This paper shows us the right way of poverty policy using the result of the decomposition of sen index, which is the epresentative index of poverty, and share of economic growth after observing the trend of poverty 1996 through 2000. The domestic source we used is the raw data of 1996 and 2000 Korea National Statistical Office “The National Survey of Household Income and Expenditure” and 2004 Korea Institute of Health and Social Welfare “The National Survey of the Actual Conditions of Household Livelihood”. The international source is the raw data of twelve countries which LIS(Luxembourg Income Study) collects. According to the result of analysis, the national indicators of poverty (Poverty rate, Poverty gap, Sen index) is getting worse most rapidly out of twelve countries. The result of the decomposition of Sen index says that the major cause of Sen index deterioration is the growth of poverty rate and the aggravation of distribution among the poor, but the average income effect of the poor improves Sen index. The distribution analysis of share of economic growth between the poor and non-poor tells us that all share of economic growth goes to the non-poor and the poor went from bad to worse. At present the gap between poor and non-poor in USA is worse than Korea. Points we must see here are that some share of economic growth goes to the poor and relative poverty rate has been making better after mid-1990’s in USA and Mexico. Because the relative poverty rate, however, is getting worse and the benefit of economic growth going to the poor is negative although the current status of Korea is not worse than countries we just mentioned, the gap between poor and non-poor in Korea may deteriorate in future more than USA and Mexico.
The deterioration of poverty and distribution impedes the social integration and the impediment of social integration educes the potential of economic growth in the long run, which causes a vicious circle of the impediment of social integration. Consequently we think that ‘Welfare’ may be the solution of these problem now.
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