Resource Booms, Inequality, and Poverty: The Case of Gas in Bolivia

31 Pages Posted: 5 Aug 2008

See all articles by Jann Lay

Jann Lay

GIGA German Institute of Global and Area Studies; University of Goettingen

Rainer Thiele

affiliation not provided to SSRN

Manfred Wiebelt

Kiel Institute for the World Economy

Abstract

This paper addresses the question of whether the Bolivian gas boom of the 1990s has bypassed large parts of the poor population, thereby leading to increasing inequalities in an already unequal society. Using a Computable General Equilibrium model that is sequentially linked to a microsimulation model, we examine the transmission channels through which the large resource inflows related to the gas boom, both initial foreign investment in the sector and the subsequent export earnings, as well as large public transfer programs affect the distribution of income. Our focus is on labor market impacts, in particular on shifts between formal and informal employment and changes in relative factor prices. Our simulation results suggest that the gas boom induces a combination of unequalizing and equalizing forces, which tend to offset each other. As net distributional change is limited, growth generated by the boom reduces poverty despite increasing informality.

Suggested Citation

Lay, Jann and Thiele, Rainer and Wiebelt, Manfred, Resource Booms, Inequality, and Poverty: The Case of Gas in Bolivia. Review of Income and Wealth, Vol. 54, No. 3, pp. 407-437, September 2008. Available at SSRN: https://ssrn.com/abstract=1202458 or http://dx.doi.org/10.1111/j.1475-4991.2008.00281.x

Jann Lay (Contact Author)

GIGA German Institute of Global and Area Studies ( email )

Neuer Jungfernstieg 21
Hamburg, DE D-20354
Germany

University of Goettingen

Platz der Gottinger Sieben 3
Gottingen, D-37073
Germany

Rainer Thiele

affiliation not provided to SSRN

Manfred Wiebelt

Kiel Institute for the World Economy ( email )

Duesternbrooker Weg 120
Kiel, Schleswig-Hosltein 24105
Germany

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