nep-lam New Economics Papers
on Central and South America
Issue of 2017‒11‒05
two papers chosen by

  1. An Index of Regulatory Practices for Financial Inclusion in Latin America: Enablers, Promoters, and Preventers By Liliana Rojas-Suarez; Lucía Pacheco
  2. The Agricultural Wage Gap: Evidence from Brazilian Micro-data By Jorge Alvarez

  1. By: Liliana Rojas-Suarez (Center for Global Development); Lucía Pacheco (BBVA)
    Abstract: This paper constructs an index of regulatory quality for improving financial inclusion for the purpose of assessing and comparing the quality of rules and regulations in a sample of eight Latin American countries. The index comprises 11 regulatory practices classified into three categories: those that determine the overall quality of the financial environment where providers of financial services that meet the needs of the poor operate (the enablers); those that deal with specific types of market frictions and regulate the provision of specific financial products and services (the promoters) to large segments of the population; and those that, albeit unintentionally, create distortions and barriers that adversely affect financial inclusion (the preventers). An important novelty of the index is that the assessment of individual regulatory practices not only takes into account accepted standards, but also recognizes that there are important interactions between regulations for financial inclusion as well as between these regulations and other type of government interventions. Among the countries in the sample, by mid-2017, Peru ranked first in this index, followed closely by Mexico. Chile, Colombia, Paraguay, and Uruguay obtained lukewarm results, although there were wide differences among these countries’ individual results. Argentina and Brazil were the two countries with the lowest overall scores. An additional contribution of the paper is that, throughout the analysis, countries’ specific areas of strengths and weakness in financial regulatory practices for improving financial inclusion are identified.
    Keywords: financial inclusion, financial regulation, Latin America
    JEL: G21 G22 G23 I25 K21 N26 O10
    Date: 2017–10–26
  2. By: Jorge Alvarez (IMF)
    Abstract: A key feature of developing economies is that wages in the agricultural sector are significantly below those of other sectors. Using a panel data set on the universe of formal workers in Brazil, I use information on workers that switch sectors to decompose the drivers of this inter-sector gap. I find that most of the gap between sectors is explained by unobservable differences in the skill composition of workers, as opposed to differential pay of workers with similar skills. The evidence speaks against the existence of large short-term wage gains from the reallocation of workers out of agriculture and favors recently proposed Roy models of inter-sector sorting as drivers of lower average wages in agriculture. A calibrated model of worker sorting can account for the wage gap observed in 1996 Brazil and a share of both the wage gap decline and the diminishing worker participation in agriculture observed during the period between 1996 and 2013.
    Date: 2017

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