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

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.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

Constraints to achieving the MDGs through domestic resource mobilization

The present paper focuses on the role of domestic resource mobilization for financing poverty reduction strategies. Policy makers should be aware of important macroeconomic trade-offs associated with MDG strategies financed from tax increases or domestic borrowing. The trade-offs are largely intertemporal: can poor and middle-income countries absorb the initial financing costs in order to achieve expected gains in productivity and human development over time? This calls for a dynamic economy-wide framework to identify the importance of such trade-offs. The paper presents such a framework and illustrates its usefulness in applications for Costa Rica and Ecuador.computable general equilibrium models; distribution; welfare and poverty; foreign aid; macroeconomic analyses of economic development.