nep-lam New Economics Papers
on Central and South America
Issue of 2022‒10‒10
three papers chosen by

  1. The Impact of COVID-19 on Living Standards: Addressing the Challenges of Nowcasting Unprecedented Macroeconomic Shocks with Scant Data and Uncharted Economic Behavior By Nora Lustig; Valentina Martinez Pabon; Federico Sanz; Stephen Younger
  2. Universal Basic Income, Taxes, and the Poor By Nora Lustig; Valentina Martinez Pabon
  3. Inequality and human development: The role of different parts of the income distribution By David Castells-Quintana; Carlos Gradín; Vicente Royuela

  1. By: Nora Lustig (Tulane University); Valentina Martinez Pabon (Yale University); Federico Sanz (Equity Institute and the World Bank); Stephen Younger (Equity Institute)
    Abstract: We present a methodological approach with relatively low information requirements to quantify the impact of large, unprecedented macroeconomic shocks like the COVID-19 pandemic on living standards across the income distribution. The approach can be produced quickly and, contrary to other "fast-delivery" exercises, does not assume that income losses are proportional across the income distribution, a feature that is critical to understanding the impact on poverty and inequality. Our method is sufficiently flexible to refine the projected effects of the shock as more information becomes available. We illustrate with data from the four largest countries in Latin America: Argentina, Brazil, Colombia, and Mexico, and discuss the estimated effect of COVID-19 on inequality and poverty. We also present the guidelines for adapting our framework to different countries and economic shocks.
    Keywords: COVID-19, inequality, poverty, mobility, microsimulations, Latin America
    JEL: C63 D31 E27 I32 I38
    Date: 2022–09
  2. By: Nora Lustig (Tulane University); Valentina Martinez Pabon (Yale University)
    Abstract: A Universal Basic Income (UBI) is often seen as an attractive policy option to replace existing targeted transfer and subsidy programs. However, in a budget-neutral switch to a UBI there is a trade-off between the generosity of the universal transfer, and hence its poverty impact, and the implied increase in tax burden. We summarize our results for fourteen low- and middle-income countries. We find that, with the exception of Russia, a poverty reducing, budget-neutral UBI would entail a significant increase in the net tax burden of top deciles. The efficiency cost and political resistance for such a policy would likely be too high.
    Keywords: universal basic income, microsimulation, inequality, poverty, tax incidence
    JEL: D31 D63 H22 I32 I38
    Date: 2022–09
  3. By: David Castells-Quintana; Carlos Gradín; Vicente Royuela
    Abstract: In this paper we reassess the relationship between inequality and human development, focusing on the differential effect associated with the concentration of national income at different parts of the income distribution. To do so, we rely on a large global panel of countries over the last decades which includes information on economic and human development as well as detailed information on the distribution of income within countries. We take advantage of detailed distributive data consistent across countries and over time (World Income Inequality Database companion datasets).
    Keywords: Human development, Inequality, Institutions, Income distribution
    Date: 2022

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