An Update on Poverty and Inequality in Albania: 9 Stylized ......2 EXECUTIVE SUMMARY This note presents 9 stylized facts that emerge related to the evolution of poverty between 2008

1

An Update on Poverty and Inequality in Albania:

9 Stylized Facts

May 2015

Poverty Global Practice

World Bank

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EXECUTIVE SUMMARY This note presents 9 stylized facts that emerge related to the evolution of poverty between 2008 and 2012 in

Albania. Findings from this note, using the latest Living Standard Measurement Study (2012 LSMS), show

that the sharp downward poverty trend observed in the first part of the 2000s halted with the global economic

crisis (Stylized fact 1). From a period of fast economic growth up to 2008, growth slowed down, labor

markets weakened and remittances inflows declined sharply in Albania, resulting in a stagnant national

poverty rate. Between 2008 and 2012, poverty increased in urban areas, narrowing poverty differences

between urban and rural areas (Stylized Fact 2). Poverty increased in most regions particularly the Coastal

region (Stylized fact 3). Not surprisingly, poverty is higher among households with low-educated members

and a larger number of members. In the period under study, poverty increased particularly among household

with older workers and youth, and the secondary-educated (Stylized Fact 4). Although poverty at the national

level remained largely unchanged, this masks significant movements in and out of poverty that point to

vulnerability of the non-poor in Albania (Stylized fact 5). In fact, the observed decline in inequality in the

period 2008 to 2012 is driven by stronger consumption decline of those in the highest quintile (Stylized fact

6).

The analysis suggests that lower economic growth was the main driver of the poverty trend (Stylized fact 7).

In particular, weakened labor markets are behind poverty changes (Stylized fact 8), mainly through job loss,

while pensions and social assistance partly offset the labor market shock (Stylized fact 9).

Worryingly, labor markets have further deteriorated beyond 2012, and Albania faces multiple structural labor

market challenges, with the low quality of jobs being a particularly salient issue.1 However, knowledge gaps

remain in terms of understanding the constraints to more and better jobs in Albania. As growth and

employment pick up in Albania, it is critical to further explore the constraints to more and better jobs so as

to boost the capacity of households to generate market income and resume the downward poverty trend.

Improving the ability to monitor poverty more frequently is also key for Albania.

1 See accompanying labor market note (World Bank, 2015) documenting a large share of low-skilled jobs, many as unpaid family workers.

3

Table of Contents

EXECUTIVE SUMMARY ............................................................................................................. 2

ACKNOWLEDGEMENTS ........................................................................................................... 4

INTRODUCTION ........................................................................................................................ 5

THE EVOLUTION OF POVERTY AND INEQUALITY IN ALBANIA .................................... 8 STYLIZED FACT 1: THE DECREASING POVERTY TREND OF THE 2000S IN ALBANIA HALTED

FROM 2008 TO 2012 ............................................................................................................................................................................. 8

STYLIZED FACT 2: POVERTY INCREASED IN URBAN AREAS, NARROWING URBAN-RURAL

POVERTY DIFFERENCES ............................................................................................................................................................... 9

STYLIZED FACT 3: POVERTY INCREASED IN MOST REGIONS, PARTICULARLY IN THE COASTAL

REGION WHERE PREVIOUS GAINS WERE LARGELY ERODED .......................................................................... 11

STYLIZED FACT 4: POVERTY INCREASED PARTICULARLY AMONG HOUSEHOLDS WITH OLDER

WORKERS AND YOUTH, AND THE SECONDARY-EDUCATED ............................................................................ 14

STYLIZED FACT 5: SMALL OBSERVED POVERTY CHANGES MASK LARGE MOVEMENTS IN AND

OUT OF POVERTY ........................................................................................................................................................................... 17

STYLIZED FACT 6: INEQUALITY DECLINED, FROM LARGER CONSUMPTION FALL AT THE TOP 18

UNDERSTANDING THE TRENDS ......................................................................................... 21 STYLIZED FACT 7: WEAK ECONOMIC GROWTH DROVE POVERTY INCREASES ..................................... 21

STYLIZED FACT 8: WEAKENED LABOR MARKETS AS A CHANNEL FOR POVERTY INCREASES .... 23

STYLIZED FACT 9: SOCIAL PROTECTION, PARTICULARLY PENSIONS, CONTRIBUTED TO

MITIGATING THE LABOR MARKET SHOCK; REMITTANCES FLOWS SHRANK .......................................... 28

CONCLUSION ........................................................................................................................... 29

ANNEX FIGURES ...................................................................................................................... 30

ANNEX TABLES ........................................................................................................................ 35

4

ACKNOWLEDGEMENTS

The note was prepared by María E. Dávalos (TTL and Senior Economist, GPVDR), César Cancho

(Economist, GPVDR) and Lidia Ceriani (consultant, GPVDR) of the World Bank. The note is part of the

poverty monitoring work under the Programmatic Poverty Assessment for the Western Balkans (P145041).

The team is grateful for insightful comments from Carlos Rodriguez (Senior Economist, GPVDR).

5

INTRODUCTION

Albania was a fast growing economy in the 2000s. Per capita gross domestic product (GDP) grew at an

average annual rate of 6 percent in real terms, and Albania moved from being one of the poorest countries

in Europe in the early 1990s, to reaching middle-income status in 2008 (Figure 1). The construction and

services sectors were the main drivers of economic and employment growth in 2000–2008 (accounting for

nearly three-quarters of growth), and significant reallocation of resources took place from rural agriculture

to construction and services.

Figure 1: Real GDP per capita, 2000–08, percent

Sources: Albania Systematic Country Diagnostic, with data from World Bank and INSTAT.

The global economic crisis slowed down Albania’s economic growth. After the global economic crisis

hit, with significant impacts across the Western Balkans (Figure 2), economic growth slowed down

significantly and persistently in Albania, linked to the Eurozone crisis and particularly to the economic

performance of Greece and Italy. The region suffered another hit in 2012 (“double-dip” recession) as it

struggled toward recovery and had negative impacts from climatic shocks; economic growth in Albania

decelerated further. Inflation remained moderate over the period before and after the global economic crisis

(below 3 percent on average from 2002 to 20122), but the labor market suffered during the economic

downturn and adjusted mainly through job loss instead of wages. Today, employment rates in Albania remain

low compared to the region, but the highest among the Western Balkans (Figure 3).

2 World Development Indicators, our elaboration on variable fp_cpi_totl, Consumer Price Index.

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Real GDP per capita in PPP terms Real GDP per capita growth

6

Figure 2: Western Balkans growth rates crisis (per capita GDP growth rates)

Source: WB staff elaboration on World Development Indicators.

Note: GDP per capita in constant 2005 US$.

Figure 3: Employment rate in Europe and Central Asia, 2013

Source: World Development Indicators.

Note: Latest data available (2013), for employment to population ratio 15+

This note presents 9 stylized facts that emerge related to the evolution of poverty and inequality

over the 2002 to 2012 period, especially from 2008 to 2012, as well as some insights into the drivers of

poverty changes. It complements existing work on monitoring and understanding shared prosperity – the

second corporate goal of the World Bank along with reducing poverty - in Albania and the Western Balkans.3

Albania poverty estimates are based on the Living Standards Measurement Survey (LSMS). The LSMS is

conducted by the Albania Statistics Office (INSTAT) with donor funding and has been carried out in 2002,

2005, 2008 and recently in 2012. The 2012 round provides an opportunity to update poverty estimates and

3 World Bank (2014), “First Insights into Promoting Shared Prosperity in South East Europe”. South East Europe Regular Economic Report

No.5, Special Topic.

