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World Bank Document Poverty map for the Palestinian Territories Public Disclosure Authorized Palestinian Expenditure and Consumption Survey 2016 and Census 2017 Technical report1 Public Disclosure Authorized September 2019 Public Disclosure Authorized 1 This technical report is written by Aziz Atamanov and Nethra Palaniswamy from the Poverty and Equity Global Public Disclosure Authorized Practice at the World Bank in close collaboration with Jawad Al-Saleh and Fida Twam (Palestinian Central Bureau of Statistics). The team is thankful for collaboration and constant support provided by Ola Awad (President) and Haleema Saeed (Director General) of the Palestinian Central Bureau of Statistics and Benu Bidani (Manager, World Bank). We are particularly thankful to Paul Corral (peer reviewer), Ken Simler, Minh Cong Nguyen and Xiayun Tan for very useful suggestions and help. Table of Contents 1. Introduction .......................................................................................................................................... 4 2. Methodology ......................................................................................................................................... 5 Methodological approach ......................................................................................................................... 5 Practical implementation .......................................................................................................................... 7 2. Data ....................................................................................................................................................... 8 PECS and Census ....................................................................................................................................... 8 Technical challenges ............................................................................................................................... 10 Small localities ..................................................................................................................................... 10 Lack of matching variables .................................................................................................................. 11 3. Model selection and results ................................................................................................................ 12 Selecting the model ................................................................................................................................ 12 Performance of the national model ........................................................................................................ 13 Model performance ............................................................................................................................ 13 Standard errors ................................................................................................................................... 15 Validation ................................................................................................................................................ 16 4. Mapping poverty and inequality results ............................................................................................. 17 Annex .......................................................................................................................................................... 21 References .................................................................................................................................................. 42 2 Tables Table 1. Geographic boundaries and classifications in the Palestinian territories ....................................... 9 Table 2. Means and standard deviations of variables in PECS 2016 and Census 2017 used in the national model .......................................................................................................................................................... 11 Table 3. Parameters from the national and regional models ..................................................................... 12 Table 4. Standard errors and coefficients of variation for locality poverty estimates obtained from the national and regional modes ...................................................................................................................... 13 Table 5. Results from the Beta model, GLS ................................................................................................. 14 Table 6. Results from Alpha model ............................................................................................................. 14 Table A1. Number of localities and enumeration areas in each governorate in PECS and Census ............ 21 Table A2. Results from the OLS and GLS models ........................................................................................ 22 Table A3. Coefficients and RMSE from Beta model and 10-fold cross validation ...................................... 23 Table A4. Small area poverty and inequality estimates for merged localities ........................................... 25 Table A5. Small area poverty estimates for governorates.......................................................................... 40 Table A6. Small area poverty estimates for rural, urban and camp areas within governorates ................ 41 Figures Figure 1. Example of merging selected localities in Hebron ....................................................................... 10 Figure 2. Governorate standard errors for direct PECS 2016 estimates and for small area estimates ...... 15 Figure 3. Standard errors for original and merged localities by different distribution groups .................. 15 Figure 4. Coefficients of variation and small area poverty estimate at the locality and governorate levels, 2017 ............................................................................................................................................................ 16 Figure 5. Comparison between the direct poverty estimates from PECS and small area estimates at the regional and governorate levels ................................................................................................................. 17 Figure 6. Small area estimates at governorate level, 2017......................................................................... 18 Figure 7. Small area estimates at governorate level across location types, 2017 ...................................... 18 Figure 8. Small area poverty estimates at the locality level, 2017 ............................................................. 19 Figure 9. Small area Gini estimates at the locality level, 2017 ................................................................... 20 Figure A1. Comparison of direct with small area poverty estimates at the locality level .......................... 21 Figure A2. Governorate coefficients of variation for direct PECS 2016 estimates and for small area estimates ..................................................................................................................................................... 24 3 1. Introduction For close to three decades, the people in the West Bank and Gaza have lived in a volatile and aid- dependent economic environment, defined by external restrictions on trade and the mobility of people, in addition to open-ended political uncertainty and internal challenges. Over the period 2011-2017, which is most recent year for which data is available, poverty increased by 3.4 percentage points in the Palestinian territories as a whole, from 25.8 to 29.2 percent (Atamanov and Palaniswamy, 2018). However, trends in the West Bank and Gaza regions diverged sharply. The proportion of the population living below the poverty line in the West Bank declined by 3.9 percentage points, from 17.8 to 13.9 percent. Poverty in Gaza rose by 14.2 percentage points, from 38.8 to 53 percent. This divergence in poverty trends at the regional level widened the gap in living standards between the two Palestinian territories significantly. While the average household in the West Bank had slightly higher living standards in 2017 than in 2011, this improvement remained fragile to a worsening political outlook2; and the precipitous decline in living standards in Gaza was accompanied by an alarming fall in access to essential public services like water and electricity. Declining aid flows and a worsening outlook on conflict are therefore likely to place significant downward pressures on living standards in both the Palestinian territories. The uniquely fragmented geography of the Palestinian territories is characterized by the isolation of Gaza from the West Bank, and man-made barriers to mobility within the West Bank (World Bank, 2014). This geography has consequences for poverty and economic development. The restrictions in mobility - that started in the early 1990’s and intensified in the period leading up to 2010 –defined important spatial disparities in economic welfare between the two regions of the West Bank and Gaza, and within the West Bank over this time. In the West Bank, restrictions took the form of internal barriers such as road closures and checkpoints within the territory; and Gaza faced external restrictions that increasingly “closed” it to the external world. These restrictions defined within-territory barriers to trade that resulted in spatial price differences (World Bank, 2011); created inequalities in access to limited labor market
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