Publication: The Impact of Economic Policies on Poverty and Income Distribution : Evaluation Techniques and Tools
Loading...
Date
2003-08
ISSN
Published
2003-08
Abstract
Development is about fundamental change in economic structures, about the movement of resources out of agriculture to services and industry, about migration to cities and international movement of labor, and about transformation in trade and technology. Social inclusion and change-change in health and life expectancy, in education and literacy, in population size and structure, and in gender relations-are at the heart of the story. The policy challenge is to help release and guide these forces of change and inclusion. But how can policymakers assess whether what they have done, or what they are doing, is right? Since the 1970s public economics has placed the serious analysis of growth at the center of its agenda. It has shown how to integrate growth and distribution - in simple terms, the size of the cake, and the distribution of the cake-rigorously into the discussion of public policy, both theoretically and empirically.
Link to Data Set
Citation
“Bourguignon, Francois; Pereira da Silva, Luiz A.. Bourguignon, Francois; Pereira da Silva, Luiz A., editors. 2003. The Impact of Economic Policies on Poverty and Income Distribution : Evaluation Techniques and Tools. © World Bank. http://hdl.handle.net/10986/15090 License: CC BY 3.0 IGO.”
Associated URLs
Associated content
Other publications in this report series
Journal
Journal Volume
Journal Issue
Collections
Related items
Showing items related by metadata.
Publication The Impact of Macroeconomic Policies on Poverty and Income Distribution : Macro-Micro Evaluation Techniques and Tools(Washington, DC : World Bank and Palgrave Macmillan, 2008-01-19)This book assembles methodologies and techniques to evaluate the poverty impact of macroeconomic policies. It takes as a departure point a companion volume, the impact of economic policies on poverty and income distribution: evaluation techniques and tools. This volume was primarily a review of microeconomic techniques aimed at assessing policies that are directly concerned with the welfare of poor households or individuals such as changing the level of cash transfers to the poorest households, increasing price subsidies for basic consumer goods, and the like. In addition, the second part of that earlier publication introduced basic techniques to deal with the poverty impact of macroeconomic policies that by definition are not targeted and affect the whole population. This volume presents a comprehensive array of macro-micro modeling frameworks. It begins by highlighting the limitation of macroeconomic models that use representative household groups to link macroeconomic policies and microeconomic data. It then moves to more complexes, top-down modeling frameworks, which combine (top) macro models and (down) micro simulation models that, in turn, can be simple micro accounting models or behavioral micro models. The book also explores integrated models, in which the macro and micro parts are either linked by iterative feedback loops or solved simultaneously as a single model. By providing clear access to these techniques, by documenting their analytical underpinnings, their data requirements, and their range of applicability, and even by highlighting some of their limitations, this book provides a unique compendium for practitioners, policy makers, and anyone interested in economic development.Publication Can the Distributional Impacts of Macroeconomic Shocks be Predicted? A Comparison of the Performance of Macro-Micro Models with Historical Data for Brazil(World Bank, Washington, D.C., 2004-05)What was the impact of Brazil's 1998-99 currency crisis-which resulted in a change of exchange rate regime and a large real devaluation-on the occupational structure of the labor force and the distribution of incomes? Would it have been possible to predict such effects ahead of the crisis? The authors present an integrated macro-micro model of the Brazilian economy in 1998. The model consists of an applied general equilibrium macroeconometric component, connected through a set of linkage aggregate variables to a microeconomic model of household incomes. The authors use this framework to predict the employment and distributional consequences of the 1999 Brazilian currency crisis, based on 1998 household survey data. They then test the predictive performance of the model by comparing its simulated results with the actual household survey data observed in 1999. In addition to the fully integrated macro-micro model, the authors also test the performances of the microeconometric model on its own, and of a "representative household groups" approach. They find that the integrated macro-micro econometric model, while still inaccurate on many dimensions, can actually predict the broad pattern of the incidence of changes in household incomes across the distribution reasonably well, and much better than the alternative approaches. The authors conclude that further experimentation with these tools might be of considerable potential usefulness to policymakers.Publication Relative Returns to Policy Reform : Evidence from Controlled Cross-Country Regressions(World Bank, 2002-10)The authors aim at contributing to understand the dispersion of returns from policy reforms using cross-country regressions. The authors compare the "before reform" with "after reform" GDP growth outcome of countries that undertook import-liberalization and fiscal policy reforms. They survey a large sample (about 54) of developing countries over the period 1980-99. The benefits of openness to trade and fiscal prudence have been extensively identified in the growth literature, but the evidence from simple cross-section analysis can sometimes be inconclusive and remains vulnerable to criticism on estimation techniques, such as identification, endogeneity, multi-colinearity, and the quality of the data. The authors use a different