nep-lam New Economics Papers
on Central and South America
Issue of 2016‒10‒30
seven papers chosen by
Maximo Rossi
Universidad de la República

  1. Inequality and Fiscal Redistribution in Middle Income Countries: Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa By Nora Lustig
  2. Fiscal Policy, Inequality and the Poor in the Developing World By Nora Lustig
  3. Social Spending, Taxes and Income Redistribution in Ecuador By Freddy Paúl Llerena Pinto; M. Cristhina Llerena Pinto; M. Andrea Llerena Pinto
  4. El Impacto de los Impuestos y el Gasto Social en la Desigualdad y la Pobreza en El Salvador By Margarita Beneke; Nora Lustig; Jose Andres Oliva
  5. Public Transfers and Poverty Reduction: An Evaluation of Program Contribution to the Exit Rate from Poverty to Children and the Elderly By Marisa Bucheli
  6. Civil Conflict and Voting Behavior: Evidence By Jorge Gallego
  7. The Skills Development Challenge in Latin America: Diagnosing the Problems and Identifying Public Policy Solutions By A. Fiszbein; C. Cosentino; B. Cumsille

  1. By: Nora Lustig (Department of Economics, Tulane University)
    Abstract: This paper examines the redistributive impact of fiscal policy for Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa using comparable fiscal incidence analysis with data from around 2010. The largest redistributive effect is in South Africa and the smallest in Indonesia. Success in fiscal redistribution is driven primarily by redistributive effort (share of social spending to GDP in each country) and the extent to which transfers/subsidies are targeted to the poor and direct taxes targeted to the rich. While fiscal policy always reduces inequality, this is not the case with poverty. Fiscal policy increases poverty in Brazil and Colombia (over and above market income poverty) due to high consumption taxes on basic goods. The marginal contribution of direct taxes, direct transfers and in- kind transfers is always equalizing. The marginal effect of net indirect taxes is unequalizing in Brazil, Colombia, Indonesia and South Africa. Total spending on education is pro-poor except for Indonesia, where it is neutral in absolute terms. Health spending is pro-poor in Brazil, Chile, Colombia and South Africa, roughly neutral in absolute terms in Mexico, and not pro-poor in Indonesia and Peru. Length: 34 pages
    Keywords: fiscal incidence, social spending, inequality, developing countries
    JEL: H22 D31 I3
    Date: 2015
  2. By: Nora Lustig (Department of Economics, Tulane University)
    Abstract: Using comparable fiscal incidence analysis, this paper examines the impact of fiscal policy on inequality and poverty in twenty-five countries for around 2010. Success in fiscal redistribution is driven primarily by redistributive effort (share of social spending to GDP in each country) and the extent to which transfers/subsidies are targeted to the poor and direct taxes targeted to the rich. While fiscal policy always reduces inequality, this is not the case with poverty. Fiscal policy increases poverty in four countries using US$1.25/day PPP poverty line, in 8 countries using US$2.50/day line, and 15 countries using the US$4/day line (over and above market income poverty). While spending on pre-school and primary school is pro-poor (i.e., the per capita transfer declines with income) in almost all countries, pro-poor secondary school spending is less prevalent, and tertiary education spending tends to be progressive only in relative terms (i.e., equalizing but not pro-poor). Health spending is always equalizing except for Jordan.
    Keywords: fiscal incidence, social spending, inequality, poverty, Developing Countries.
    JEL: H22 H5 D31 I3
    Date: 2016
  3. By: Freddy Paúl Llerena Pinto (Ecuadorian Association of Population Studies and ECONOMICA CIC. Research Center); M. Cristhina Llerena Pinto (ECONOMICA CIC. Research Center); M. Andrea Llerena Pinto (ECONOMICA CIC. Research Center)
    Abstract: An analysis of the redistributive effect of fiscal policy on poverty reduction and income distribution in Ecuador using household survey data is described. Due to the detail and depth of the database, it is possible to single out the effects of direct transfers and taxes, indirect taxes and subsidies, and the use of public education and health services. Standard incidence analysis shows that direct taxes are progressive. Nonetheless, they have a negligible effect on both income distribution and poverty. Indirect taxes are progressive as well, due to several exemptions from the value added tax. Social spending on direct transfers, education, and health is progressive in absolute terms, except for secondary education, wherein it is neutral. Ecuador ranks first in inequality reduction effectiveness and second in poverty reduction effectiveness when compared to six other Latin American countries. However, it ranks only fourth in overall inequality and poverty reduction.
