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RESOURCE BOOMS, INEQUALITY, AND POVERTY: THE CASE OF GAS IN BOLIVIA
Author(s) -
Lay Jann,
Thiele Rainer,
Wiebelt Manfred
Publication year - 2008
Publication title -
review of income and wealth
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.024
H-Index - 57
eISSN - 1475-4991
pISSN - 0034-6586
DOI - 10.1111/j.1475-4991.2008.00281.x
Subject(s) - boom , economics , computable general equilibrium , earnings , poverty trap , poverty , income distribution , labour economics , population , general equilibrium theory , investment (military) , inequality , macroeconomics , economic growth , environmental science , mathematical analysis , mathematics , accounting , demography , environmental engineering , sociology , politics , political science , law
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.