Beyond Oaxaca-Blinder: Accounting for Differences in Household Income Distributions Across Countries

53 Pages Posted: 14 Aug 2002

See all articles by Francisco H. G. Ferreira

Francisco H. G. Ferreira

World Bank - Development Research Group (DECRG)

Francois Bourguignon

Paris School of Economics

Phillippe G. Leite

World Bank - Research Department

Date Written: April 2002

Abstract

This paper develops a micro-econometric method to account for differences across distributions of household income. Going beyond the determination of earnings in labor markets, we also estimate statistical models for occupational choice and for the conditional distributions of education, fertility and non-labor incomes. We import combinations of estimated parameters from these models to simulate counterfactual income distributions. This allows us to decompose differences between functionals of two income distributions (such as inequality or poverty measures) into shares due to differences in the structure of labor market returns (price effects); differences in the occupational structure; and differences in the underlying distribution of assets (endowment effects). We apply the method to the differences between the Brazilian income distribution and those of the United States and Mexico, and find that most of Brazil's excess income inequality is due to underlying inequalities in the distribution of two key endowments: access to education and to sources of non-labor income, mainly pensions.

Keywords: Inequality, Distribution, Micro-simulations

JEL Classification: C15, D31, I31, J13, J22

Suggested Citation

Ferreira, Francisco H. G. and Bourguignon, Fran├žois and Leite, Phillippe G., Beyond Oaxaca-Blinder: Accounting for Differences in Household Income Distributions Across Countries (April 2002). Available at SSRN: https://ssrn.com/abstract=320109 or http://dx.doi.org/10.2139/ssrn.320109

Francisco H. G. Ferreira (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States
202-473-4382 (Phone)

Fran├žois Bourguignon

Paris School of Economics ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

Phillippe G. Leite

World Bank - Research Department ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
200
Abstract Views
1,739
rank
193,565
PlumX Metrics