    Keywords: Poverty, Inequality, Transfers and Taxes, Government Benefits, Ecuador
    JEL: H22 D31 I3
    Date: 2015
  4. By: Margarita Beneke (FUSADES); Nora Lustig (Department of Economics, Tulane University); Jose Andres Oliva (FUSADES)
    Abstract: Desarrollamos un ejercicio de incidencia fiscal para estimar el efecto de los impuestos, el gasto social y los subsidios en la desigualdad y la pobreza en El Salvador, utilizando la metodología del proyecto “Compromiso por la Equidad”. Los impuestos son progresivos, pero dado su tamaño, el impacto es imitado. Las transferencias directas se concentran en hogares pobres pero su presupuesto es pequeño por lo que su incidencia es limitada; una porción significativa de los subsidios llegan a hogares en los deciles superiores de ingreso, por lo que, aunque su presupuesto es mayor, su impacto es pequeño. El componente que tiene el mayor efecto sobre la desigualdad es el gasto de educación y salud. Como resultado, la incidencia de la política fiscal es limitada y resulta pequeña al comparar con otros países con nivel similar de ingreso por habitante. En este sentido, hay espacio para mejorar con los recursos actuales.
    Keywords: Desigualdad, Pobreza, Incidencia Fiscal, Impuestos, Gasto Social, El Salvador
    JEL: H22 I38 D31
    Date: 2015
  5. By: Marisa Bucheli (Department of Economics, Universidad de la República in Uruguay)
    Abstract: In Uruguay, social spending reduces poverty. The aim of this paper is to compare its performance for children and the elderly. The main motivation is that in Uruguay, as in the rest of Latin America, poverty affects mostly children, even after the recent period of fall in poverty. The methodological strategy consists on the estimation of the effect of transfers on the poverty exit rate and its decomposition in the coverage effect and the amount effect. The main conclusions are as follows: a) households with children (elder) are the less (more) likely to leave poverty, b) the reason is the per capita amount of the transfer received by each household type and not the coverage, c) the effectiveness of the amount is lower for households with children than with elders because poverty is more intense for the former, d) households in the same poverty conditions are less likely to be lifted out of poverty when they are composed by children than by elders because the conditional transfers directed to children are lower than the assistance pensions for the elders.
    Keywords: poverty, public transfers, social spending, children
    JEL: I32 I38 J13
    Date: 2015
  6. By: Jorge Gallego
    Abstract: What are the effects of war on political behavior? Colombia is an interesting case in which conflict and elections coexist, and illegal armed groups intentionally affect electoral outcomes. Nonetheless, groups use different strategies to alter these results. This paper argues that differential effects of violence on electoral outcomes are the result of deliberate strategies followed by illegal groups, which in turn, are a consequence of military conditions that differ between them. Using panel data from Senate elections from 1994 to 2006 and an instrumental variable approach to address potential endogeneity concerns, this paper shows that guerrilla violence decreases turnout, while paramilitary violence has no effect on participation, but reduces electoral competition and benefits non-traditional third parties. FARC violence is significantly higher during election years, while paramilitary violence is lower. This is consistent with the hypothesis that the guerrilla’s strategy is to sabotage elections, while paramilitaries establish alliances with certain candidates
    Keywords: Conflicto armado, Elecciones, Grupos armados ilegales
    Date: 2016–09–24
  7. By: A. Fiszbein; C. Cosentino; B. Cumsille
    Abstract: This paper describes key drivers of the skills development problem in Latin America and offers recommendations for leveraging policy tools to address the challenge.
    Keywords: Latin America, Skills, Employment, STEM, Economic growth, Vocational education, Secondary education
    JEL: I F Z

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