analytical framework that establishes additional controls. First, they construct a counterfactual control group. These are countries that-under specific thresholds-did not introduce policy reforms under scrutiny. Second, the authors also try to use the most appropriate variable of policy reform, for example, exogenous changes in import-tariffs instead of the endogenous sum of all trade flows. Third, the authors try to base the before-after reform comparison on the most accurate date for the beginning of a policy reform period (instead of comparing averages over fixed intervals of time). Once these controls are set, they explain the difference between average GDP growth rates during the country-specific post and the pre-reform periods, relative to the average GDP growth of the relevant control group. The explanatory variables in the regressions include the standard growth-regression controls. The results are the following: 1) With a better measurement and timing of the policy reforms, the growth effect (the "returns on reform") is generally smaller than in previous papers. 2) There is evidence of contingent relationships between policy and growth, corresponding to the country's size, its export profile, and its governance. 2) Within the group of policy reformers, some countries have exhibited a relatively weaker growth response. Overall, the findings suggest that more accurate measurement and definition of the timing of reforms does not strengthen the significance of the effects of reforms on GDP growth. In fact, the effects are weaker than indicated in most cross-section studies. This suggests that the policy implications to be derived from these relationships should be treated with even more caution than previously thought.Publication A Poverty Analysis Macroeconomic Simulator (PAMS) Linking Household Surveys with Macro-Models(World Bank, Washington, DC, 2002-09)The Poverty Analysis Macroeconomic Simulator (PAMS) is a model that links standard household surveys with macro frameworks. It allows users to assess the effect of macroeconomic policies-in particular, those associated with Poverty Reduction Strategies papers-on sectoral employment and income, the incidence of poverty, and income distribution. PAMS (in Excel) has three interconnected components: (1) A standard aggregate macro-framework that can be taken from any macro-consistency model (for example, RMSM-X, 123) to project GDP, national accounts, the national budget, the BoP, price levels, and so on, in aggregate consistent accounts. (2) A labor market model breaking down labor categories by skill level and economic sectors whose production total is consistent with that of the macro framework. Individuals from the household surveys are grouped in representative groups of households defined by the labor category of the head of the household. For each labor category, labor demand depends on sectoral output and real wages. Wage income levels by economic sector and labor category can thus be determined. In addition, different income tax rates and different levels of budgetary transfers across labor categories can be added to wage income. (3) A model that uses the labor model results for each labor category to simulate the income growth for each individual inside its own group, assumed to be the average of its group. After projecting individual incomes, PAMS calculates the incidence of poverty and the inter-group inequality. PAMS can produce historical or counterfactual simulations of: + Alternative growth scenarios with different assumptions for inflation, fiscal, and current account balances. These simulations allow test tradeoffs within a macro stabilization program. + Different combinations of sectoral growth (agricultural or industrial, tradable or non-tradable goods sectors), within a given aggregate GDP growth rate. + Tax and budgetary transfer policies. For example, PAMS will simulate a baseline macro-scenario for Burkina Faso corresponding to an existing IMF/World Bank-supported program and introduce changes in tax, fiscal, and sectoral growth policies to reduce poverty and inequality more effectively than the base scenario. So, the authors argue that there are several possible "equilibria" in terms of poverty and inequality within the same macro framework.Publication Estimating the Economic and Distributional Impacts of the Regional Comprehensive Economic Partnership(Washington, DC: World Bank, 2022-02-15)This paper applies a top-down, macro-micro modeling framework that links a computable general equilibrium model with the survey-based global income distribution dynamics model to assess the economic and distributional effects of the implementation of the Regional Comprehensive Economic Partnership (RCEP). Reductions of tariffs and non-tariff measures, implementation of a rule of origin, together with productivity gains stemming from trade cost reductions can strengthen regional trade and value chains among Regional Comprehensive Economic Partnership members. The results of the analysis indicate that in an already deeply integrated region, tariff liberalization alone brings little benefit, with estimated real income gains of 0.21 percent relative to the baseline (without the RCEP) in 2035. With liberal rules of origin, the gains in real income could double to 0.49 percent. The biggest benefits accrue when the productivity gains are considered, increasing real income by as much as 2.5 percent for the trade bloc. In this scenario, trade among RCEP members increases by 12.3 percent in 2035 relative to the baseline. The RCEP also has the potential to lift 27 million additional people to middle-class status by 2035. It will also boost wages, with faster gains in sectors that employ larger shares of women. The aggregate effects mask large variety of outcomes across countries, with Vietnam expected to register the highest trade and income gains. Implementation of the RCEP help partially mitigate the negative economic impacts of COVID-19 in the East Asia and the Pacific region.
