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Resource Booms, Inequality, And Poverty: The Case Of Gas In Bolivia

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  • Jann Lay
  • Rainer Thiele
  • Manfred Wiebelt

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. Our focus is on labor 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 unequalizing and equalizing forces, which tend to offset each other. As net distributional change is limited, growth generated by the boom reduces poverty despite increasing informality. Copyright 2008 The Authors. Journal compilation 2008 International Association for Research in Income and Wealth Published.

Suggested Citation

  • Jann Lay & Rainer Thiele & Manfred Wiebelt, 2008. "Resource Booms, Inequality, And Poverty: The Case Of Gas In Bolivia," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(3), pages 407-437, September.
  • Handle: RePEc:bla:revinw:v:54:y:2008:i:3:p:407-437
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    References listed on IDEAS

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    1. Maria Tannuri-Pianto & Donald M. Pianto & Omar Arias, 2004. "Informal Employment in Bolivia: A Lost Proposition?," Working papers - Textos para Discussao do Departamento de Economia da Universidade de Brasilia 317, Departamento de Economia da Universidade de Brasilia.
    2. Federico Escobar & Osvaldo Nina, 2004. "Pension Reform in Bolivia: A Review of Approach and Experience," Development Research Working Paper Series 04/2004, Institute for Advanced Development Studies.
    3. Spatz, Julius, 2004. "The Impact of Structural Reforms on Wages and employment: The case of Formal versus Informal Workers in Bolivia," Revista Latinoamericana de Desarrollo Economico, Instituto de Investigaciones Socio-Económicas (IISEC), Universidad Católica Boliviana, issue 2, pages 91-122, Abril.
    4. Francois Bourguignon & Francisco H.G. Ferreira & Nora Lustig, 2005. "The Microeconomics of Income Distribution Dynamics in East Asia and Latin America," World Bank Publications, The World Bank, number 14844.
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    1. repec:eee:eneeco:v:66:y:2017:i:c:p:35-42 is not listed on IDEAS

    More about this item

    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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