Abstract

RUBIN DE CELIS CEDRO, Raúl  and  ESPINOZA VASQUEZ, Lourdes. Vartia algorithm application: The primary education sector in Bolivia. rlde [online]. 2015, n.23, pp.97-125. ISSN 2074-4706.

The standard approach in order to assess the changes in welfare is the calculation of the equivalent variation or the compensating variation, which relies in what the literature has been called the integrability method. This methodology needs a precise and well defined demand function. In general the use of empirical approximations for this demand function has many drawbacks. In this paper we test the robustness ofVartia algorithm instead of applying the integrability method. We verify that, in sectors like education, this algorithm can be used as an alternative mechanism to assess the changes in the welfare when the level of prices changes.

Keywords : Welfare; equivalent variation; compensating variation; Integrability Alghoritm of Vartia.

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