Methods for measuring the effect of adjustment policies on income distribution
The effect of adjustment policies on different groups in the population is an important and complex issue. The distributional implications can have a large influence on the sustainability of programs. In particular, there is a need to identify how different groups in society are affected by an adjustment program and how an alternative mix of policies would affect this outcome. This assessment will be useful for developing compensation schemes for those groups that may be negatively affected in the transitional adjustment period, and in generating support for adjustment programs. This paper reviews the methodologies that have been suggested to study the effect of adjustment on distribution and provides examples of each approach. Each method is evaluated and data requirements are described. The review provides a range of approaches to selecta method to apply to a particular country. The paper also reviews recent work on macropolicies and income distribution and provides recommendations and conclusions.
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