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analysis since 2008, capturing the effects on poverty of the global economic crisis and lower economic growth

in the country that in the first part of the decade.4

Findings from this note show that downward poverty trends in the first part of the 2000s halted in

Albania between 2008 and 2012. Increases took place particularly in urban areas, narrowing poverty

differences between urban and rural areas. Poverty changes were driven mostly by changes in mean

consumption growth. This analysis suggests that lower economic growth and particularly weakened labor

markets were drivers of poverty increases, while pensions and social assistance partly offset the labor market

shock. Specifically, decomposing household income growth and poverty changes by different sources of

income suggests that labor markets were a key channel for poverty changes during the shock, mainly from

job loss. In addition, pensions increased considerably over the period partly mitigating the crisis effects on

poverty, together with social assistance income.

The stylized facts behind these findings are the following:

Stylized fact 1: the decreasing poverty trend of the 2000s in Albania reversed from 2008 to 2012

Stylized fact 2: poverty increased in urban areas, narrowing urban-rural poverty differences

Stylized fact 3: poverty increased in most regions, particularly in the coastal region where previous gains were largely eroded

Stylized fact 4: poverty increased particularly among older workers and youth, and the secondary-educated

Stylized fact 5: small observed poverty changes mask large movements in and out of poverty

Stylized fact 6: inequality declined, from larger consumption fall at the top

Stylized fact 7: weak economic growth drove poverty increases

Stylized fact 8: weakened labor markets as a channel for poverty increases

Stylized fact 9: social protection, particularly pensions, contributed to mitigating the labor market shock; remittances flows shrank

The rest of the note presents trends and evidence supporting each of these using the LSMS data from 2002,

2005, 2008 and 2012, with a stronger focus on the latest round. Findings presented here are complemented

with two accompanying notes on labor markets in Albania using the Labor Force Survey, and on gender and

access to economic opportunities using the LSMS.

4 Official Poverty estimates for Albania are produced by the Albania Institute of Statistics (INSTAT) using data from the Living Standards Measurement Survey (LSMS). Poverty is based on total per-capita household consumption, regionally deflated. The poverty line has been estimated following the cost of basic needs methodology. The food poverty line or extreme poverty line was set at 3,047 LEK per month, whereas the poverty line has been set at 4,891 LEK in 2002 prices. This note focuses on the poverty line, given that poverty at the extreme poverty line is very low at 2.2 percent in 2012 (going from 5 percent in 2002, to 3.5 percent in 2005, to 1.2 percent in 2008). The poverty line in 2012 prices is 6,407.21Lek per month, which corresponds to about 3.12 US$ in 2005 PPP.

8

THE EVOLUTION OF POVERTY AND INEQUALITY IN ALBANIA

STYLIZED FACT 1: THE DECREASING POVERTY TREND OF THE 2000S

IN ALBANIA HALTED FROM 2008 TO 2012

The decreasing poverty trend observed from 2002 to 2008 in Albania halted between 2008 and 2012.

Following a substantial decrease in poverty from 25.4 percent to 12.5 percent up to the global economic

crisis (2002-2008), poverty slightly increased between 2008 and 2012 from 12.5 percent to 14.3 percent,

although increases are not statistically significant.5 In addition, the average shortfall from the poverty line

became deeper (poverty gap) and inequality among the poor (squared poverty gap) increased (Figure 4). The

slight increase in poverty in the recent period is robust to any choice of poverty line: as shown in Figure A1,

regardless of the threshold, poverty was higher in 2002 than in 2005, and higher in 2012 than in 2008.

Figure 4: Poverty headcount rate, poverty gap and poverty severity (percent), 2002-2012

Source: WB staff analysis on LSMS data.

Note: Poverty line = 6,407.21Lek per month at 2012 prices.

Using a regionally harmonized welfare aggregate and poverty line, Albania is one of the poorest

countries in the region. Using the regional moderate poverty line of $5.00 US$, Albania has a high poverty

rate at 47 percent, compared to the regional average of 22 percent (Figure 5). The national poverty line lies

between the regional poverty lines of 2.50 and 5.00 US$ 2005 PPP per day (Figure 6).

5 At 5 percent level.

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18.5

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Headcount Poverty Gap Squared Poverty Gap

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2002 2005 2008 2012

9

Figure 5: Poverty headcount rate, international poverty line at 5$PPP per day, latest regionally harmonized data

between 2011 and 2013

Source: WB staff analysis on ECAPOV data

Figure 6: Poverty headcount rate, different poverty lines


STYLIZED FACT 2: POVERTY INCREASED IN URBAN AREAS,

NARROWING URBAN-RURAL POVERTY DIFFERENCES

Poverty increases were more pronounced in urban areas, narrowing urban-rural poverty differences.

The overall poverty increase observed in Albania from 2008 to 2012 was driven by a statistically significant

increase of more than three percentage points of urban poverty6 which, coupled with the large gains in

6 Significant at the 10 percent level.

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10

poverty reduction in rural areas from 2005 to 2008, reduced significantly the urban-rural poverty divide

compared to 2005 (Figure 7). Poverty rates in 2012 were higher than in 2005 (13.6 percent as opposed to

11.2 percent), reversing a slight gain for urban areas in the second half of the 2000s. In line with the national

trend, the severity and depth of poverty increased in both urban and rural areas, but more so in the former

(Table A1). In recent years (2008-2012), the urban population grew from 50 percent to 54 percent of the

total population, and the concentration of poor became nearly evenly distributed between urban and rural

areas given a large increase in the poor in urban areas (Figure 8).

Figure 7: Poverty headcount urban and rural areas

Figure 8: Distribution of the poor urban and rural areas, 2008-2012, percent



In line with poverty changes, household expenditures fell with a particularly pronounced drop in

urban areas. The two percent increase in overall poverty between 2012 and 2008 is associated to a 5 percent

mean reduction in total per capita expenditure. This contraction in consumption was higher in urban areas

(-9 percent) than rural areas (-3 percent) (Figure 9). The second quintile of the population was the most

affected (Table A2).

Figure 9: Mean per capita expenditures, 2002-2012

19.5

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11



STYLIZED FACT 3: POVERTY INCREASED IN MOST REGIONS,

PARTICULARLY IN THE COASTAL REGION WHERE PREVIOUS GAINS

WERE LARGELY ERODED

Poverty increased within all regions except mountain areas, which experienced a considerable

decline in poverty. In Tirana and in the Coastal regions not only did poverty increase in 2012 with respect

to 2008, but it reached higher levels than in 2005. In 2012 the incidence of poverty was higher among

individuals living in Coastal region, where 17.6 percent of the population was living below the poverty line

(see Figure 10 and Table A3). The mountain areas experienced a sharp decline in poverty (from 27 percent

in 2008 to 15 percent in 2012), despite a quite stable population share (from 8.3 percent in 2008 to 9.2 percent

in 2012); it remains, however, the second poorest region in Albania. More insights are nevertheless needed

to understand the drivers of poverty changes in this region.

