On synthetic income panels

In many developing countries, the increasing public interest for economic inequality and mobility runs into the scarce availability of longitudinal data. Synthetic panels based on matching individuals with the same time-invariant characteristics in consecutive cross-sections have been proposed as a substitute for such data – see Dang and Lanjouw (2014). The present paper improves on the calibration methodology of such synthetic panels in several directions: a) it abstracts from (log) normality assumptions; b) it improves on the estimation of auto-correlation of unobserved determinants of (log) earnings; c) it considers the whole mobility matrix rather than mobility in and out of poverty. We exploit the cross-sectional dimension of a national-representative Mexican panel survey to evaluate the validity of this approach. The income mobility matrix in the synthetic panel calibrated on the former turns out to be very close to the observed matrix in the latter.

A. Hector Moreno M. is a Research Officer at OPHI. He holds a PhD in Economics from the Paris School of Economics (PSE) in France. Previously, he served as Research Coordinator for the Human Development Research Office at the UNDP Mexico, and as under director of Poverty Methodologies for the Mexican government at CONEVAL. He has also been a consultant for private, public and international institutions. His fields of research include wealth and income distribution, poverty measurement, economic mobility and, development economics. His research has received research-oriented awards from diverse institutions in Mexico like the Banamex-Citibank prize in economics, the Tlacaélel prize for economic consulting, and the National University’s award for applied research in economics. He has taught multiple courses in Statistics at Sciences Po Paris in France and a variety of courses in Economics at Universidad Iberoamericana in Mexico. He refereed the Journal of Economic Inequality (Elsevier), the Politicas Públicas Journal (Tec de Monterrey ) and the Review of Economics and Statistics (MIT). He holds a master 2 in Quantitative Economics, Public Policy and Development (École des Hautes Études en Sciences Sociales) and an MSc in Economics (UPF/Barcelona Graduate School of Economics).