Linking Representative Household Models with Household Surveys for Poverty Analysis A Comparison of Alternative Methodologies

Abstract

We compare three approaches to linking macro models with representative households and micro household income data in terms of their implications for measuring the poverty and distributional effects of poverty reduction strategies. These approaches are a simple micro- accounting method, an extension of that method to account for changes in employment structure, and the Beta distribution approach. Even though in our simulation exercises the three methods do not lead to fundamentally different results in absolute terms, we show that potential differences in the measurement of distributional and poverty effects of policy shocks can be very large.Applied General Equilibrium Models, Poverty, Income Distribution, Policy Evaluation