8,000

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11,000

12,000

13,000

14,000

15,000

2002 2005 2008 2012

Lek

per

cap

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per

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Total Rural Urban

12

Figure 10:Poverty Headcount, by region, 2002, 2005, 2008, and 2012



The concentration of poor people has increased in the Coastal region. The Coastal region has

accounted for 31 percent of the total population over the decade (2002 to 2012), while the relative

contribution to poverty increased going from 25 percent in 2002, to 27 percent in 2005, to 32 percent in

2008 and 38 percent in 2012. In 2012, therefore, the Coastal region accounts for a larger share of poor

individuals than the Central region, which is the most populous area with 42 percent of total population

(Figure 11).

Figure 11: Evolution of population share and relative contribution to poverty, by regions

Population share Relative contribution to poverty



0

5

10

15

20

25

30

35

40

45

50

2002 2005 2008 2012

Per

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Coastal Central Mountain Tirana

30.88% 31.20% 30.66% 30.79%

46.01% 44.76% 42.83% 41.55%

11.75% 11.35%8.30% 9.19%

11.35% 12.69%18.21% 18.47%

0%

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90%

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2002 2005 2008 2012


25.06% 27.34% 32.07%37.69%

46.35%51.39%

37.14%36.31%

20.62%15.68%

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7.97% 5.59%12.93% 16.17%

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13

Further disaggregating the data by prefectures also shows

a heterogeneous poverty picture across the country. The

LSMS 2012 data allow for a further decomposition of poverty

by the 12 counties or prefectures (quarku or prefektura) in which

the country is administered. Kukes is the poorest county, with

22 percent of population living below the poverty line followed

by Fier and Lezhe both with 18 percent of poor individuals,

while Elbasan and Gjirokaster are the least poor, with 11 percent

of population living below the poverty line (see Figure 12and

Table A4). The average poverty shorfall is highest in Lezhe (4.3

percent of the poverty line), while in Shkoder there is the highest

concentration of poor at the bottom of the distribution (the

squared poverty gap is the highest). A further decomposition by

strata allows picturing the different prefectures by urban and

rural settlements. In seven of the twelve prefectures (namely

Berat, Fier, Gjirokaster, Korce, Kukes, Shkoder, Tirane) the

incidence of poverty is higher in rural than in urban areas (see

Figure A2). Urban poverty ranges from 5.6 percent in Kukes to

17.5 percent in Lezhe. Rural poverty ranges from 9.7 percent in

Elbasan to 29.5 percent in Kukes. Overall, household

expenditures declined particularly sharply in the Coastal and

Tirana regions (-7 and -13 percent, respectively). Looking at

poverty by prefectures and urban/rural, weighted by the total

population in the country, data show (Figure 13, panel a.) that

poor individuals are mainly concentrated in urban Tirana (19

percent), rural Fier (10 percent), and urban Durres (8 percent). Figure 13, panel b. shows instead the

distribution of poor individuals as share or urban and rural population. Urban poor are mainly found in

Tirana (38 percent) and Durres (16 percent); while rural poor live mainly in rural Fier (21 percent) and rural

Tirana (16 percent).

Figure 12: Incidence of poverty, by prefectures, 2012

Source: WB staff analysis on LSMS 2012 data.

Note: prefectures are coloured according to their poverty

headcount level – from lower poverty (lighter blue) to higher

poverty (darker blue).

14

Figure 13: Share of population and incidence of poverty by prefectures and rural/urban, 2012

a. As a share of total population b. As a share of urban/rural population

Note: Each bar shows individuals and poor individuals living in each

prefecture as a share of total population. The red (green) bars

correspond to poor individuals living in urban (rural) areas.

Note: Left-hand bars show individuals and poor individuals as share

of total urban population. Right-hand bars show individuals and

poor individuals as share of total rural population. The red (green)

bars correspond to poor individuals living in urban (rural) areas. Source: WB staff analysis on LSMS 2012 data.

STYLIZED FACT 4: POVERTY INCREASED PARTICULARLY AMONG

HOUSEHOLDS WITH OLDER WORKERS AND YOUTH, AND THE

SECONDARY-EDUCATED

Poor households seem to have a higher share of youth and older people. The 15 percent increase in

poverty (or 2 percentage points) has hit in particular households that concentrate mature working-age adults

(age 50 to 64) - who bore a 73 percent increase in poverty with respect to 2008 - and youth (age 15-24) where

the incidence of poverty increased by 24 percent (Table 1).

Table 1: Poverty headcount, by age groups, percent

Age groups 2002 2005 2008 2012 % change 2012-2008

0-14 32.8 25.1 19.8 21.1 6.8

15-24 25.7 18.3 12.0 14.8 23.5

25-49 24.1 18.0 13.1 14.4 10.0

50-64 15.3 12.0 5.4 9.3 73.0

65+ 20.1 13.4 8.5 9.6 13.1

15

Total 25.4 18.5 12.4 14.3 15.9

Source: WB staff analysis on LSMS 2002, 2005, 2008, 2012 data.

Nevertheless, the poor among younger age groups accounts for a higher share of the total poor.

This is partly explained by a higher share of children and youth in the total population, observed in the age

and gender population pyramid. Interestingly, the population pyramids evidence a missing population

group between the ages of 30 and 40 years, likely linked to migration (Figure 14): around 2.8 percent of the

Albanian population was estimated to be an international migrant in 2010.7

Figure 14: Age-gender pyramids, share of total population and share of poor (Percent), 2012

Note: The left(right)-hand side shows the share of males(female) and poor males(poor females) in each age-braket as shares of the total population. Specifically, the distance from the middle to each side in blue and pink denotes the total population share in that age group for males and females. The distance in light gray and purply is the proportion of poor people in that age group of the total number of poor, again for each gender.

Average levels of education increased during the 2000s in Albania. During the period 2002-2012

average educational attainment improved: the share of individuals aged 25 or more who attained tertiary

education increased by 75 percent over the 2000s, from 8 percent in 2002 to 14 percent in 2012. At the same

time, there are 4 percentage points fewer individuals with at most incomplete primary education, and general

secondary education became more important with respect to vocational types of secondary schools (see

Figure 15).

7 2010 data from the World Development Indicators for the international migrant stock (% of population).

6 4 2 0 2 4 6

0-5

10-15

20-25

30-35

40-45

50-55

60-65

70-75

80-85

90-95

Share in total population, %

Age

in y

ears

Poor females Poor males Females Males

16

Figure 15: Share of population (age 25+) by highest level of education attained

Source: WB staff analysis on LSMS 2002, 2005, 2008, 2012 data

Not surprisingly, education levels are negatively related to poverty. The incidence of poverty is highest

in households in which the head have none or incomplete primary education at 18 percent (Figure 16 and

Table A6). Conversely, poverty levels are lowest for individuals headed by someone who attained tertiary

education at 2 percent in 2012. The increase in poverty in the years 2008-2012 has affected all individuals,

regardless of the education level of the household head. Nevertheless, individuals with secondary education

seem to have been particularly hit.

On average, 66 percent of poor individuals live in households where the head has no education of incomplete

primary education, as opposed to 45 percent of individuals in the top 60 percent of the distribution. On the

other hand, only 2 percent of poor individuals live in households where the head has tertiary education, as

opposed to 16 percent of individuals in the top three quintiles (Figure 16, right panel).

