Estimating income mobility in Colombia using maximum entropy econometrics.

cg.coverage.countryColombia
cg.coverage.iso3166-alpha2CO
cg.coverage.regionLatin America
cg.coverage.regionSouth America
cg.creator.identifierSamuel Morley: 0000-0003-3047-8112
cg.creator.identifierSherman Robinson: 0000-0002-5478-9372
cg.identifier.projectIFPRI - Archive
cg.number26en
cg.placeWashington, DCen
cg.reviewStatusInternal Reviewen
dc.contributor.authorMorley, Samuelen
dc.contributor.authorRobinson, Shermanen
dc.contributor.authorHarris, Rebecca Leeen
dc.date.accessioned2024-11-21T09:54:15Zen
dc.date.available2024-11-21T09:54:15Zen
dc.identifier.urihttps://hdl.handle.net/10568/161222
dc.titleEstimating income mobility in Colombia using maximum entropy econometrics.en
dcterms.abstractIncome mobility can be viewed as a first-order Markov process, with a matrix of transition probabilities which measure how individuals move from an income status in time t to a new status in time t+1. Direct estimation of transition matrices is difficult, since time series panel data are unavailable and limited data on the distribution of income do not suffice to determine the coefficients mathematically, let alone provide enough degrees of freedom for estimation. In this paper, we show that maximum entropy econometrics offers a feasible way to estimate transition matrices using distributional data from Colombia. Using a cross-entropy estimation method, we make efficient use of prior information about the structure of the transition matrices and how they vary with age. The approach is very flexible, allowing the use of “information” in a variety of forms such as inequality constraints, errors in measurement, and prior estimates. Under weak assumptions about the error generation process, we can derive test statistics based on the likelihood ratio measuring the significance of the estimation. The model fits the data well in that the predicted and actual distributions for period t+1 are close. The results show that there is a large degree of upward mobility in Colombia, especially at the bottom of the income distribution and for the younger age cohorts.en
dcterms.accessRightsOpen Access
dcterms.bibliographicCitationMorley, Samuel; Robinson, Sherman; Harris, Rebecca Lee. 1998. Estimating income mobility in Colombia using maximum entropy econometrics. TMD Discussion Paper 26. https://hdl.handle.net/10568/161222en
dcterms.extent3 p.en
dcterms.isPartOfTMD Discussion Paperen
dcterms.issued1998
dcterms.languageen
dcterms.publisherInternational Food Policy Research Instituteen
dcterms.replaceshttps://ebrary.ifpri.org/digital/collection/p15738coll2/id/125681en
dcterms.subjectincome distributionen
dcterms.subjecteconometricsen
dcterms.typeWorking Paper

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