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

François J. Bourguignon, Francisco H. G. Ferreira () and Phillippe G. Leite

No 478, William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan Stephen M. Ross Business School

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 (search for similar items in EconPapers)
JEL-codes: C15 D31 I31 J13 J22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-lab and nep-ltv
Date: 2002-02-01
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Related works:
Working Paper: Beyond Oaxaca-Blinder: accounting for differences in household income distributions across countries (2002)
Working Paper: Beyond Oaxaca-Blinder: Accounting for Differences in Household Income Distributions Across Countries (2002)
Working Paper: Beyond Oaxaca-Blinder: accounting for differences in household income distributions across countries (2002)
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Persistent link: http://EconPapers.repec.org/RePEc:wdi:papers:2002-478

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