Figure 16: Poverty and Education level

Source: WB staff analysis on LSMS 2008 and 2012 data.

Poor individuals live in larger households. On average, poor individuals live in households made of 6

individuals, as opposed to just 3 individuals for households in the top 60 percent. Individuals in the bottom

2.0% 0.1% 0.6% 0.5%

56.1% 56.8% 55.6% 51.8%

17.8% 18.8%13.9%

6.1%

15.8% 15.7%18.4%

27.7%

8.4% 8.6% 11.5% 14.0%

2 0 0 2 2 0 0 5 2 0 0 8 2 0 1 2

None or less than 4 Incomplete (5-12) Specialized Secondary General Secondary Tertiary

17.2

8.15.6

1.9

18.4

11.59.5

2.2

0.0

5.0

10.0

15.0

20.0

None orIncomplete

Primary

GeneralSecondary

SpecializedSecondary

Tertiary

Per

cen

t

Poverty Headcount by level of education of the household head

2008 2012

0.010.020.030.040.050.060.070.0

None orIncomplete

Primary

GeneralSecondary

SpecializedSecondary

Tertiary

Per

cen

t

Distribution of individuals by level of education of the household head

Poor Bottom 40 percent Top 60 percent

17

40 percent live in households about as numerous as the poor’ (see Figure 17). Only a minority of households

are female-headed in Albania, so profiling on this characteristics might be less relevant. As Figure 18 shows,

at most 10 percent of individuals in the top three quintiles and in urban settlements live in female-headed

household. For poor individuals, in rural settlements 7 percent live in female-headed households, and only 5

percent of those living in urban settlements.

Figure 17: Average Household size Figure 18: Distribution of individuals in Female-

headed households


STYLIZED FACT 5: SMALL OBSERVED POVERTY CHANGES MASK LARGE

MOVEMENTS IN AND OUT OF POVERTY

Even if overall poverty did not increase significantly over the period, economic mobility analysis

suggest high churning. Using the synthetic panel methodology8 to explore movements in and out of

poverty over the period, results show that around 15 percent of households, both in 2005-2008 and in 2008-

2012, changed socio-economic status (falling into poverty or escaping poverty) (Figure 19). However, while

around 7 percent of households escaped poverty in the recent period, around 8 percent of non-poor

households fell into poverty (in net resulting in very small poverty changes). In 2005 and 2008, although

movements out of poverty more than offset movements into poverty – thus resulting in poverty decreases

overall – vulnerability was still present with 10 percent of poor households escaping poverty, while around

five percent of the non-poor fell into poverty. Table 2 shows the full transition matrices of movements in

and out of poverty in the two periods estimated using the abovementioned method, given the lack of panel

data for Albania.

8 The synthetic panel methodology builds on an imputation methodology to construct synthetic panel data with predicted consumption using

two different rounds of cross sections. The approach relies on time- invariant individual and household characteristics, and makes assumptions on the error structure. For more details see Dang et al. (2014) on synthetic panels using point estimates.

5.5 5.45.7

5.1 5.05.2

3.3 3.23.6

2.0

2.5

3.0

3.5

4.0

4.5

5.0

5.5

6.0

Overall Urban Rural

Av

erag

e H

H s

ize

Poor Bottom 40 percent Top 60 percent

6.04.7

7.2

7.6 7.87.3

9.59.9

9.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

11.0

Overall Urban Rural

Per

cen

tPoor Bottom 40 percent Top 60 percent

18

Figure 19: Economic mobility –share of households moving in and out of poverty, and net escapes from

poverty (in percent)

Source: WB staff analysis on LSMS 2005, 2008, 2012 data.

Notes: Methodology based on Dang et al. (2014) on synthetic panels using point estimates.

Table 2: Mobility in Albania: Transition in and out of poverty (2005-2008 and 2008-2012)

Destination (2008)

Poor Non-poor Total

Origin (2005) Poor 6.9 4.7 11.6

Non-poor 10.1 78.4 88.5

Total 17 83.1 100

Destination (2012)

Poor Non-poor Total

Origin (2008) Poor 4.8 6.9 11.7

Non-poor 7.7 80.6 88.3

Total 12.5 87.5 100

STYLIZED FACT 6: INEQUALITY DECLINED, FROM LARGER

CONSUMPTION FALL AT THE TOP

Between 2008 and 2012 inequality declined. The Gini index went from 28.2 in 2008 to 26.9 in 2012

(Figure 20), as consumption expenditures of those at the top of the distribution declined more sharply than

for others (Table A2). Other measures of inequality shows the same path of inequality overtime. Tirana

remains the region with higher inequality, with a Gini index of 28.4, even if inequality fell more sharply in

this region. Inequality – measured with the Theil index – is almost fully explained by inequality within regions.

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

2005-2008 2008-2012

Escaped poverty Fell into poverty Net escapes from poverty

19

Figure 20: Inequality in per-capita expenditure distribution, total and by region


The decline in inequality resulted from a larger decline in consumption for the well-off, compared

to the rest of the population. The incidence of growth across the consumption distribution was different

pre and post crisis, and in urban and rural areas. Pre-crisis, as Figure 21 shows, the growth rate of the bottom

quintiles was higher than the growth rate of the rest of the distribution; in other words, growth benefitted

disproportionately more the poor and less well-off resulting in a good performance in shared prosperity. In

the period 2008 to 2012, which covers the global economic crisis, consumption growth is negative for all

groups and more so for those in the highest quintile (Figure 22 and Table A2), which is behind the falling

inequality.

28.2

12.9

3.6

12.1

29.6

14.4

3.8

13.4

28.2

13.0

3.5

12.2

26.9

11.8

3.3

11.1

0

5

10

15

20

25

30

35

Gini Theil p90/p10 Atkinson (e=1)

2002 2005 2008 2012

27.125.7 24.8

32.6

27.2 26.2

22.4

28.4

0

5

10

15

20

25

30

35


Gini Index

2008 2012

20

Figure 21: Growth-incidence curve (2002-2008)

a. Overall Population (2002-2008)

Figure 22: Growth-incidence curve (2008-2012)

a. Overall Population (2008-2012)

b. Urban (2002-2008)

b. Urban (2008-2012)

c. Rural (2002-2008)

c. Rural (2008-2012)

Source: World Bank Staff analysis over LSMS 2002, 2008 and 2012.

23

45

6

An

nu

al g

row

th r

ate

%

1 10 20 30 40 50 60 70 80 90 100Expenditure percentiles

Growth incidence 95% confidence bounds

Growth in mean Growth at median

Mean growth rate

Total (years 2006 and 2008)

-4-3

-2-1

0

An

nu

al g

row

th r

ate

%




Mean growth rate


24

68

An

nu

al g

row

th r

ate

%




Mean growth rate


-8-6

-4-2

0

An

nu

al g

row

th r

ate

%




Mean growth rate


12

34

5

An

nu

al g

row

th r

ate

%




Mean growth rate


-4-3

-2-1

01

An

nu

al g

row

th r

ate

%




Mean growth rate


21

UNDERSTANDING THE TRENDS

STYLIZED FACT 7: WEAK ECONOMIC GROWTH DROVE POVERTY

INCREASES

Economic growth decelerated significantly following the global economic crisis. The GDP per capita

growth rate suddenly dropped from 7.5 percent in 2008 to 3.4 percent in one year, and in 2013 it showed a

merely 1.4 percent growth of the economy (Figure 23). Household consumption from National Accounts

shows an even more serious deceleration, consistent with the negative consumption growth rates captured

in the LSMS.

