A Note on Decomposing Differences in Poverty Incidence Using Regression Estimates: Algorithm and Example

This paper decomposes differences in poverty incidence (head count ratio) using estimates from a regression equation, synthesizing the approaches proposed in World Bank (2003) and Yun (2004). A significance test is developed for characteristics and coefficients effects when decomposing differences in poverty incidence. The proposed method is implemented for studying differences in poverty incidence between Serbians and Albanians in Kosovo using Living Standard Measurement Survey.