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The author is grateful to S. Bouna, M.Cangul, F.Gwenhamo, D. Gressani, L. Dicks-Mireaux, L. Kehler, E.Mottu, A.Olhaye for careful reading and helpful comments. The author thanks DISED (S.Konate) colleagues for sharing the database, useful comments and discussion, and World Bank colleagues (J.Lohi and G.Lara) for comments and methodological input. Research assistance from J.Chen and L.Zhao is gratefully acknowledged. Any remaining errors are the author’s. The findings of the paper were presented to the Djiboutian authorities during the 2016 Article IV Consultations.
The squared poverty gap index averages the squares of the poverty gaps relative to the poverty line. It takes into account not only the distance separating the poor from the poverty line (the poverty gap), but also the inequality among the poor because it places a higher weight on households further away from the poverty line.
The Watts index is defined as a logarithm of the quotient of the poverty line and a geometric mean of an income standard applied to the censored distribution.
The MLD is an index of inequality given by the mean across the population of the log of the overall mean divided by individual income.
Lt(p) is the fraction at time t of total income that the holders of the lowest pth fraction of incomes possess. This varies from zero to one, 0 ≤ p ≤ 1, and is presented as the inverse of the cumulative distribution function.