nep-lam New Economics Papers
on Central and South America
Issue of 2019‒10‒14
three papers chosen by
Maximo Rossi
Universidad de la República

  1. Poverty Alleviation Strategies Under Informality: Evidence for Latin America By Martín Caruso; Sebastian Galiani; Federico Weinschelbaum
  2. On Latin American Populism, And Its Echoes Around the World By Sebastian Edwards
  3. What Works for Active Labor Market Policies? By Eduardo Levy Yeyati

  1. By: Martín Caruso; Sebastian Galiani; Federico Weinschelbaum
    Abstract: Strategies based on growth and inequality reduction require a long-run horizon, and this paper therefore argues that those strategies need to be complemented by poverty alleviation programs. With regards to such programs, informality in Latin America and the Caribbean is a primary obstacle to carry out means testing income-support programs, and countries in the region have therefore mostly relied on proxy means testing mechanisms. This paper studies the relative effectiveness of these and other mechanisms by way of a formal model in which workers choose between job opportunities in the formal and informal sectors. Although the means testing mechanism allows for a more pro-poor design of transfers, it distorts labor decisions made by workers. On the other hand, (exogenous) proxy means testing does not cause distortions, but its pro-poor quality is constrained by the power of observable characteristics to infer income levels. However, since taxation is necessary to fund programs, redistribution becomes less effective, especially for programs other than means testing. The paper concludes by discussing the implications of these results for the design of more efficient targeting programs.
    JEL: I38 J38 O54
    Date: 2019–10
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:26339&r=all
  2. By: Sebastian Edwards
    Abstract: In this paper I discuss the ways in which populist experiments have evolved historically. Populists are charismatic leaders that use a fiery rhetoric to pitch the interests of “the people” against those of banks, large firms, multinational companies, the IMF, and immigrants. Populists implement redistributive policies that violate the basic laws of economics, and in particular budget constraints. Most populist experiments go through five distinct phases that span from euphoria to collapse. Historically, the vast majority of populist episodes end up with declines in national income. When everything is over, incomes of the poor and middle class tend to be lower than when the experiment was launched. I argue that many of the characteristics of traditional Latin American populism are present in more recent manifestations from around the globe.
    JEL: D71 D72 D74 D78 E52 E62 N16
    Date: 2019–10
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:26333&r=all
  3. By: Eduardo Levy Yeyati
    Abstract: The past 5 years have witnessed a flurry of RCT evaluations that shed new light on the impact and cost effectiveness of Active Labor Market Policies (ALMPs) aiming to improve workers´ access to new jobs and better wages. We report the first systematic review of 102 RCT interventions comprising a total of 652 estimated impacts. We find that (i) a third of these estimates are positive and statistically significant (PPS) at conventional levels; (ii) programs are more likely to yield positive results when GDP growth is higher and unemployment lower; (iii) programs aimed at building human capital, such as vocational training, independent worker assistance and wage subsidies, show significant positive impact, and (iv) program length, monetary incentives, individualized follow up and activity targeting are all key features in determining the effectiveness of the interventions.
    Keywords: vocational training, labor policies, wage subsidies, randomized controlled trials
    JEL: J21 J48 E24
    Date: 2019–07
    URL: http://d.repec.org/n?u=RePEc:cid:wpfacu:358&r=all

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