New Economics Papers
on Central and South America
Issue of 2006‒06‒17
four papers chosen by

  1. Income Distribution and Poverty in the Republic of Haiti By Evans Jadotte
  2. Poverty and Employability Effects of Workfare Programs in Argentina By Lucas Ronconi; Juan Sanguinetti; Sandra Fachelli; Virginia Casazza; Ignacio Franceschelli
  3. Brazil's Fiscal Stance During 1995-2005: The Effect of Indebtedness on Fiscal Policy Over the Business Cycle By Luiz de Mello; Diego Moccero
  4. Sources of Income Persistence: Evidence from Rural El Salvador By Walter Sosa-Escudero; Mariana Marchionni; Omar Arias

  1. By: Evans Jadotte
    Abstract: After decades of stagnation and economic decline coupled with political upheavals, the Republic of Haiti is today the poorest nation in the Western Hemisphere and one of the poorest in the world. The present research reveals that this country is also where income is worst distributed in the most unequal region of the world, viz., Latin America and the Carribbean. We use the 2001 Haiti Living Conditions Survey for distributive analysis and poverty assessment to try to make manifest the potential links between household well-being and individual socio-economic characteristics. One particular finding is that access to land does not help the poor escape poverty. Complementary to the inequality and poverty profiles constructed herein, a relatively new methodology using weighted least squares for complex survey is adopted to additively decompose inequality by multiple factor components. Also, we estimate a polychotomous ordered logic to investigate the risk of being indigent or poor.
    Keywords: Republic of Haiti, inequality, multiple factor components decomposition, poverty, stochastic dominance
    JEL: D31 D63 I32
    Date: 2006
  2. By: Lucas Ronconi; Juan Sanguinetti; Sandra Fachelli; Virginia Casazza; Ignacio Franceschelli
    Abstract: In 1993 Argentina began implementing workfare programs, and workfare has become a central public policy starting 2002 when the government increased the number of beneficiaries from 100,000 to 2 million people in a country of 38 million. We explore targeting, poverty and employability effects of workfare before 2002 based on the permanent household survey (EPH). We find that the program was pro-poor although more than one third of participants did not satisfy the eligibility criteria. Our estimates suggest that the income of participants increased during treatment - particularly for women - indicating beneficial short run poverty effects. However, the long run effects of the program are not obvious due to selection on treatment completion. We present evidence suggesting that -for a large fraction of participants- the program generated dependency and did not increase their human capital.
    Keywords: Workfare, evaluation, Argentina
    JEL: J48 I38
    Date: 2006
  3. By: Luiz de Mello; Diego Moccero
    Abstract: Brazil's fiscal adjustment since the floating of the real in 1999 has been impressive, even in periods of lacklustre growth. This suggests a remarkable fiscal effort to ensure public debt sustainability. To better gauge the magnitude of this adjustment effort, this paper applies the methodology used by the OECD Secretariat to distinguish changes in the fiscal stance that are due to policy action from those that are related to the automatic stabilisers built into the tax code, the social security system and unemployment insurance. The paper's main finding is that discretionary action tends to be essentially pro-cyclical in downturns, underscoring the presence of a strong "sustainability motive" in the conduct of Brazilian fiscal policy. Spending on mandatory items, such as personnel, are pro-cyclical in upturns too, which can create a "ratcheting-up" effect on government spending over time, an issue that will have to be addressed to improve the quality of on-going fiscal adjustment. An increase in the debt-to-GDP ratio by 1 percentage point is associated with a decrease in discretionary federal spending by 0.33 percentage point during 1997-2005. This responsiveness appears to have become stronger after the floating of the real in 1999. This Working Paper relates to the 2005 OECD Economic Survey of Brazil ( <P>Orientation de la politique budgétaire au Brésil sur la période 1995-2005 L'ajustement budgétaire du Brésil depuis l'adoption d'un régime de taux de change flottant en 1999 a été impressionnant, malgré la morosité de la croissance pendant ces années. Cela suggère un remarquable effort budgétaire pour assurer la soutenabilité de la dette publique. Pour mieux évaluer l'ampleur de cet effort d'ajustement, ce document applique la méthodologie utilisée par le Secrétariat de l'OCDE pour distinguer les changements dans la position budgétaire liés à l'orientation de la politique discrétionnaire de ceux liés aux stabilisateurs automatiques du code des impôts, du système de sécurité sociale et de l'assurance chômage. Les calculs sont utilisés pour estimer la sensibilité des initiatives de la politique discrétionnaire à un changement de la dette publique. La politique budgétaire discrétionnaire est essentiellemen procyclique dans les phases de basses conjonctures, ceci est la principale conclusion rapportée dans ce document. Cela souligne que la conduite de la politique budgétaire Brésilienne est fortement motivée par la soutenabilité de la dette publique. Les catégories de dépenses obligatoires, comme les dépenses en personnel,sont également procycliques dans les périodes de reprise. Ceci crée un effet rattrapage en «dents de scie» des dépenses publiques, une question qui devra être abordée pour améliorer la qualité de l'ajustement budgétaire progressif. Une augmentation du ratio de la dette publique sur le PIB de 1% est associé à une baisse de 0.33 point de pourcentage dans les dépenses discrétionnaires au niveau fédéral. Cette réponse paraît s'être renforcée après l'adoption d'un régime de taux de change flottant en 1999. Ce Document de travail se rapporte à l'Étude économique de l'OCDE du Brésil, 2005 (
    Keywords: fiscal policy, politique budgétaire, business cycles, Brazil, Brésil, debt sustainability, soutenabilité de dette, cycle des affaires
    JEL: E32 E62 H60
    Date: 2006–05–22
  4. By: Walter Sosa-Escudero (Universidad de San Andrés); Mariana Marchionni (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) - Universidad Nacional de La Plata); Omar Arias (Poverty and Gender Group of the Latin American and Caribbean Department of the World Bank)
    Abstract: This paper uses a unique panel dataset (1995-2001) of rural El Salvador to investigate the main sources of the persistence and variability of incomes. First we propose an econometric framework where a general dynamic panel model is validly reduced to a simple linear structure with a dynamic covariance structure, which augments considerably the number of degrees of freedom usually lost in the construction of instruments to estimate standard dynamic panel models. Then we investigate the extent to which families are continuously poor due to endowments (observed and unobserved) that yield low income potential or due to systematic income shocks that they are unable to smooth. We find that life-cycle incomes are largely explained by the relatively time-invariant productive characteristics of families and their members such as education, public goods and other assets. Observed income determinants account for about half of income persistence. Controlling for unobserved heterogeneity leaves little room for pure state dependence. Although of second order, high volatility and the inability to insure from shocks is a more important source of variation in incomes than in developed countries. Low income potential is the more likely source of poverty traps in Rural El Salvador. Many of the family endowments are manipulable by policy interventions, although many not in the short term.
    Keywords: Income mobility, Poverty Traps, Panel Data, El Salvador
    JEL: I32
    Date: 2006–06

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.