nep-lam New Economics Papers
on Central and South America
Issue of 2023‒12‒11
seven papers chosen by

  1. Racial and ethnic inequality in Latin America By Telles, Edward E.; Bailey, Stanley R.; Davoudpour, Shahin; Freeman, Nicholas C.
  2. Trade shocks and social mobility: The intergenerational effect of import competition in Brazil By César, Andrés; Ciaschi, Matías; Falcone, Guillermo; Neidhöfer, Guido
  3. Fiscal policy, income redistribution, and poverty reduction in Latin America By Lustig, Nora; Martinez Pabon, Valentina; Pessino, Carola
  4. Cash transfers, poverty, and inequality in Latin America and the Caribbean By Stampini, Marco; Medellín, Nadin; Ibarrarán, Pablo
  5. Rare macroeconomic disasters and lost decades in Latin America: The COVID-19 experience in a historical context By Jose F. Ursua; Alejandro Werner
  6. Clases sociales y futuro del trabajo en Chile By Egaña-delSol, Pablo; Gutiérrez Crocco, Francisca; Contreras, Dante; Paredes, Valentina; Serrudo, Luis
  7. The political economy of redistribution and (in)efficiency in Latin America and the Caribbean By Altube, Matias Guizzo; Scartascini, Carlos; Tommasi, Mariano

