Poverty, Growth and Income Distribution in Lebanon August 2008

Poverty, Growth and Income Distribution in Lebanon August 2008 ©2008 United Nations Development Programme All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior permission of UNDP/Lebanon CO 2 Poverty, Growth and Income Distribution in Lebanon Study Team Core Team Heba El-Laithy Khalid Abu-Ismail Kamal Hamdan Peer Review Nanak Kakwani Mohamad Hussein Bakir Central Statistics Administration Team Maral Toutelian Najwa Yaacoub United Nations Development Programme Team Marta Ruedas Mona Hammam Zena Ali-Ahmad Manal Fouani Mona El-Yassir Michella Haddad Ghada Naifeh Research Support and Editing Dina Magdy Rabih Fakhry Mona Naguib Ghada Khoury Poverty, Growth and Income Distribution in Lebanon 3 Acknowledgments This report is the result of intensive collaboration between the Government of Lebanon, represented by the Ministry of Social Affairs, the Central Administration of Statistics, UNDP and the World Bank. The Ministry of Social Affairs and UNDP wish to record their gratitude to the Core Team responsible for the analysis and drafting of this report; namely Dr. Heba El-Laithy who was in charge of poverty measurement and analysis, Dr. Khalid Abu-Ismail who was responsible for macroeconomics and poverty analysis, and Dr. Kamal Hamdan who was responsible for results validation and policy recommendations. We also wish to thank the peer reviewers of the Report, namely Professor Nanak Kakwani and Dr. Mohamad Hussein Bakir, and Dr. Terry McKinley who supported the finalization of the executive summary for the report, and its publication as an International Poverty Center Country Study. From the Central administration of Statistics, we wish to thank Dr. Maral Toutelian who provided the Core Team with the necessary data and Najwa Yaacoub who supported the Core Team in all statistical requirements and in drafting the sampling methodology section. We also would like to thank the members of the Advisory Group for the Report composed of the following members: Dr. Jad Chaaban, Dr. Toufic Gaspard, Mr. Redha Hamdan, Ms. Amal Karaki, Dr. George Kosseifi, Mr. Adib Nehmeh, Dr. Haneen el-Sayed, Ms. Alexandra Prorsac, Ms. Sawsan Masri, Ms. Maysaa Nehlawi, and, particularly, Dr. Zafiris Ptzantos who provided the Core Team with extensive comments and recommendations. From the World Bank, we thank Mr. Zurab Sajaia, who provided the Team with consumption aggregates which were used for the analysis in this report. From UNDP Lebanon, Ms. Zena Ali Ahmad was the Task Coordinator for the Report supported by Ms. Manal Fouani and Ms. Ghada Naifeh; Ms. Mona El- Yassir and Ms. Michella Haddad were tasked with follow-up to design, layout and printing of the Report. Many thanks go to Dr. Dina Magdy and Mr. Rabih Fakhri for the valuable research support they provided for the Report, and Ms. Ghada Khoury and Ms. Mona Naguib for the editing support. 4 Poverty, Growth and Income Distribution in Lebanon Foreword The Government of Lebanon is committed to enhancing social development and the reduction of poverty in the country. However, policy elaboration and progress monitoring cannot be effectively undertaken without accurate baselines, which require a strong statistical base, upon which a portrait of the living conditions of the population can be drawn and improvements on these conditions can be pur- sued and realized. Advocacy for poverty reduction and social development is one of the aims of the joint project initiative between the Ministry of Social Affairs and the United Na- tions Development Programme (UNDP). Such advocacy, however, would not have been possible without the publication and wide dissemination of poverty surveys and studies. Since the mid-1990s, the Ministry of Social Affairs, supported by the UNDP, and in partnership with the Central Administration of Statistics, has undertaken a number of seminal surveys and studies; including “The Mapping of Living Conditions” (1998), which identified deprivation rates at the Kada’ level, provided evidence of the geographic distribution and concentration of poverty, and estab- lished that wide disparities exist between the peripheral and central regions of the country. The “Living Conditions of Households” (2007) highlighted the results of the Multi-Purpose Survey (2004) and provided a portray of living conditions in the country. The “Comparative Mapping of Living Conditions between 1995 and 2004” was produced in 2006, using the data generated by the “National Survey of Household Living Conditions, 2004. It analyzed the changes in the deprivation levels ten years after the publication of the first mapping study. The current report, “Poverty, Growth and Inequality in Lebanon,” is the first of its kind in Lebanon. It