Macro Models and Household Survey Data : Linkages for Poverty and Distributional Analysis

This paper focuses on approaches to linking macroeconomic models to household income data for poverty and distributional analysis. Given that linkage methods can influence the resulting poverty and income distribution effects, understanding the benefits and costs of various linkages is important. Simulation exercises do not show fundamentally different results when comparing three approaches: a simple micro-accounting method, an extension of that method to account for changes in employment structure, and the Beta distribution approach. However, potential differences can be very large. We also highlight the extended micro-accounting method as a practical approach to linking macroeconomic models to household income data