Figure 23: Annual percentage growth rate of GDP per capita and consumption (national accounts), 2002-

2014

Source: WB staff analysis on World Development Indicators.

Note: GDP and Household final consumption expenditure in constant local currency (indicators ny_gdp_pcap_kn and ne.con.petc.kn)

In the period under study, the construction sector was the most affected by the economic downturn.

While growth rates for other sectors were modest but positive, the construction sector shrank by around 9

percent annually from 2008 to 2012. The share of the sector in GDP fell from 16 percent to 10 percent over

the period (Figure 24). These sectoral patterns are consistent with an increase in urban poverty – as

construction is usually concentrated in urban areas and is a labour-intensive sector. In 2009, 10 percent of

the total employed in Albania (mostly males) worked in the construction sector. This represented around

114,882 jobs. By 2011, this number had gone down to 94,488 workers. The large majority of workers are in

the agriculture sector (around 45 percent pre crisis, 2008) – mostly concentrated in rural areas – which

experienced modest but positive growth rates over the period.9

9 Data estimated using Labor Force Surveys.

2.9

5.7 5.9 5.5 5.05.9

7.5

3.4 3.72.5

1.6 1.4

9.4

4.3

-2.9

1.3

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

10.0

12.0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Per

cen

t

GDP growth HH consumption growth

22

Figure 24: GDP by sector: sectoral share and annualized sectoral growth rate, 2008-2012

Source: Own calculations with statistics from INSTAT

Changes in mean consumption growth, not changes in inequality, drove poverty increases between

2008 and 2012. Decomposing poverty changes into those attributed to growth and redistribution shows that

the shift in mean growth was poverty-enhancing (pushing poverty up by 3.95 percentage points), and were

not fully offset by changes in the shape of the distribution. The growth effect was stronger in urban areas

than in rural areas (Figure 25).

In the first part of the 2000s, however, both changes in mean growth and redistribution contributed

to the downward trend in poverty, mainly driven by growth. When compared to what happened in the

previous period (2002-2008), data (Figure 25) shows that the thirteen percentage points reduction in poverty

can be attributed to growth primarily (-11 percentage points, 84 percent of the change), while a relatively

smaller but poverty-reducing share to redistribution (-2 percentage points, 16 percent of the change). This

pattern is similar in both rural and urban areas, although the distribution effect was relatively stronger for

urban areas (21 percent of the change compared to 14 percent in rural areas).

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

Agriculture,Hunting,

Forestry &Fishing

Mining andQuarrying

Manufacturing Construction Trade, Hotelsand Restaurants

Transport Post andCommunications

Other Services

GDP share 2008 GDP share 2012 Annualized sectoral growth rate

23

Figure 25: Growth-redistribution decomposition of poverty changes (Shapley Approach), percentage points

Source: WB staff analysis on LSMS 2002, 2008, 2012 data.

STYLIZED FACT 8: WEAKENED LABOR MARKETS AS A CHANNEL FOR

POVERTY INCREASES

Labor markets weakened during the global economic crisis of 2009. With the slowdown in economic

growth, employment rates declined, both from higher inactivity and unemployment rates.10 The results here

focus on labor market outcomes derived from the LSMS. Some data issues emerge when measuring labor

market activity with the LSMS, particularly in 2012, which could introduce bias to the results. Nevertheless,

the overall shock to labor markets is validated with LFS data. 11

The share of households with an unemployed or inactive (non-retired) head increased in Albania

between 2008 and 2012. Particularly, the share of heads in unemployment rose from around 3 to 12 percent

over the period (Figure 26); similarly, a large share of household heads became inactive (from 7 to around

14 percent). This is partly due to a sharp decline in people working as own-account and unpaid family workers

during the economic downturn. In tandem with a deterioration in labor market outcomes of household

heads, the share of the total population (15 years and older) in unemployment and inactivity increased from

4 percent to 12 percent, and from 17 percent to 28 percent, respectively (see Table A7).

10 See Albania labor market note based on the LFS, produced by the Poverty Global Practice. 11 Some potential data challenges related to changes in survey fieldwork need to be highlighted. The 2012 LSMS was carried out in the Fall of 2012, while previous rounds carried out the data collection in the Spring. The impact of this change on key indicators is not fully established. The extent to which it affects the consumption aggregate and poverty rates cannot be determined; however, under the assumption of consumption smoothing, it could be relatively less than other more seasonal indicators such as labor market outcomes (including labor income). Is this is the case, some sharp changes in labor market outcomes observed between 2008 and 2012 could be partly explained by fieldwork changes rather than true trends in the economy. Nevertheless, the overall shock to labor markets is validated with LFS data in the Albania labor market note (2015) produced by the Poverty Global Practice.

-16

-14

-12

-10

-8

-6

-4

-2

0

2

Urban Rural Total

Per

cen

tage

Po

ints

2002-2008

Growth Redistribution

5.4

2.02

3.95

-1.9 -1.4 -1.99

-3

-2

-1

0

1

2

3

4

5

6

Urban Rural Total

Per

cen

tage

Po

ints

2008-2012

Growth Redistribution

24

Figure 26: Labor force status of household heads in the total population, 2002-2012


Note: Figures for category “Student” are close to zero. Self-employed includes both employers (a very small share of the total) and own-account

workers. For 2002, it is not possible to disentangle self-employed (employers and own-account workers) from unpaid family workers.

Along with a higher share of unemployed and inactive household heads in Albania, the

concentration of the poor increased dramatically in households with these categories. Of the total

number of poor in the country, 19 percent are in households with an unemployed head - the highest of the

decade and in contrast to around 4 percent in 2008 - and 25 percent in households with a head out of the

labor force (not retired) (Table 3). In 2002, in turn, the highest concentration of the poor was among the

self-employed (44 percent), dropping sharply by 2012 (17 percent). Similarly, of the poor population 15 years

and older, more were concentrated among the unemployed and inactive in 2012, compared to 2008.

Table 3: Distribution of the poor by labor force status of the household head (percent)

2002 2005 2008 2012

Employee 20.06 25.50 25.36 20.18

Self-Employed* 43.23

18.82 22.99 12.92

Unpaid family worker 23.04 11.37 4.51

Unemployed 9.54 6.00 3.39 18.67

Retired 16.39 16.12 23.23 19.19

Out of the labor force (excl. retired) 9.92 10.47 13.56 24.53

Total 100.0 100.0 100.0 100.0


Note: Figures for category “Student” omitted. Self-employed includes both employers (a very small share of the total) and own-account workers.

For 2002, it is not possible to disentangle self-employed (employers and own-account workers) from unpaid family workers. * Employers and

own-account workers.

Accordingly, poverty is significantly higher in households with an unemployed or inactive head.

