Marinko Škare,

Juraj Dobrila University of Pula, Pula, Croatia,

mskare@unipu.hr

CONSTRUCTING POVERTY LINES IN CROATIA USING KAKWANI’S MODEL

Romina Pržiklas Družeta,

Juraj Dobrila University of Pula, Pula, Croatia,

rprzik@unip.hr

Abstract. This paper presents a new model for defining the poverty line as a possible candidate for the construction of a new official poverty line in Croatia. The model, based on Kakwani’s (2010) approach (nutrition- based anchor), uses consumer theory as the basis for defining food and non-food poverty lines. In Croatia, various alternative poverty indicators have been developed to define the official poverty line. To ensure international comparability and consistency, the poverty threshold expressed in local currency by applying the exchange rate of currencies’ purchasing power (PPP) is expressed in international dollars. It is important to ensure implementation of redistributive policies, maximization of market efficiency, and increased social justice. All this policy goals and instruments heavily depend on efficient and precise poverty measurement methods.

Received: July, 2016

1st Revision: October, 2016

Accepted: December, 2016

DOI: 10.14254/2071- 789X.2017/10-1/15

JEL Classification: I32, P36, P2

Keywords: poverty  line,  Kakwani’s  method,  poverty  threshold, Croatia, purchasing power parity