A Stochastic Dominance Approach to Evaluating Pro-Poor Growth—An Application to the Spanish Case

Abstract

In this paper, we analyze, in a novel way, the nature of economic growth in Spain after the Great Recession, in relation to its effect on poverty reduction. We use a statistical test to analyze the pro-poorness nature of economic growth using a stochastic dominance approach, not used in this context so far. We decompose changes in the difference in generalized Lorenz ordinates into a growth effect and an inequality effect and apply this to formal Spanish income data statistical tests based on dominance methods. We found that growth was pro-poor in Spain as a whole between 2013 and 2017. As regards regional growth effects, we conclude that growth was weakly pro-poor in seven of Spain’s 17 regions, it was neither pro-poor nor anti-poor in nine regions, and only weakly anti-poor in one region.