New Economics Papers
on Central and South America
Issue of 2009‒10‒31
three papers chosen by

  1. Income and beyond: Multidimensional poverty in six Latin American countries By Diego Battiston; Guillermo Cruces; Luis Felipe Lopez-Calva; Maria Ana Lugo; Maria Emma Santos
  2. The recent decline of inequality in Latin America: Argentina, Brazil, Mexico and Peru By Luis F. Lopez-Calva; Nora Lustig
  3. Threats in Latin American and Caribbean countries: How do inequality and the asymmetries of rules affect tax morale? By Mariana Gerstenblüth; Natalia Melgar; Juan Pablo Pagano; Máximo Rossi

  1. By: Diego Battiston (CEDLAS, Universidad de La Plata); Guillermo Cruces (CEDLAS, Universidad de La Plata and CONICET, Argentina); Luis Felipe Lopez-Calva (UNDP, Regional Bureau for Latin America and the Caribbean.); Maria Ana Lugo (Department of Economics, University of Oxford); Maria Emma Santos (OPHI, University of Oxford and CONICET, Argentina)
    Abstract: This paper presents empirical results of a wide range of multidimensional poverty measures for: Argentina, Brazil, Chile, El Salvador, Mexico and Uruguay, for the period 1992–2006. Six dimensions are analysed: income, child attendance at school, education of the household head, sanitation, water and shelter. Over the study period, El Salvador, Brazil, Mexico and Chile experienced significant reductions of multidimensional poverty. In contrast, in urban Uruguay there was a small reduction in multidimensional poverty, while in urban Argentina the estimates did not change significantly. El Salvador, Brazil and Mexico together with rural areas of Chile display significantly higher and more simultaneous deprivations than urban areas of Argentina, Chile and Uruguay. In all countries, access to proper sanitation and education of the household head are the highest contributors to overall multidimensional poverty.
    Keywords: Multidimensional poverty measurement, counting approach, Latin America, Unsatisfied Basic Needs, rural and urban areas.
    JEL: D31 I32
    Date: 2009
  2. By: Luis F. Lopez-Calva (UNDP Regional Bureau for Latin America); Nora Lustig (Tulane University and Center for Global Development)
    Abstract: Between 2000 and 2006, the Gini coefficient declined in 12 of the 17 Latin American countries for which data are available. Why has inequality declined? Have the changes in inequality been driven by market forces such as the demand and supply for labor with different skills? Or have governments become more redistributive than they used to be, and if so, why? This paper attempts to answer these questions by focusing on the determinants of inequality in four countries: Argentina, Brazil, Mexico and Peru. The analysis suggests that the decline in inequality is accounted for by two main factors: (i) a fall in the earnings gap between skilled and low-skilled workers (through both quantity and price effects); and (ii) more progressive government transfers (monetary and in-kind transfers). Demographic factors, such as a change in the proportion of adults (and working adults) per household, have been equalizing but the magnitude of their contribution has been small by comparison. In Brazil, Mexico and Peru, the fall in earnings gap, in turn, is mainly the result of the expansion of basic education over the last couple of decades, which reduced inequality in attainment and made the returns to education curve less steep. It also results from the petering out of the unequalizing effect of skill-biased technical change in the 1990s associated with the opening up of trade and investment. In Argentina, the decline in earnings inequality seems to be associated with government policies that without the windfall of high commodity prices will be hard to sustain.
    Keywords: Income inequality, Latin America, wage gap, government transfers.
    JEL: O15 H53 J48
    Date: 2009
  3. By: Mariana Gerstenblüth (Department of Economics, State University, Uruguay); Natalia Melgar (Department of Economics, State University, Uruguay); Juan Pablo Pagano (Department of Economics, State University, Uruguay); Máximo Rossi (Department of Economics, State University, Uruguay)
    Abstract: Latin America is well known as the most inequitable region. As it is recognized, inequality and corruption perception weaken the way that political institutions works and the democratic system. Focusing on Latin American and Caribbean countries, we analyze what are the elements that shape tax morale. In particular, we analyze how the context influences on ethic decisions such as the predisposition to pay taxes. Our data source is the survey carried out in 2005 by Latinobarometro. In particular, our objective is to analyze how country performance is determining tax morale. To do so, we estimated four probit models including Gini index, Transparency International Corruption Perception Index and Gross Domestic Product per capita (GDPpc). As expected we found that some socio-demographic variables play a relevant role. Interestingly, we also found that, in this attitude, LAC countries do not register a gender bias. However, those are not our main contributions to the literature on the field. The most important results are linked with: 1) the level matters, GDPpc increases the probability that people have tax morale, 2) moreover, income distribution also influence on tax morale but in opposite direction and 3) corruption perception also reduces tax morale. Those results show that the quality of institutions matters and therefore, the way that democracy works play a relevant role.
    Keywords: Tax morale, corruption, inequality, democracy, microeconomic behaviour.
    JEL: H26 H73
    Date: 2009

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