Individuals living in household where the household head is occupied (either employed or self-employed) or

retired are less likely to be poor than individuals living in households headed by unemployed or inactive

28.20 32.77 30.94 26.63

36.1420.52 23.08

17.92

13.91 6.82

3.33

6.16 3.562.87

11.68

21.29 22.4428.70

25.75

7.26 6.76 7.0214.41

0

10

20

30

40

50

60

70

80

90

100

2002 2005 2008 2012

Employed Self-Employed Unpaid Family Workers Unemployed Retired OLF

25

(Table 4). In 2012, in fact, the incidence of poverty in households with an employed or retired head was,

respectively, 11 percent and 13 percent as opposed to 22 and 24 percent, in turn, for households with

unemployed and inactive heads. Between 2008 and 2012 the incidence of poverty has increased by 5

percentage points among individuals living in household headed by unemployed individuals, while it

decreased by 2 percentage points among individuals whose household head was self-employed. Among

employees, public sector workers have significantly lower poverty rates (see Table A8).

Table 4: Poverty headcount by labour force status of the household head (percent)

2002 2005 2008 2012

Employee 18.01 14.08 9.66 10.55

Self-Employed 28.37 21.04 12.89 10.64

Unemployed 39.04 30.84 14.59 21.17

Retired 22.11 15.33 11.97 12.81

Out of the labor force (excl. retired) 35.80 29.53 24.10 23.94

Total 25.41 18.51 12.44 14.35


Note: Figures for category “Student” omitted.

Not surprisingly, employment played an important role in poverty changes. Although capturing

income is not the focus of the LSMS and welfare is measured using consumption data, utilizing the available

data on income, with caveats in mind12, could point to some insights on poverty changes. Decomposing

poverty by income source shows opposite trends in the factors behind poverty reduction between 2005-2008

and 2008-2012. From 2005 to 2008 poverty reduction was led by favourable changes in labor income – from

a combination of higher wages/earnings, and higher numbers of adults and employed adults in the household

– and changes in pensions. From 2008 to 2012, the loss of jobs (“shared of employed”) is a key factor behind

poverty trends with a poverty-increasing effect (Figure 27). Looking at growth in household income shows

a similar pattern (Figure 28), with job loss across quintiles. Increases in wages/earnings were particularly

relevant for income growth of those in the lowest quintiles in that period (Figure 28, panel a). Poverty

decomposition results show that wages/earnings continued contributing to poverty reduction, signalling that

the labor market adjusted in quantities during the crisis.

12 Income is not the best proxy for welfare in a country like Albania with very high informality and a large agricultural sector. Specifically, income tends to be underreported, especially in societies with large agricultural or self-employed populations for various reasons, including people forgetting items sold, reluctance to disclose the full extent of income, or reluctance to report income earned illegally. In addition, income measures do not capture how household smooth consumption when facing a negative or positive economic shock. Finally, income does not capture the advantage of having free or subsidized access to services, such as housing, health care, education or child care.

26

Figure 27: Poverty decompositions by income source, percentage points


Note: Labor income is captured by wages/earnings, shared of adults (demographic effect) and share of employed. “Other” includes mainly

remittances, as well as property and other income.

1.3

-2.2

-0.2

-1.8

-2.9

-0.2

0.1

-4.0 -3.0 -2.0 -1.0 0.0 1.0 2.0

RatioConsumption/Income

Share of Adults

Share of Employed

Wages/Earnings

Pensions

Social Assistance

Other

2005-2008

10.4

-2.5

5.6

-2.8

-5.2

-3.2

-1.0

-10.0 -5.0 0.0 5.0 10.0 15.0

RatioConsumption/Income

Share of Adults

Share of Employed

Wages/Earnings

Pensions

Social Assistance

Other

2008-2012

27

Figure 28: Decomposition of total household income growth

2005-2008

a. Income growth by source and quintile

b. Average changes in income growth

2008-2012


b. Average changes in income growth

Source: WB staff analysis on LSMS 2005, 2008 and 2012 data.



-0.2

-0.1

0

0.1

0.2

0.3

0.4

LowestQuintile

II III IV HighestQuintile

Per

cen

t

Share Adults Share Employed Wages/Earnings

Pensions Social Assistance Other

7%

2%

-3%

7%

2%

-1%

15%

-15% -5% 5% 15% 25%

Share Adults

Share Employed

Wages/Earnings

Pensions

Social Assistance

Other

Total Income

-0.4

-0.2

0

0.2

0.4

0.6

0.8

LowestQuintile


Per

cen

t



0%

-11%

5%

14%

6%

-5%

9%

-15% -5% 5% 15% 25%

Share Adults

Share Employed

Wages/Earnings

Pensions

Social Assistance

Other

Total Income

28

STYLIZED FACT 9: SOCIAL PROTECTION, PARTICULARLY PENSIONS,

CONTRIBUTED TO MITIGATING THE LABOR MARKET SHOCK;

REMITTANCES FLOWS SHRANK

Pension income increased significantly in Albania over the period. The pension system deficit as a

share of GDP, including subsidies for rural pensions, increased from 2.7 percent in 2005 to 3.6 percent in

2012. This is partly linked to large increases in average pensions: administrative data shows that average

urban pensions rose by 18.9 percent and average rural pensions by 61.4 percent during 2007–2012. In line

with administrative data, pension income increased significantly for households in rural areas (around 19

percent between 2008 and 2012) accounting for the majority of total income increases in those locations.

Overall, pensions accounted for a higher share of total household income in 2012 compared to 2008 (Tables

A9, A10 and A11).

Largely pensions, and to a lesser extent social assistance, contributed to mitigating the poverty

effect of the loss of jobs. Income from pensions and social assistance increased for all quintiles (Figure 21)

– particularly for the poorest - and both played an important role in mitigating poverty impacts from a labor

market shock (Figures 20). In relative terms, by 2012, households – poor and non-poor - relied much more

on pensions and private transfers as income sources than in 2008 (Table A9 through A10)

Remittances declined as the crisis hit the Eurozone, hitting some groups of the population in

Albania. Remittances fell from 10.3 percent of GDP in 2008 to 6.8 percent in 2013, largely due to the close

links to poorly-performing Greek and Italian economies where a large share of migrants reside. The stock of

Albanian emigrants stands at 40 percent: in 2013 – very high compared to neighbouring countries. Almost

1.3 million Albanians were living outside the country, most of them in Greece (46 percent) and Italy (36

percent).13

The decline in remittances affected relatively less the poorest – hence the lower role in increasing poverty –

but more so the income of the better-off. Those in the fourth quintile, who benefited significantly from

remittances between 2005 and 2008, suffered the largest contraction in this source of income during the

crisis period. While remittances represented around 8 percent of income for the non-poor in 2008, the share

of income from remittances was around 3 percent for the poor. This share declined dramatically by 2012

(Table A10 and A11), in line with the declining trends in aggregate remittances previously mentioned. For

the better-off in rural areas, remittances played a larger role both pre-crisis (increasing their income) and post

crisis (reducing their income) (Figure A5 through A8).

13 World Bank (2015). Next Generation Albania: A Systematic Country Diagnostic.

29

CONCLUSION

The stylized facts in this short note aimed at updating poverty trends for Albania using the 2012 LSMS and

exploring initial hypothesis on trends and drivers of poverty. Since poverty numbers and analysis were not

available since the 2008 LSMS round, this analysis can be useful in presenting issues and areas for further

research.

