Micro-simulation and Multi-decomposition: A Case Study: Philippines
This article combines computable general equilibrium (CGE) micro-simulation modeling and the Gini multi-decomposition analysis. The CGE-micro-simulation approach enables one to generate endogenous income distributions following government policy interventions. The introduction of these endogenous distributions into the Gini multi-decomposition, that merges income source and subgroup decompositions, provides powerful information to decision makers, which analyze the trade-off between inequality and efficiency whereas Gini multi-decomposition is usually applied in a partial equilibrium context. This is done by imposing the assumption that either the income or the price effects are exogenous.
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