Poverty, Income Distribution and CGE Modeling: Does the Functional Form of Distribution Matter?

Dorothee Boccanfuso, Bernard Decaluwe () and Luc Savard

Cahiers de recherche from CIRPEE

Abstract: In this paper, we provide an overview of approaches used to model income distribution and poverty in CGE models. CGE models have started to use income distribution functional forms such as the lognormal, Pareto, beta distribution and Kernel non-parametric methods to apply GFT poverty indices. None of the authors of these papers have gone into much detail to justify the use of one method or functional form over the other, within the context of this type of work. Extensive literature exists on the choice of functional forms to estimate income distribution; however it has not been utilized in the CGE context. Given the fact that the desegregation of groups of households can be important in CGE analysis and the fact that the impact on income of policy simulations are often small in CGE models, we investigate the importance of othe choice of the functional form used to estimate the income distribution of groups of households. We compare six functional forms with parametric estimation and on a non-parametric method. Results show that no single form is more appropriate in all cases or groups of households. The characteristics of samples and subgroups play an important role and the choice shoudl be guided by the best fitting distribution.

Keywords: Computable general equilibrium models; estimation; personal income and wealth distribution; measurement and analysis of poverty (search for similar items in EconPapers)
JEL-codes: C13 C68 D31 I32 (search for similar items in EconPapers)
Date: 2003
New Economics Papers: this item is included in nep-edu and nep-ltv
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
http://www.cirpee.org/fileadmin/documents/Cahiers_2003/CIRPEE03-32.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:lvl:lacicr:0332

Access Statistics for this paper

More papers in Cahiers de recherche from CIRPEE Contact information at EDIRC.
Bibliographic data for series maintained by Manuel Paradis ().