draws a profile of poverty based on money-metric poverty measurements and calculates a national poverty line based on household expen- ditures. Relying on the expenditure data from the Multi-Purpose Survey, the report provides a comprehensive overview of the characteristics of the poor and estimates the poverty gap and Gini Coefficient used to measure inequality. This seminal study is directed towards decision-makers, forming a basis for consid- ering and choosing from among the development policy and investment options which promote poverty reduction, inclusiveness, equity and regional balance. It also aims to spur further research and analyses, as well as to inform development practitioners with an aim of supporting the achievement of the MDGs. The report is expected to directly contribute to the reform processes launched by the Government of Lebanon at the Paris III donor conference. The Govern- ment’s medium-term reform programme includes, for the first time, a Social Ac- tion Plan that places the objective of poverty reduction, social justice and equity at the heart of the reform process. The Social Action Plan focuses on pursuing a coordinated inter-ministerial approach to improving efficiency, cost effectiveness and coverage in the delivery of social services, including better targeted safety Foreword 5 nets for the most deprived and vulnerable population groups. It also calls for the elaboration of a comprehensive and longer-term Social Development Strategy that consolidates the inter-ministerial and cross-sectoral coherence needed for a concerted effort to achieve the targets set for reducing poverty and regional disparities as intrinsic and essential factors for attaining inclusive and sustained economic growth, social equity and social justice. One important goal of the reform process is also to increase the effectiveness and coverage of social safety nets for the poor and marginalized. We hope that this report will constitute the first step towards establishing a mechanism for measuring poverty at regular intervals, as a means to both track progress towards poverty reduction targets and make corrective policy adjustments accordingly. The calculation of money metric poverty indicators is only the start of a momentum that should not stop until the battle against poverty is won. We would like to extend our gratitude to the Core Team who produced the study and to thank the members of the Advisory Team for their valuable guidance. We would also like to extend our appreciation to our partner, the Central Administra- tion of Statistic without whose help the production of this report would not have been possible. Nayla Mouawad Marta Reudas Minister of Social Affairs UNDP Resident Representative 6 Poverty, Growth and Income Distribution in Lebanon Abbreviations and Acronyms AFC Actual Final Consumption AUB American University in Beirut CAS Central Authority of Statistics CBN Consumption Basic Needs CPI Consumer Price Index CPR Combined Poverty Rate CSC Civil Servant Cooperative DHS Demographic and Health Surveys FAO Food and Agriculture Organisation FCND Food Consumption and Nutrition Division FGT Foster Greer Thorbecke FHH Female-Headed Households FPL Food Poverty Line GDP Growth Domestic Product GoL Government of Lebanon GQ General Quadratic HBS Household Budget Survey HCE Household Consumption Expenditure HDI Human Development Index HE Household Expenditure HLCS Households Living Conditions Survey HPI Human Poverty Index ICOR Incremental Capital Output Ratio IFPRI International Food Policy Research institute ILO International Labour Organization IMF International Monetary Fund LBP Lebanese Pounds LCHBS Living Condition Household Budget Survey LDC Least Developed Country MDG Millennium Development Goal MENA Middle East and North Africa MoH Ministry of Health MHH Male-Headed Households MoSA Ministry of Social Affaires MPS Multi Purpose Survey NGO Non- Governmental Organisation ODA Official Development Assistance OECD Organization for Economic Cooperation and Development PHC Primary Health Care PG Poverty Gap PSU Primary Sampling Unit SPG Squared Poverty Gap UBN Unsatisfied Basic Needs UNDP United Nations Development Program WDR World Development Report Table of Contents 7 Table of Contents 2 Study Team 3 Acknowledgments 4 Foreword 6 Abbreviations and Acronyms 13 Executive Summary 29 Introduction 31 Chapter One: Definitions and Methodology 31 Introduction 31 Measuring Money Metric Poverty Conceptual Issues Measuring Welfare Units of Measurement Poverty Lines Poverty Measurements 36 Constructing Poverty Lines Constructing Food Poverty Lines Constructing Lower and Upper Poverty Lines 40 Data Issues 42 Chapter Two: Poverty, Growth,

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