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Resource booms, inequality, and poverty: The case of gas in Bolivia

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  • Lay, Jann
  • Thiele, Rainer
  • Wiebelt, Manfred

Abstract

This paper addresses the question of whether the Bolivian gas boom of the 1990s has bypassed large parts of the poor population, thereby leading to increasing inequalities in an already unequal society. Using a Computable General Equilibrium model that is sequentially linked to a microsimulation model, we examine the transmission channels through which the large resource inflows related to the gas boom, both initial foreign investment in the sector and the subsequent export earnings, as well as large public transfer programs affect the distribution of income. These transfers may well be interpreted as a means of redistributing resource rents. Our focus is on labour market impacts, in particular on shifts between formal and informal employment and changes in relative factor prices. Our simulation results suggest that the gas boom induces a combination of unequalising and equalising forces, which tend to offset each other. As net distributional change is limited, growth generated by the boom reduces poverty despite increasing informality.

Suggested Citation

  • Lay, Jann & Thiele, Rainer & Wiebelt, Manfred, 2006. "Resource booms, inequality, and poverty: The case of gas in Bolivia," Kiel Working Papers 1287, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1287
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    References listed on IDEAS

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    Cited by:

    1. Christopher Hartwell & Roman Horvath & Eva Horvathova & Olga Popova, 2022. "Natural resources and income inequality in developed countries: synthetic control method evidence," Empirical Economics, Springer, vol. 62(2), pages 297-338, February.
    2. Joseph Marchand, 2015. "The distributional impacts of an energy boom in Western Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(2), pages 714-735, May.
    3. George Adu & Franklin Amuakwa-Mensah & George Marbuah & Justice Tei Mensah, 2016. "Effect of gold mining on income distribution in Ghana," Working Papers 2016.23, FAERE - French Association of Environmental and Resource Economists.
    4. Timilsina,Govinda R. & Dissou,Yazid & Toman, Mike & Heine,Dirk, 2021. "Carbon Tax in an Economy with Informality : A Computable General Equilibrium Analysis for Cote d’Ivoire," Policy Research Working Paper Series 9710, The World Bank.
    5. Farzanegan, Mohammad Reza & Habibpour, Mohammad Mahdi, 2017. "Resource rents distribution, income inequality and poverty in Iran," Energy Economics, Elsevier, vol. 66(C), pages 35-42.
    6. repec:aru:wpaper:201304 is not listed on IDEAS
    7. Eid, Ahmed & Aguirre, Rodrigo, 2013. "Tendencias en desigualdad de ingreso y consumo en Bolivia: un cuento de hadas de gigantes empequeñeciendo y enanos. en crecimiento," Revista Latinoamericana de Desarrollo Economico, Carrera de Economía de la Universidad Católica Boliviana (UCB) "San Pablo", issue 20, pages 75-110, Noviembre.
    8. Zijie Yang & Dong Huang & Yuqing Zhao & Wenqian Wang, 2022. "A Bibliometric Review of Energy Related International Investment Based on an Evolutionary Perspective," Energies, MDPI, vol. 15(9), pages 1-21, May.
    9. Barkhordar, Zahra A. & Saboohi, Yadollah, 2013. "Assessing alternative options for allocating oil revenue in Iran," Energy Policy, Elsevier, vol. 63(C), pages 1207-1216.

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    More about this item

    Keywords

    Distribution; Computable General Equilibrium Model; Microsimulation; Natural Gas; Bolivia; Poverty;
    All these keywords.

    JEL classification:

    • D3 - Microeconomics - - Distribution
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • Q33 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Resource Booms (Dutch Disease)
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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