A Decomposition of the Change in Total Poverty Gap

The total poverty gap provides a straightforward information to policymakers as it measures the amount of income needed to get poor people out of poverty. Monitoring the change in total poverty gap is useful to examine poverty dynamics, however such a measure would be more informative if it were linked to other poverty indicators in a unified analysis framework. This paper suggests a decomposition that links the change in total poverty gap to those in poverty incidence, poverty depth, population size and composition. The decomposition is used to analyze the change in total poverty gap in Italy between 2010 and 2020. The total poverty gap decreased in the period considered and the change in poverty incidence was the main driver of such a reduction.