  1. By: Telles, Edward E.; Bailey, Stanley R.; Davoudpour, Shahin; Freeman, Nicholas C.
    Abstract: This chapter examines socioeconomic inequality in Latin America through the lens of race and ethnicity. We primarily use national census data from the International Public Use Micro Data Sample (IPUMS). Since censuses use inconsistent measures of race and ethnicity, we also draw on two additional measures from the Latin American Public Opinion Project (LAPOP). Unlike censuses, LAPOP data offer a more consistent ethnoracial scheme across countries and a unique interviewer-rated skin color measure. Our study shows that black and indigenous populations and those with darker skin color experience educational, income, and occupational disadvantages, even after controlling for their social origins. However, inequality and hierarchical ordering of Afro-descendants, indigenous peoples, mestizos, whites, and others vary across countries. We include an extended examination of educational inequality in Brazil, the region’s largest country. The chapter concludes with an exploration of public policy approaches to address black and indigenous disadvantage across Latin America while also highlighting the case of Brazil, where targeted antiracism policy is most advanced.
    JEL: I30
    Date: 2023–11–01
  2. By: César, Andrés; Ciaschi, Matías; Falcone, Guillermo; Neidhöfer, Guido
    Abstract: This paper investigates whether the impact of trade shocks on employment and wages persists across generations. Using survey data with retrospective information on parental employment, we study the causal effect of increased Chinese import competition in Brazilian industries on individuals with differently exposed fathers. Results show that several years after the shock, children of more exposed fathers have lower education and earnings, lower chances of formal jobs, and are more likely to rely on social assistance. These effects are substantially stronger for children from disadvantaged background, indicating that the shock had a negative impact on intergenerational mobility.
    Keywords: Import competition, Education, Social Mobility, Incomes, Brazil
    JEL: I24 J62 F14 F16 J23
    Date: 2023
  3. By: Lustig, Nora; Martinez Pabon, Valentina; Pessino, Carola
    Abstract: This paper uses standard fiscal incidence analysis to study how much income redistribution and poverty reduction are accomplished through the fiscal system in eighteen Latin American and Caribbean (LAC) countries. We show there is considerable heterogeneity in the income inequality and poverty-reducing power of LAC fiscal systems. While all LAC fiscal systems reduce income inequality, fiscal systems in nine LAC countries are poverty-increasing, and this startling characteristic has not improved over time. When analyzing specific fiscal elements, we find that direct taxes, direct transfers, and in-kind transfers are all equalizing, and spending on education and health is often pro-poor. Moreover, contrary to expectations, indirect taxes and subsidies are more frequently equalizing than unequalizing.
    Keywords: fiscal policy; inequality; poverty; Latin America
    JEL: D31 D60 E62 H22 I32
    Date: 2023–11–01
  4. By: Stampini, Marco; Medellín, Nadin; Ibarrarán, Pablo
    Abstract: We assess the non-contributory cash transfer systems in 17 Latin American and Caribbean countries to identify factors that keep them from reducing poverty and inequality. To perform this assessment, we analyze three dimensions of size (number of beneficiaries, size of transfer per beneficiary, and size of total budget) and three dimensions of targeting (coverage, leakage, and quality of demographic targeting). We identify 67 programs, which fall into three broad categories: conditional cash transfers, non-contributory pensions, and other transfers. We use an international poverty line of 6.85 dollars PPP per day (similar to the average national poverty line of upper middle-income countries), and adjust survey weights to correct for the fact that household survey data often underestimates the official number of transfer beneficiaries compared to administrative sources. We show that two key factors limit the effect of cash transfer programs on poverty and inequality: the small size of their transfers and their historic undercoverage of the population living in poverty. Transfers represent approximately 33% of the poverty gap. Additionally, only 55% of the population in poverty benefits from these programs. Forty-one percent of people living in households that receive at least one non-contributory transfer are above the poverty line. Children and Indigenous people are underrepresented, relative to their poverty rate, in the rosters of beneficiaries. Brazil, Suriname, Argentina, Chile, Costa Rica, Panama, and Uruguay consistently earn the highest scores across the assessment categories. Our policy recommendations include: (i) intensifying efforts to increase coverage among the poor, using modern poverty mapping techniques along with active, on-the-ground searches and (ii) recertifying eligibility for transfer programs more frequently by using highly interoperable administrative data and social registries. Both efforts are needed to create more efficient income protection systems that address both structural and transient poverty.
    Keywords: cash transfer programs; conditional cash transfers; non-contributory pensions; coverage; leakage; targeting; social protection; Latin America and the Caribbean
    JEL: I38 H53
    Date: 2023–11–01
  5. By: Jose F. Ursua (Dodge & Cox); Alejandro Werner (Peterson Institute for International Economics)
    Abstract: COVID-19 led to the single largest year-over-year decline in Latin America's GDP per capita in more than 100 years. Although the region has endured several macroeconomic shocks before, mostly related to financial dislocations, none has been so deep and synchronized. The authors' analysis of the COVID-19 experience for the region and eight economies with available historical data reveals the extent of the damage. Through 2020, four economies suffered "rare disasters" (cumulative contractions by 10 percent or more): Argentina, Mexico, Peru, and Venezuela. Tragically, Venezuela's macroeconomic collapse matches the largest contraction registered by any country in modern history. In addition, Argentina, Brazil, Mexico, and Venezuela, together with the Latin America regional aggregate, are undergoing "lost decades" (prolonged periods of stagnation), which are unlikely to end soon. While Brazil, Chile, Colombia, and Uruguay did relatively better with COVID-19, they still suffered significant recessions, and their economic performance has lost steam compared with prior decades. Overall, COVID-19 will cast a long shadow in Latin America even as economic growth rebounds. The shock also offers opportunities for a reset, with the appropriate set of macroeconomic policies, advances on microeconomic reforms, and the strengthening of institutions. Whether this set of policies will materialize in the midst of challenging political contexts remains an open question.
    Keywords: Rare macroeconomic disasters, economic history of Latin America, COVID-19, lost decades, long-run growth
    JEL: F43 O47 N16
    Date: 2023–09
  6. By: Egaña-delSol, Pablo; Gutiérrez Crocco, Francisca; Contreras, Dante; Paredes, Valentina; Serrudo, Luis
    Abstract: El propósito de este estudio es proporcionar análisis y datos actuales sobre el estado del mercado laboral en Chile y los riesgos que plantea el futuro del trabajo en este país. En el informe se hace especial hincapié en determinar los sectores de la población que son vulnerables a la automatización, considerando las características socioeconómicas de las personas y las distintas clases sociales. Se discuten, asimismo, los desafíos que supone la automatización para los sindicatos y su relación con las empresas. Al respecto, se sugiere que los sindicatos en Chile se encuentran en una posición particularmente débil para asumir los retos que impone la transformación tecnológica del trabajo. Por último, se ofrece un conjunto de recomendaciones útiles para orientar las políticas ante las nuevas dinámicas del mercado laboral chileno.
    Date: 2023–10–02
  7. By: Altube, Matias Guizzo; Scartascini, Carlos; Tommasi, Mariano
    Abstract: Predominant views on the political economy of Latin America and the Caribbean tend to emphasize that elite domination helps to understand the high levels of inequality. The contemporary fiscal version of that assertion goes something like “the rich are powerful and they don't like taxes, hence we have little taxation and little redistribution.” That is a good approximation to the reality of some countries, but not of others. There are cases in the region where there are high levels of taxation and non-negligible redistributive efforts. But in some of those cases such redistribution comes hand in hand with macroeconomic imbalances, high inflation, low growth, as well as low-quality public policies. When redistributive efforts are short-sighted and attempted with inefficient public policies, fiscal imbalances lead to inflation and to frequent macroeconomic crises that reduce growth and thwart poverty reduction efforts. The argument of this paper is that there are various possible political configurations (including elite domination and populism among others) that lead to different economic and social outcomes (including the degree of redistribution and others). We postulate that each configuration of social outcomes emerges out of different political economy equilibria. Different countries in the region will be in different political economy equilibria, and hence will have different combinations of political economy syndromes and of socioeconomic outcomes. In this paper, we characterize the countries regarding the size of the public sector, how much fiscal redistribution there is, and how efficient this public action is. We summarize various strands of literature that attempt to explain some elements of that fiscal vector one at a time; and then attempt to provide a simple framework that might explain why different countries present different configurations of size, distributiveness, and efficiency.
    Keywords: inequality; redistribution; political economy; growth; poverty
    JEL: H20 H23 E62 P16
    Date: 2023–11–01

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