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A Non-Parametric Microsimulation Approach to Assess Changes in Inequality and Poverty

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  • Rob Vos
  • Marco V. Sánchez

Abstract

This paper presents a non-parametric microsimulation methodology for assessing the determinants of changes in income inequality and poverty. One great advantage of this method over alternatives is that it is not very demanding in terms of modelling labour supply and household behaviour while still providing a plausible link between changes in overall labour market conditions and the full household income distribution. The paper also shows how the method can be adapted to assess the poverty and inequality effects of changes in non-labour incomes (such as through a government transfer programme) and how it can be combined with economy-wide models.

Suggested Citation

  • Rob Vos & Marco V. Sánchez, 2010. "A Non-Parametric Microsimulation Approach to Assess Changes in Inequality and Poverty," Working Papers 94, United Nations, Department of Economics and Social Affairs.
    • Handle: RePEc:une:wpaper:94
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    References listed on IDEAS

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    2. Kearney, Marna & Odusola, Ayodele, 2011. "Assessing Development Strategies to Achieve the MDGs in The Republic of South Africa," UNDP Africa Economists Working Papers 307332, United Nations Development Programme (UNDP).
    3. Debowicz, Dario & Golan, Jennifer, 2012. "The impact of Oportunidades on human capital and income distribution: a top-down/bottom-up approach," Conference papers 330252, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    4. Banerjee, Onil & Cicowiez, Martin & Gachot, Sébastien, 2015. "A quantitative framework for assessing public investment in tourism – An application to Haiti," Tourism Management, Elsevier, vol. 51(C), pages 157-173.
    5. Kearney, Marna & Odusola, Ayodele, 2001. "Assessing Development Strategies to Achieve the MDGs in The Republic of South Africa," UNDP Africa Research Discussion Papers 267055, United Nations Development Programme (UNDP).
    6. Breisinger, Clemens & Ecker, Olivier, 2014. "Simulating economic growth effects on food and nutrition security in Yemen: A new macro–micro modeling approach," Economic Modelling, Elsevier, vol. 43(C), pages 100-113.
    7. Debowicz, Darío & Golan, Jennifer, 2014. "The impact of Oportunidades on human capital and income distribution in Mexico: A top-down/bottom-up approach," Journal of Policy Modeling, Elsevier, vol. 36(1), pages 24-42.
    8. Roman Mogilevsky & Anara Omorova, 2011. "Assessing Development Strategies to Achieve the MDGs in Asia. Macroeconomic Strategies of MDG Achievement in the Kyrgyz Republic," CASE Network Reports 0095, CASE-Center for Social and Economic Research.
    9. Lofgren, Hans & Cicowiez, Martin & Diaz-Bonilla, Carolina, 2013. "MAMS – A Computable General Equilibrium Model for Developing Country Strategy Analysis," Handbook of Computable General Equilibrium Modeling, in: Peter B. Dixon & Dale Jorgenson (ed.), Handbook of Computable General Equilibrium Modeling, edition 1, volume 1, chapter 0, pages 159-276, Elsevier.
    10. Sánchez, Marco V. & Cicowiez, Martín, 2014. "Trade-offs and Payoffs of Investing in Human Development," World Development, Elsevier, vol. 62(C), pages 14-29.
    11. Carmen Estrades & Cecilia Llambí, 2013. "Lessons from the 2008 Financial Crisis: Policy Responses to External Shocks in Uruguay," The Developing Economies, Institute of Developing Economies, vol. 51(3), pages 233-259, September.
    12. Cicowiez, Martín & Ordóñez, Romina, 2021. "The economic impacts of tourism-related private investment in Jamaica," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), December.
    13. Edward, Batte Sennoga & John Mary, Matovu, 2016. "Growth and Welfare Effects of Macroeconomic Shocks in Uganda," Occasional Papers 244096, Economic Policy Research Centre (EPRC).
    14. Debowicz, Darío, 2016. "Does the microsimulation approach used in macro–micro modelling matter? An application to the distributional effects of capital outflows during Argentina's Currency Board regime," Economic Modelling, Elsevier, vol. 54(C), pages 591-599.
    15. Zhang, Yumei & Wang, Xinxin & Chen, Kevin, 2012. "Growth and Distributive Effects of Public Infrastructure Investments in China," Conference papers 332234, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    16. Renato Vargas & Pamela Escobar & Maynor Cabrera & Javier Cabrera & Violeta Hernández & Vivian Guzmán & Martin Cicowiez, 2017. "Climate risk and food security in Guatemala," Working Papers MPIA 2017-01, PEP-MPIA.
    17. Ramírez, Nerys F., 2016. "Determinantes del Desempleo en la República Dominicana: Dinámica Temporal y Microsimulaciones [Determinants of Unemployment in the Dominican Republic: Temporal Dynamics and Microsimulations]," MPRA Paper 76998, University Library of Munich, Germany.
    18. Sánchez Cantillo, Marco Vinicio, 2015. "Macroeconomic trade-offs and external vulnerabilities of human development in Nicaragua," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.

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    More about this item

    Keywords

    Non-parametric simulation methods; Computable General Equilibrium Models; Income Distribution; Employment; Unemployment; and Wages; Measurement and Analysis of Poverty; Effects of Welfare Programs; Supply and Demand for Labour; Segmented Labour Markets;
    All these keywords.

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C16 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Econometric and Statistical Methods; Specific Distributions
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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