this debate, it does not make sense to me to measure and analyze poverty as a global phenomenon if each poverty measure has to be specific to a particular country. It would therefore be useful for readers to observe that efforts have been made by the World Bank and other such agencies to find a compromise out of this apparent impasse. Their approach is to devise various sets of measures deemed applicable to various categories of