Users also downloaded
Showing related downloaded files
Publication The Journey Ahead(Washington, DC: World Bank, 2024-10-31)The Journey Ahead: Supporting Successful Migration in Europe and Central Asia provides an in-depth analysis of international migration in Europe and Central Asia (ECA) and the implications for policy making. By identifying challenges and opportunities associated with migration in the region, it aims to inform a more nuanced, evidencebased debate on the costs and benefits of cross-border mobility. Using data-driven insights and new analysis, the report shows that migration has been an engine of prosperity and has helped address some of ECA’s demographic and socioeconomic disparities. Yet, migration’s full economic potential remains untapped. The report identifies multiple barriers keeping migration from achieving its full potential. Crucially, it argues that policies in both origin and destination countries can help maximize the development impacts of migration and effectively manage the economic, social, and political costs. Drawing from a wide range of literature, country experiences, and novel analysis, The Journey Ahead presents actionable policy options to enhance the benefits of migration for destination and origin countries and migrants themselves. Some measures can be taken unilaterally by countries, whereas others require close bilateral or regional coordination. The recommendations are tailored to different types of migration— forced displacement as well as high-skilled and low-skilled economic migration—and from the perspectives of both sending and receiving countries. This report serves as a comprehensive resource for governments, development partners, and other stakeholders throughout Europe and Central Asia, where the richness and diversity of migration experiences provide valuable insights for policy makers in other regions of the world.Publication Argentina Country Climate and Development Report(World Bank, Washington, DC, 2022-11)The Argentina Country Climate and Development Report (CCDR) explores opportunities and identifies trade-offs for aligning Argentina’s growth and poverty reduction policies with its commitments on, and its ability to withstand, climate change. It assesses how the country can: reduce its vulnerability to climate shocks through targeted public and private investments and adequation of social protection. The report also shows how Argentina can seize the benefits of a global decarbonization path to sustain a more robust economic growth through further development of Argentina’s potential for renewable energy, energy efficiency actions, the lithium value chain, as well as climate-smart agriculture (and land use) options. Given Argentina’s context, this CCDR focuses on win-win policies and investments, which have large co-benefits or can contribute to raising the country’s growth while helping to adapt the economy, also considering how human capital actions can accompany a just transition.Publication Lebanon Economic Monitor, Fall 2022(Washington, DC, 2022-11)The economy continues to contract, albeit at a somewhat slower pace. Public finances improved in 2021, but only because spending collapsed faster than revenue generation. Testament to the continued atrophy of Lebanon’s economy, the Lebanese Pound continues to depreciate sharply. The sharp deterioration in the currency continues to drive surging inflation, in triple digits since July 2020, impacting the poor and vulnerable the most. An unprecedented institutional vacuum will likely further delay any agreement on crisis resolution and much needed reforms; this includes prior actions as part of the April 2022 International Monetary Fund (IMF) staff-level agreement (SLA). Divergent views among key stakeholders on how to distribute the financial losses remains the main bottleneck for reaching an agreement on a comprehensive reform agenda. Lebanon needs to urgently adopt a domestic, equitable, and comprehensive solution that is predicated on: (i) addressing upfront the balance sheet impairments, (ii) restoring liquidity, and (iii) adhering to sound global practices of bail-in solutions based on a hierarchy of creditors (starting with banks’ shareholders) that protects small depositors.Publication Classroom Assessment to Support Foundational Literacy(Washington, DC: World Bank, 2025-03-21)This document focuses primarily on how classroom assessment activities can measure students’ literacy skills as they progress along a learning trajectory towards reading fluently and with comprehension by the end of primary school grades. The document addresses considerations regarding the design and implementation of early grade reading classroom assessment, provides examples of assessment activities from a variety of countries and contexts, and discusses the importance of incorporating classroom assessment practices into teacher training and professional development opportunities for teachers. The structure of the document is as follows. The first section presents definitions and addresses basic questions on classroom assessment. Section 2 covers the intersection between assessment and early grade reading by discussing how learning assessment can measure early grade reading skills following the reading learning trajectory. Section 3 compares some of the most common early grade literacy assessment tools with respect to the early grade reading skills and developmental phases. Section 4 of the document addresses teacher training considerations in developing, scoring, and using early grade reading assessment. Additional issues in assessing reading skills in the classroom and using assessment results to improve teaching and learning are reviewed in section 5. Throughout the document, country cases are presented to demonstrate how assessment activities can be implemented in the classroom in different contexts.Publication World Development Report 2006(Washington, DC, 2005)This year’s Word Development Report (WDR), the twenty-eighth, looks at the role of equity in the development process. It defines equity in terms of two basic principles. The first is equal opportunities: that a person’s chances in life should be determined by his or her talents and efforts, rather than by pre-determined circumstances such as race, gender, social or family background. The second principle is the avoidance of extreme deprivation in outcomes, particularly in health, education and consumption levels. This principle thus includes the objective of poverty reduction. The report’s main message is that, in the long run, the pursuit of equity and the pursuit of economic prosperity are complementary. In addition to detailed chapters exploring these and related issues, the Report contains selected data from the World Development Indicators 2005‹an appendix of economic and social data for over 200 countries. This Report offers practical insights for policymakers, executives, scholars, and all those with an interest in economic development.