Findings show that poverty reduction halted in Albania in the recent period (2008-2012). Net trends were

driven by a combination of lower economic growth and particularly weakened labor markets, as well as

increases in social protection benefits particularly pensions. Poverty results are consistent with the story on

shared prosperity for Albania: the country performed well before the global economic crisis in terms of the

shared prosperity indicator (consumption of the bottom 40 percent of the distribution grew by 2.64%), but

this trend did not continue during the most recent period. In fact, from 2008 to 2012, mean consumption

declined by around 1.31% and 1.22% for the bottom 40 percent. Beyond the period analysed in this note,

prospects for poverty reduction in the coming years are positive in Albania but risks are on the downside.

Economic developments in Greece and the Eurozone could negatively impact economic growth, labor

markets, and remittances inflows, adversely affecting households.

Labor markets in Albania have been a key mechanism, as in most countries, driving poverty changes and

overall improvements or declines in welfare. The drop in employment and increase in both inactivity and

unemployment documented in this note, and their close association with poverty status, point to a critical

agenda in terms of job creation. Worryingly, labor markets further deteriorated beyond 2012, and Albania

faces multiple structural labor market challenges, with the low quality of jobs being a particularly salient

issue.14 However, knowledge gaps remain in terms of understanding the constraints to more and better jobs

in Albania.

In addition, the role of social protection is critical – as previously discussed - and improvements need to be

made there as well, as pointed in the recent Albania Systematic Country Diagnostic (World Bank, 2105).

Encouragingly, efforts are ongoing to better target the main social safety net program and make it more

compatible with work. However, other instruments that can respond to times of crisis should be re-visited

to ensure they are flexible enough to do so. Given that remittances are a source of income for many

households in Albania, and that remittances flows are highly vulnerable given economic struggles of sending

countries, counting on tools to protect the poor and vulnerable, alongside efforts to increase their market

income-generating capacity, is critical.

A poverty measurement agenda also emerges. Specifically, the main constraint for monitoring poverty and

overall welfare in Albania lies in the frequency of the surveys (thus far surveys have been carried out every 3

to 4 years) and availability of donor funding (used thus far to finance the household surveys). Tools for a

more frequent and sustained welfare monitoring are needed.

14 See accompanying labor market note (World Bank, 2015) documenting a large share of low-skilled jobs, many as unpaid family workers.

30

ANNEX FIGURES

Figure A1: Poverty Incidence Curve (poverty headcount at different levels of the poverty line), by year

0

.05

.1.1

5.2

.25

FG

T(0

), %

0 1281.442 2562.884 3844.326 5125.768 6407.21

Poverty Line, New Leks, 2012 prices

Year 2002 Year 2005

Year 2008 Year 2012

2002

2005

2012

2008

31

Figure A2: Incidence of poverty, by prefectures, urban and rural settlements, 2012

Urban

Rural


Note: prefectures are coloured according to their poverty headcount level – from lower poverty (lighter color) to higher poverty (darker

color). Note: Poverty line = 6,407.21 Lek per month at 2012 prices.

Figure A3. Expenditures vs. income: Log-Distribution of per capita income and expenditure, 2012

Source: WB staff analysis on LSMS 2008, 2012 data.

0.2

.4.6

.8

Ke

rne

l de

nsity

0 5 10 15Logarithm of per capita Income or Expenditure

Expenditure Income

32

Figure A4: Age-gender pyramids, share of total population and share of poor (Percent)

Note: The left(right)-hand side shows the share of males(female) and poor males(poor females) in each age-braket as shares of the total population. Specifically, the distance from the middle to each side in blue and pink denotes the total population share in that age group for males and females. The distance in light gray and purply is the proportion of poor people in that age group of the total number of poor, again for each gender.

8 6 4 2 0 2 4 6

0-5

10-15

20-25

30-35

40-45

50-55

60-65

70-75

80-85

90-95


Age

in y

ears

ALB2002

Poor females Poor males

6 4 2 0 2 4 6

0-5

10-15

20-25

30-35

40-45

50-55

60-65

70-75

80-85

90-95


Age

in y

ears

ALB2005


6 4 2 0 2 4 6

0-5

10-15

20-25

30-35

40-45

50-55

60-65

70-75

80-85

90-95


Age

in y

ears

ALB2008


33

Figure A5: Decomposition of total income growth (2005-2008), Urban Settlements


b. Average Changes


Figure A6: Decomposition of total income growth (2005-2008), Rural Settlements


b. Average Changes




-0.3

-0.2

-0.1

0

0.1

0.2

0.3

LowestQuintile




6%

2%

-9%

6%

1%

-4%

2%

-15% -5% 5% 15% 25%

Share Adults

Share Employed

Wages/Earnings

Pensions

Social Assistance

Other

Total Income

-0.3

-0.2

-0.1

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

LowestQuintile




7%

-2%

5%

6%

3%

10%

-15% -5% 5% 15% 25%

Share Adults

Share Employed

Wages/Earnings

Pensions

Social Assistance

Other

Total Income

34

Figure A7. : Decomposition of total income growth (2008-2012), Urban Settlements


b. Average Changes


Figure A8: Decomposition of total income growth (2008-2012), Rural Settlements


b. Average Changes




-0.4

-0.3

-0.2

-0.1

0

0.1

0.2

0.3

0.4

0.5

0.6

LowestQuintile




-1%

-8%

1%

11%

7%

-2%

8%

-15% -5% 5% 15% 25%

Share Adults

Share Employed

Wages/Earnings

Pensions

Social Assistance

Other

Total Income

-0.6

-0.4

-0.2

0

0.2

0.4

0.6

0.8

1

LowestQuintile


Share Adults Share Employed

Wages/Earnings Pensions

Social Assistance Other

0%

12%

19%

6%

-11%

5%

-15% -5% 5% 15% 25%

Share Adults

Share Employed

Wages/Earnings

Pensions

Social Assistance

Other

Total Income

35

ANNEX TABLES

Table A1: Poverty gap and squared poverty gap (percent), total, urban and rural, 2002-2012

Poverty Gap (P1) Squared Poverty Gap (P2)

2002 2005 2008 2012 2002 2005 2008 2012

Rural 6.59 5.31 2.64 3.02 2.14 1.75 0.71 1.01

Urban 4.47 2.33 1.98 2.85 1.60 0.80 0.61 0.90

Total 5.7 4.0 2.3 2.9 1.9 1.3 0.7 1.0


Table A2: Mean per capita expenditure for different groups (Leks per month, 2012 prices)

2002 2005 2008 2012 Percentage

change

2012-2008

Overall Population 10,218.90 11,932.24 12,748.25 11,709.51 -8.15

Type of settlement

Rural 9,447.16 10,306.62 11,585.19 11,145.23 -3.80

Urban 11,297.68 14,006.83 13,935.81 12,189.69 -12.53

Regions

Coastal 11,029.2 12,548.8 12,639.2 11,217.4 -11.2

Central 9,819.8 11,151.0 12,308.3 12,026.9 -2.3

Mountain 8,079.7 9,354.1 9,319.9 9,939.6 6.6

Tirana 11,845.6 15,476.4 15,528.6 12,696.5 -18.2

Quintiles

poorest 4,647.41 5,135.02 5,873.66 5,552.52 -5.47

2 6,872.33 7,769.21 8,591.42 7,999.16 -6.89

3 8,824.20 10,348.73 11,053.61 10,271.29 -7.08

4 11657.89 13,551.51 14,257.5 13,444.44 -5.70

least poor 19106.11 22,869.55 23,974.75 21,290.25 -11.20


36

Table A3. Poverty headcount by region, 2002-2012, percent

Region 2002 2005 2008 2012

Change

2012-2008

(Percentage

points)

