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A Non-Parametric Microsimulation Approach to Assess Changes in Inequality and Poverty


  • Rob Vos
  • Marco V. Sánchez


This paper presents a non-parametric microsimulation methodology for assessing the determinants of changes in income inequality and poverty. One great advantage of this method over alternatives is that it is not very demanding in terms of modelling labour supply and household behaviour while still providing a plausible link between changes in overall labour market conditions and the full household income distribution. The paper also shows how the method can be adapted to assess the poverty and inequality effects of changes in non-labour incomes (such as through a government transfer programme) and how it can be combined with economy-wide models.

Suggested Citation

  • Rob Vos & Marco V. Sánchez, 2010. "A Non-Parametric Microsimulation Approach to Assess Changes in Inequality and Poverty," Working Papers 94, United Nations, Department of Economics and Social Affairs.
  • Handle: RePEc:une:wpaper:94

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    References listed on IDEAS

    1. Sattinger, Michael, 1993. "Assignment Models of the Distribution of Earnings," Journal of Economic Literature, American Economic Association, vol. 31(2), pages 831-880, June.
    2. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters,in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
    3. Hartog, Joop, 1985. "Earnings functions : Testing for the demand side," Economics Letters, Elsevier, vol. 19(3), pages 281-285.
    4. Luc Savard, 2003. "Poverty and Income Distribution in a CGE-Household Micro-Simulation Model: Top-Down/Bottom Up Approach," Cahiers de recherche 0343, CIRPEE.
    5. François Bourguignon & Anne-Sophie Robilliard & Sherman Robinson, 2003. "Representative versus real households in the macro-economic modeling of inequality," Working Papers DT/2003/10, DIAL (Développement, Institutions et Mondialisation).
    6. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, January.
    7. Almeida dos Reis, Jose Guilherme & Paes de Barros, Ricardo, 1991. "Wage inequality and the distribution of education : A study of the evolution of regional differences in inequality in metropolitan Brazil," Journal of Development Economics, Elsevier, vol. 36(1), pages 117-143, July.
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    Cited by:

    1. Sánchez, Marco V. & Cicowiez, Martín, 2014. "Trade-offs and Payoffs of Investing in Human Development," World Development, Elsevier, vol. 62(C), pages 14-29.
    2. Renato Vargas & Pamela Escobar & Maynor Cabrera & Javier Cabrera & Violeta Hernández & Vivian Guzmán & Martin Cicowiez, 2017. "Climate risk and food security in Guatemala," Working Papers MPIA 2017-01, PEP-MPIA.
    3. Ramírez, Nerys F., 2016. "Determinantes del Desempleo en la República Dominicana: Dinámica Temporal y Microsimulaciones
      [Determinants of Unemployment in the Dominican Republic: Temporal Dynamics and Microsimulations]
      ," MPRA Paper 76998, University Library of Munich, Germany.
    4. Edward, Batte Sennoga & John Mary, Matovu, 2016. "Growth and Welfare Effects of Macroeconomic Shocks in Uganda," Occasional Papers 244096, Economic Policy Research Centre (EPRC).
    5. Sánchez Cantillo, Marco Vinicio, 2015. "Macroeconomic trade-offs and external vulnerabilities of human development in Nicaragua," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    6. repec:eee:touman:v:51:y:2015:i:c:p:157-173 is not listed on IDEAS
    7. Debowicz, Darío, 2016. "Does the microsimulation approach used in macro–micro modelling matter? An application to the distributional effects of capital outflows during Argentina's Currency Board regime," Economic Modelling, Elsevier, vol. 54(C), pages 591-599.
    8. Breisinger, Clemens & Ecker, Olivier, 2014. "Simulating economic growth effects on food and nutrition security in Yemen: A new macro–micro modeling approach," Economic Modelling, Elsevier, vol. 43(C), pages 100-113.
    9. Lofgren, Hans & Cicowiez, Martin & Diaz-Bonilla, Carolina, 2013. "MAMS – A Computable General Equilibrium Model for Developing Country Strategy Analysis," Handbook of Computable General Equilibrium Modeling, Elsevier.
    10. Debowicz, Darío & Golan, Jennifer, 2014. "The impact of Oportunidades on human capital and income distribution in Mexico: A top-down/bottom-up approach," Journal of Policy Modeling, Elsevier, vol. 36(1), pages 24-42.
    11. Banerjee, Onil & Cicowiez, Martin & Gachot, Sébastien, 2015. "A quantitative framework for assessing public investment in tourism – An application to Haiti," Tourism Management, Elsevier, vol. 51(C), pages 157-173.

    More about this item


    Non-parametric simulation methods; Computable General Equilibrium Models; Income Distribution; Employment; Unemployment; and Wages; Measurement and Analysis of Poverty; Effects of Welfare Programs; Supply and Demand for Labour; Segmented Labour Markets;

    JEL classification:

    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C16 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Econometric and Statistical Methods; Specific Distributions
    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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