To analyze issues of income distribution, most disaggregated macroeconomic models of the Computable General Equilibrium(CGE) type specify a few representative household groups (RHG) differentiated by their endowments of factors of production. To capture "within-group" inequality, it is often assumed, in addition, that each RHG represents an aggregation of households in which the distribution of relative income within each group follows an exogenously fixed statistical law. Analysis of changes in economic inequality in these models focuses on changes in inequality between RHGs. Empirically, however, analysis of household surveys indicates that changes in overall inequality are usually due at least as much to changes in within-group inequality as to changes in the between-group component. One way to overcome this weakness in the RHG specification is to use real households, as they are observed in standard household surveys, in CGE models designed to analyze distributional issues. In this integrated approach, the full heterogeneity of households, reflecting differences in factor endowments, labor supply, and consumption behavior, can be taken into account. In such a model, one can explore how household heterogeneity combines with market equilibrium mechanisms to produce more or less inequality in economic welfare as a consequence of shocks or policy changes. An integrated microsimulation-CGE model must be quite large and raises many issues of model specification and data reconciliation. This paper presents an alternative, top-down method for integrating micro-economic data on real households into modeling. It relies on a set of assumptions that yield a degree of separability between the macro, or CGE, part of the model and the micro-econometric modeling of income generation at the household level. This method is used to analyze the impact of a change in the foreign trade balance, and the resulting change in the equilibrium real exchange rate, in Indonesia (before the Asian financial crisis) and a comparison with the standard RHG approach is provided.

Does migrants' experience abroad provide an earnings premium for wage earners and/or a productivity advantage for entrepreneurs? In terms of earnings, we find that experience abroad results in a substantial wage premium for migrants returning from an OECD country but not for other return migrants. Past migration in an OECD country also results in a productive advantage for returnees who became entrepreneurs upon returning. However, the low share of return migrants in the population of WAEMU countries suggests that the effectiveness of return migration as a driver of development is only moderate. L'expérience migratoire est-elle valorisable? Une analyse empirique sur données collectées auprès de migrants de retour et de nonmigrants en Afrique de l'Ouest RÉSUMÉ-Les migrants bénéficient-ils d'une prime salariale sur le marché du travail de leur pays d'origine une fois rentrés au pays ? Qu'en est-il pour ceux qui dirigent une entreprise ou sont à leur compte? Les résultats de nos analyses suggèrent que les migrants de retour perçoivent une prime salariale forte lorsqu'ils reviennent d'un pays de l'OCDE. Le même résultat est observé pour ceux ayant le statut d'entrepreneurs. Cependant, étant donnée la faible proportion de migrants de retour dans la population des pays de la région, l'impact de la migration de retour sur le développement ne peut être que modéré. Acknowledgments: The authors thank François Roubaud and the PARSTAT project for making the data available for this work. The authors acknowledge financial support from OECD/DELSA under the Return Migration and Development Programme. They also thank Gilles Spielvogel, Ira Gang, Jacklin Wahba and three anonymous referees for their useful comments on a previous draft. The usual disclaimer applies.

a b s t r a c t JEL classification: J31 J71 O15 O55 Keywords: Earnings equations Gender wage gap Ethnic wage gap West AfricaIn this paper, we measure, compare and analyse gender and ethnic earnings gaps in seven West African capitals using data from an original series of urban household surveys. Our results show that gender earnings gaps are large in all the cities in our sample with significant variations across cities. Cities with large gender earnings gaps are also where gender education gaps are wider and where the female labour market participation is highest. Decomposition of the gender gaps shows that differences in characteristics explain around 40% of the raw gender gap on average, but this varies somewhat across cities. The results of the full decomposition of the gender earnings gaps suggest that differences in sector allocation contribute, on average, to one third of gender earnings gaps. Gender gaps are very wide in the informal sector and differences in micro-firm characteristics also account for differences in self-employment earnings. In contrast to the large gender earnings gaps measured in the seven cities, majority ethnic groups do not appear to be in a systematically advantageous position on the urban labour markets in our sample of cities, and observed gaps are small compared with gender gaps. Looking at more detailed levels of ethnic disaggregation, ethnic earnings differentials are found to be systematically smaller than gender differentials. Moreover, none of the minority "favoured" groups seem to have any relation to the ethnicity of the Head of State at the time of the survey. Holding productive characteristics constant, some unexplained differences persist however.

This paper presents an approach to reconciling household surveys and national accounts data. The problem is how to use the information provided by the national accounts data to re-estimate the household weights used in the survey so that the survey results are consistent with the aggregate data. The estimation approach uses an estimation criterion based on an entropy measure of information. The survey household weights are treated as a prior. New weights are estimated that are close to the prior and that are also consistent with the additional information. This approach is implemented to reconcile household survey data and macro data for Madagascar. The results indicate that the approach is powerful and flexible, supporting the efficient use of information from a variety of sources to reconcile data at different levels of aggregation in a consistent framework. Copyright 2003 by the International Association for Research in Income and Wealth.

Most households in rural Madagascar are engaged in agriculture and derive a large share of their income from the production of food or cash crops and from animal husbandry. However, agricultural yields can be extremely volatile due to weather conditions, pests, insects, rodents and other calamities. As a result, households record large fluctuations in their incomes that must be dealt with. Since the usual consumption-smoothing market mechanisms are quite limited in the Malagasy context, households need to rely on nonmarket mechanisms or to adopt multi-faceted strategies to cope with risk. In this paper, we examine the possibility that parents obtain informal income insurance by letting their children work. We test this hypothesis by examining the relationship between household income shocks and human capital investment in children. In particular, we investigate whether children's propensity to join school and to drop out of school responds to transient shocks. We also investigate issues such as gender and intrahousehold resource allocation.

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Indonesia experienced rapid growth and the expansion of the formal financial sector during the last quarter of the 20 th century. Although this tendency was reversed by the shock of the financial crisis that spread throughout Asia in 1997 and 1998, macroeconomic stability has since then been restored, and poverty has been reduced to pre-crisis levels. Poverty reduction remains nevertheless a critical challenge for Indonesia with over 110 million people (53 percent of the population) living on less than $2 per day.The objective of this study is to help identify ways in which the Doha Development Agenda might contribute to further poverty reduction in Indonesia. In order to provide a good technical basis for answering this question, we use an approach which combines a Computable General Equilibrium (CGE) model with a microsimulation model. This framework is designed to capture important channels through which macroeconomic shocks affect household incomes. It allows making recommendations on specific trade reform options as well as on complementary development policy reforms.The framework presented in this study generates detailed poverty outcomes of trade shocks. Given the magnitude of the shocks examined here and the structural features of the Indonesian economy, only the full liberalization scenario generates significant poverty changes. Their impact is examined under alternative specifications of the functioning of labor markets. These alternative assumptions generate different results, all of which confirm that the impact of the full liberalization on poverty would be beneficial, with wage and employment gains dominating the adverse food price changes that could hurt the poorest households. Two alternative tax replacement schemes are examined. While direct tax replacement appears to be more desirable in terms of efficiency gains and translates into higher poverty reduction, political and practical considerations could lead the Government of Indonesia to choose a replacement scheme through the adjustment of VAT rates across nonexempt sectors.

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