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Working Paper

Losing the Gains of the Past : The Welfare and Distributional Impacts of the Twin Crises in Iraq 2014

HOUSEHOLD INCOMES LIVING STANDARDS PER CAPITA CONSUMPTION HOUSEHOLD SIZE HOUSEHOLD SURVEY WELFARE MEASURE UNEMPLOYMENT RATES POVERTY LINE DURABLE GOODS ECONOMIC GROWTH POVERTY LEVELS POVERTY ‐HEAD INCOME SCHOOLING POVERTY INDICES PROJECTIONS POVERTY RATES HOUSEHOLD CONSUMPTION NATIONAL POVERTY LINE REGIONAL LEVEL UTILITY MAXIMIZATION EXPORTS AGGREGATE POVERTY ELASTICITY MACROECONOMIC SHOCKS FOOD PRICES HOUSING WELFARE OPTIMIZATION NATIONAL POVERTY POOR PEOPLE DISTRIBUTION VARIABLES DISTRIBUTIONAL EFFECTS INPUTS INFLATION MEASURES POVERTY MEASURES INCOME GENERATION NEW POOR TRENDS REGION ECONOMIC SHOCK NEW POOR POVERTY REDUCTION HOUSEHOLD INCOME SMOOTHING CONSUMPTION REGIONAL POVERTY INFLUENCE FOOD BASKET PER CAPITA INCOME HOUSEHOLD INCOMES PER CAPITA INCOME INCOME DISTRIBUTION POVERTY GAP SOCIAL PROTECTION RENT FOOD PRICE POVERTY INCIDENCE ECONOMETRICS FOOD REQUIREMENTS TRANSFERS TRANSFERS IN KIND POVERTY HEADCOUNT RATES PER CAPITA CONSUMPTION HOUSEHOLD INCOME LACK OF INFORMATION CARTEL HOUSEHOLD SURVEYS SOCIAL PROTECTION INCOME LEVELS CALORIE INTAKE ECONOMIC POLICIES DIVIDENDS CHANGES IN POVERTY UTILITY PER CAPITA CONSUMPTION FOOD ITEMS TAXES FOOD ITEMS UNEMPLOYMENT CONSUMPTION PER CAPITA POVERTY LINES SAFETY NET TRANSFERS CONSUMPTION LIVING STANDARDS WAGES ECONOMIC POLICIES POVERTY RATES UNEMPLOYMENT RATE INCOME GAINS FINANCIAL CRISIS ECONOMIC PROJECTIONS VALUE POVERTY ‐HEAD POVERTY LINE AGGREGATE POVERTY POVERTY IMPACT ECONOMIC SECTORS FAMILY INCOME SAFETY NET INCOME DISTRIBUTION AGRICULTURAL SECTOR EMPLOYMENT STATUS AGRICULTURE RURAL FOOD BASKET POVERTY LINES TRANSFERS IN KIND NATIONAL POVERTY LINE ECONOMIC SECTOR PRIVATE TRANSFERS ECONOMIC SECTOR POVERTY INDICES INFLATION RATES INSURANCE TAXATION MACROECONOMIC SHOCKS TRADE POOR POPULATION GDP WELFARE MEASURES GOODS FINANCIAL CRISIS HOUSEHOLD CONSUMPTION PER CAPITA THEORY FOOD SHARE REGIONS GROWTH RATE WAR BASIC FOOD REQUIREMENTS WELFARE MEASURES PRIVATE TRANSFERS ACCESS TO SERVICES POOR HOUSEHOLDS DURABLE GOODS POVERTY ACCESS TO SERVICES INCIDENCE OF POVERTY INCIDENCE OF POVERTY HOUSEHOLD CONSUMPTION POVERTY GAP INFORMAL EMPLOYMENT INCOME GAINS POVERTY MEASURES HOUSEHOLD WELFARE UNDERESTIMATES POOR CONSUMPTION PER CAPITA MACROECONOMIC POLICIES WELFARE MEASURE POVERTY HEADCOUNT RATES TOTAL OUTPUT POVERTY IMPACT LACK OF INFORMATION FOOD PRICES CONSUMPTION LEVELS OUTCOMES POVERTY INCIDENCE PRICES GROWTH PROJECTIONS DEVELOPMENT POLICY INCOME GROUPS INEQUALITY POOR HOUSEHOLDS HOUSEHOLD SURVEY
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World Bank, Washington, DC
Middle East and North Africa | Iraq
2016-03-09T18:13:24Z | 2016-03-09T18:13:24Z | 2016-02

Iraq was plunged into two simultaneous crises in the second half of 2014, one driven by a sharp decline in oil prices, the other, by the war against the Islamic State in Iraq and Syria. The severity and recurrent nature of these crises demand a fast understanding and quantification of their welfare impact, which is critical for policy makers. This paper employs an innovative extension of the micro-simulation methodology to provide an ex ante estimate and analysis of the complex and dynamic poverty and distributional impact of the twin crises. The results show an almost complete erosion of the welfare gains of the past, with poverty falling back to 2007 levels and a 20 percent increase in the number of the poor. While the incidence of poverty is higher among internally displaced persons than the rest of the population (except in the Islamic State–affected governorates, where poverty is higher), internally displaced persons make up only a small proportion of Iraq's eight million poor in 2014. The rest comprise of households who already lived below the poverty line, or those who have fallen below the poverty line in the face of the massive economic disruptions the country is facing. The welfare impact of the crises varies widely across space, with the largest increases in poverty headcount rates in Kurdistan and the Islamic State–affected governorates. Yet, the poorest regions in the 2014 crisis scenario are the same as in 2012, the currently Islamic State–affected, and the South, with poverty rates of 40 and 30 percent, respectively. Although the simulated results are not strictly comparable to ex post micro data estimates, because of survey coverage constraints, overall the results are very much in line, particularly in Kurdistan and the South.

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