The Socio-Economic Well-being Method (swm)as an alternative for multidimensional poverty measurement: a perspective from wages

Abstract

In the measurement of poverty, the role of wages in the formation of household income has not been taken into account explicitly. The minimum wage arises in capitalist economies as a guarantee of a minimum level of well-being. The minimum wage established in the Mexican Constitution is linked to the satisfaction of basic needs, could well serve as threshold for poverty measurement. This article uses as income threshold for multidimensional poverty measurement the equivalent of the minimum constitutional wage. A new method for measuring multidimensional poverty is developed here: The Socio-Economic Well-being Method (SWM). Its procedures and results are contrasted with the LPMM and CONEVAL’s method. The SWM identifies a very similar proportion of poor people as the LPMM. It highlights CONEVAL’s underestimation of poverty as well as the key role that the definition of thresholds and the procedures to combine dimensions play in measuring poverty.