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Beyond Oaxaca-Blinder : accounting for differences in household income distributions across countries

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Author Info
Bourguignon, Francois
Ferreira, Francisco H. G.

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Abstract

The authors develop a microeconometric method to account for differences across distributions of household income. Going beyond the determination of earnings in labor markets, they also estimate statistical models for occupational choice and for conditional distributions of education, fertility, and nonlabor incomes. The authors import combinations of estimated parameters from these models to simulate counterfactual income distributions. This allows them to decompose differences between functionals of two income distributions (such as inequality or poverty measures) into shares because of differences in the structure of labor market returns (price effects), differences in the occupational structure, and differences in the underlying distribution of assets (endowment effects). The authors apply the method to the differences between the Brazilian income distribution and those of Mexico and the United States, and find that most of Brazil's excess income inequality is due to underlying inequalities in the distribution of two key endowments: access to education and to sources of nonlabor income, mainly pensions.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 2828.

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Date of creation: 30 Apr 2002
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Handle: RePEc:wbk:wbrwps:2828

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Related research
Keywords: Services&Transfers to Poor; Environmental Economics&Policies; Poverty Impact Evaluation; Economic Theory&Research; Health Economics&Finance; Inequality; Economic Theory&Research; Rural Poverty Reduction; Safety Nets and Transfers; Services&Transfers to Poor;

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  1. François Bourguignon & Francisco Ferreira & Phillippe Leite, 2008. "Beyond Oaxaca–Blinder: Accounting for differences in household income distributions," Journal of Economic Inequality, Springer, vol. 6(2), pages 117-148, June. [Downloadable!] (restricted)
  2. Ñopo, Hugo, 2004. "Matching as a Tool to Decompose Wage Gaps," IZA Discussion Papers 981, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  3. Cunningham, Wendy & Jacobsen, Joyce P., 2008. "Earnings inequality within and across gender, racial, and ethnic groups in four Latin American Countries," Policy Research Working Paper Series 4591, The World Bank. [Downloadable!]
  4. Arcand Jean-Louis & Béatrice d'Hombres, 2005. "Racial Discrimination in the Brazilian Labour Market: Wage, Employment and Segregation Effects," Labor and Demography 0510015, EconWPA. [Downloadable!]
    Other versions:
  5. Francisco H. G. Ferreira & Peter Lanjouw & Marcelo Côrtes Neri, 2003. "A Robust Poverty Profile for Brazil Using Multiple Data Sources," Revista Brasileira de Economia, Graduate School of Economics, Getulio Vargas Foundation (Brazil), vol. 57(1), April. [Downloadable!]
    Other versions:
  6. Marcelo de Paiva Abreu, 2003. "The political economy of economic integration in the Americas: Latin American interests," Textos para discussão 468, Department of Economics PUC-Rio (Brazil). [Downloadable!]
  7. Daniele Checchi & Cecilia Garcia-Peñalosa, 2005. "Labour Market Institutions and the Personal Distribution of Income in the OECD," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  8. Brigitte Dormont & Anne-Laure Samson, 2007. "Intergenerational inequalities in GPs' earnings : experience, time and cohort effects," Working Papers 0704, University of Lausanne, Institute of Health Economics and Management (IEMS). [Downloadable!]
    Other versions:
  9. Philippe G. Leite, 2005. "Race Discrimination or Inequality of Opportunities: The Brazilian Case," Ibero America Institute for Econ. Research (IAI) Discussion Papers 118, Ibero-America Institute for Economic Research. [Downloadable!]
  10. Brigitte Dormont & Michel Grignon & Hélène Huber, 2006. "Health expenditure growth : reassessing the threat of ageing," Post-Print halshs-00181605_v1, HAL. [Downloadable!]
    Other versions:
  11. Evans Jadotte, 2006. "Income Distribution and Poverty in the Republic of Haiti," Cahiers de recherche PMMA 2006-13, PEP-PMMA. [Downloadable!]
  12. Francisco H. G. Ferreira & Phillippe George Leite, 2002. "Educational expansion and income distribution. A Micro-Simulation for Ceará," Textos para discussão 456, Department of Economics PUC-Rio (Brazil). [Downloadable!]
  13. Wendy Cunningham & Joyce P. Jacobsen, 2003. "Earnings Inequality Within and Across Gender, Racial, and Ethnic Groups in Latin America," Wesleyan Economics Working Papers 2003-001, Wesleyan University, Department of Economics. [Downloadable!]
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