GROWTH, DISTRIBUTION AND POVERTY IN MADAGASCAR: LEARNING FROM A MICROSIMULATION MODEL IN A GENERAL EQUILIBRIUM FRAMEWORK

Denis Cogneau · Anne-Sophie Robilliard

158 citations0/0 files storedAgEcon Search (University of Minnesota, USA)

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Income, Poverty, and Inequality Economic Theory and Policy demographic modeling and climate adaptation

Abstract

This paper presents an applied microsimulation model built on household data with explicit treatment of heterogeneity of skills, labor preferences and opportunities, and consumption preferences at the individual and/or household level, while allowing for an endogenous determination of relative prices between sectors. The model is primarily focused on labor markets and labor allocation at the household level, but consumption behavior is also modeled. Modeling choices are driven by a desire to make the best possible use of microeconomic information derived from household data. This framework supports analysis of the impact of different growth strategies on poverty and income distribution, without making use of the “representative agent” assumption. The model is built on household survey data and represents the behavior of 4,508 households. Household behavioral equations are estimated econometrically. Different sets of simulation are carried out to examine the comparative statics of the model and study the impact of different growth strategies on poverty and inequality. Simulation results show the potential usefulness of this class of models to derive both poverty and inequality measures and transition matrices without prior assumptions regarding the intragroup income distribution. Market clearing equations allow for the endogenous determination of relative prices between sectors. The impact of different growth strategies on poverty and inequality is complex given general equilibrium effects and the wide range of household positions in markets for factors and goods markets. Partial equilibrium analysis or the use of representative households would miss these effects.

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References

1997The analysis of household surveys 1980Economics and Consumer Behavior 1998New ways of looking at old issues: inequality and growth 1992Whom or What Does the Representative Individual Represent?1983General Equilibrium Models for Development Policy.1994Quantitative development policy analysis 1998Explaining International and Intertemporal Variations in Income Inequality 1976Inequality, poverty and development

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