Coastal 20.6 16.2 13.0 17.6 4.61

Central 25.6 21.2 10.7 12.5 1.80

Mountain 44.5 25.6 26.6 15.3 (11.31)

Tirana 17.8 8.1 8.8 12.6 3.78

Total 25.4 18.5 12.4 14.3 1.97

Table A4. Poverty, different indices, by prefectures, 2012, percent

Headcount Poverty Gap Squared

Poverty Gap

Headcount

Urban

Headcount

Rural

Berat 12.67 2.36 0.71 10.19 14.57

Diber 13.01 2.32 0.68 15.83 12.05

Durres 16.23 3.31 1.10 16.48 15.39

Elbasan 10.72 2.25 0.75 12.38 9.70

Fier 17.54 3.52 1.06 11.02 21.82

Gjirokaster 10.69 2.23 0.87 9.62 11.79

Korce 12.22 2.49 0.71 10.50 13.28

Kukes 21.79 3.71 0.91 6.55 29.50

Lezhe 17.48 4.30 1.56 17.53 17.41

Shkoder 15.69 3.69 1.59 14.95 16.27

Tirane 14.15 2.81 0.85 14.12 14.24

Vlore 11.68 2.40 0.83 12.14 10.75

Total 14.34 2.93 0.95 15.27 13.56

Table A5. Gini coefficient

2002 2005 2008 2012

Total 0.2818 0.2963 0.2823 0.2692

Region

Coastal 0.2792 0.2940 0.2708 0.2720

Central 0.2687 0.2866 0.2567 0.2624

Mountain 0.2716 0.2443 0.2478 0.2236

Tirana 0.2980 0.2984 0.3262 0.2843

37

Table A6. Poverty headcount by education level, percent

2002 2005 2008 2012 Change 2012-2008

Incomplete (5-12) 27.0 20.9 13.3 15.0 1.7

General Secondary 16.7 10.3 7.7 10.9 3.2

Specialized Secondary 12.3 6.6 4.2 7.5 3.3

Tertiary 3.2 1.7 1.6 3.1 1.5

Population 25+ 20.6 14.9 9.6 11.8

2.2

Table A7. Poverty, distribution of poor and population by employment status, population 15 years and older,

percent

Poverty Headcount Rate Distribution of the Poor Distribution of Population

2002 2005 2008 2012 2002 2005 2008 2012 2002 2005 2008 2012

Employee 14.0 10.2 7.1 7.7 11.3 12.8 15.2 11.1 18.1 20.5 22.4 18.1 Self

Employed 25.6 13.8 8.6 8.4 40.5 9.3 10.8 6.5 35.3 11.1 13.1 9.8 Unpaid Family Worker 24.3 13.0 10.5 29.4 17.4 3.3 19.7 13.9 3.9

Unemployed 33.3 20.2 21.6 18.2 11.1 5.9 9.2 16.9 7.5 4.8 4.4 11.7

Out of the labor force

Retired 18.4 12.5 7.7 9.8 12.8 12.2 14.2 13.2 15.6 15.9 19.3 17.0

Student 15.2 7.9 6.2 10.6 4.0 4.8 5.8 10.1 5.8 10.0 9.8 11.9

Other OLF 25.4 23.2 16.8 17.8 20.2 25.5 27.4 38.9 17.8 17.9 17.1 27.5 Population

15+ 22.3 16.3 10.4 12.6

100 100 100 100 100 100 100 100

Table A8. Poverty by type of ownership of the job place of the household head, 2012, percent

Poverty Population

share

Absolute

contribution

Relative

contribution

Private 13.38 62.74 8.40 79.61

1.97 1.55 1.28 4.16

Public 4.79 33.11 1.59 15.03

1.23 1.50 0.41 3.66

Total employee HH 10.55 100.00 10.55 100.00

1.39 0.00 1.39 0.00

Note: Population shares of private and public employees do not add up to 100 because 4 of observations have missing

information on ownership of the job place.

Table A9: Share of total income by income source, by consumption deciles 2008 and 2012, percent

38

Deciles Wage Income Pension Social Assistance Private Transfers

2008 2012 2008 2012 2008 2012 2008 2012

1 70.4 42.1 16.2 38.1 9.2 16.6 2.8 1.0

2 75.7 41.2 16.4 41.5 4.9 14.5 2.1 1.3

3 75.2 48.6 13.7 32.4 3.9 14.6 2.4 1.3

4 71.0 56.4 20.4 29.7 3.6 10.6 3.6 1.6

5 76.7 57.3 16.2 31.9 3.7 7.1 2.7 2.5

6 76.4 56.2 17.4 27.2 2.4 10.4 2.6 2.5

7 57.7 59.5 14.5 24.5 2.3 10.5 8.2 2.2

8 64.3 60.8 12.2 26.4 2.0 7.7 19.5 2.9

9 62.6 63.7 13.1 26.7 3.2 4.8 15.2 3.2

10 78.2 72.5 10.6 15.1 3.4 2.9 4.8 3.7

Total 69.9 58.6 14.2 27.3 3.4 8.7 8.0 2.5

Deciles Unemployment

Benefit Property Other Incomes Total

2008 2012 2008 2012 2008 2012

1 0.1 0.8 0.6 0.2 0.7 1.1 100

2 0.2 0.7 0.4 0.4 0.3 0.2 100

3 0.2 0.7 4.5 0.3 0.1 2.1 100

4 0.3 0.7 1.1 0.7 0.1 0.3 100

5 0.1 0.6 0.6 0.2 0.2 0.3 100

6 0.0 0.1 1.1 2.6 0.1 0.9 100

7 0.0 0.4 16.9 2.6 0.2 0.3 100

8 0.0 0.1 1.6 1.6 0.3 0.6 100

9 0.2 0.1 4.6 0.9 1.1 0.5 100

10 0.1 0.2 2.6 5.0 0.2 0.5 100

Total 0.1 0.4 4.1 1.9 0.4 0.6 100

Source: WB staff analysis on LSMS 2012 data. Table A10: Share of total income by income source, by poverty status, 2008, percent

Wage

Income Pension

Social Assistance

Private Transfers

Unemployment Benefit

Property Other

Incomes Total

Non poor

69.9 14.1 3.0 8.2 0.1 4.3 0.3 100

Poor 71.1 15.1 9.7 2.9 0.1 0.6 0.6 100

Total 69.9 14.2 3.4 8.0 0.1 4.1 0.4 100

Source: WB staff analysis on LSMS 2008 data. Table A11: Share of total income by income source, by poverty status, 2012, percent

Wage

Income Pension

Social Assistance

Private Transfers

Unemployment Benefit

Property Other

Incomes Total

39

Non poor

60.4 26.1 8.0 2.6 0.3 2.0 0.6 100

Poor 40.3 39.9 16.6 1.1 1.0 0.4 0.8 100

Total 58.6 27.3 8.7 2.5 0.4 1.9 0.6 100


40

An Update on Poverty and Inequality in Albania: 9 Stylized ......2 EXECUTIVE SUMMARY This note presents 9 stylized facts that emerge related to the evolution of poverty between 2008

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