Mind the gap, mind corruption: cross-country differences between multidimensional and monetary poverty

Countries with similar rates of monetary poverty differ with respect to their multidimensional poverty rates. A large positive multidimensional/monetary poverty gap suggests that many non-monetary poor still fail to meet some of their most basic needs. We make use of panel data to examine these cross-country differences between monetary and multidimensional poverty and explicitly link them to underlying country characteristics. Our analysis builds on an earlier scholarly debate on the importance of institutions in ensuring an efficient/equitable allocation of resources. We find strong empirical support of a negative association between the control of corruption and the multidimensional/monetary poverty gap.