Changing Betas or Changing X’s? Evolution of Income and Poverty in Ecuador, 2001-12

Diana Chiliquinga and Gaurav Datt

No 14-16, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: While endowment v rates-of-return decompositions are common in the labour market literature, in most applied work on modelling of income and poverty changes over time, the hypothesis of unchanging rates of return (betas) has largely remained untested. This paper tests and rejects the hypothesis for Ecuador for models of household income and poverty estimated over the period 2001-12. A variation on the Oaxaca-Blinder decomposition over time shows that changing betas are also quantitatively important, contributing nearly three-fourths of the substantial income growth and poverty reduction in Ecuador over this period. Changes in only a few endowments (𝑥’s) and rates of return (betas) are however found to account for most of the change.

Keywords: income growth; poverty; Oaxaca-Blinder decomposition; Ecuador (search for similar items in EconPapers)
JEL-codes: I32 O15 O54 (search for similar items in EconPapers)
Pages: 20 pages
Date: 2016-11
New Economics Papers: this item is included in nep-dev
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