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Changing Betas or Changing X’s? Evolution of Income and Poverty in Ecuador, 2001-12

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  • Diana Chiliquinga
  • Gaurav Datt

Abstract

While endowment v rates-of-return decompositions are common in the labour market literature, in most applied work on modelling of income and poverty changes over time, the hypothesis of unchanging rates of return (betas) has largely remained untested. This paper tests and rejects the hypothesis for Ecuador for models of household income and poverty estimated over the period 2001-12. A variation on the Oaxaca-Blinder decomposition over time shows that changing betas are also quantitatively important, contributing nearly three-fourths of the substantial income growth and poverty reduction in Ecuador over this period. Changes in only a few endowments (𝑥’s) and rates of return (betas) are however found to account for most of the change.

Suggested Citation

  • Diana Chiliquinga & Gaurav Datt, 2016. "Changing Betas or Changing X’s? Evolution of Income and Poverty in Ecuador, 2001-12," Monash Economics Working Papers 14-16, Monash University, Department of Economics.
  • Handle: RePEc:mos:moswps:2016-14
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    References listed on IDEAS

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    More about this item

    Keywords

    income growth; poverty; Oaxaca-Blinder decomposition; Ecuador;
    All these keywords.

    JEL classification:

    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean

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