nep-lam New Economics Papers
on Central and South America
Issue of 2024‒04‒15
eight papers chosen by

  1. Racial and Ethnic Inequality in Latin America By Telles, Edward E.; Bailey, Stanley R.; Davoudpour, Shahin; Freeman, Nicholas C.
  2. Fiscal Policy, Income Redistribution, and Poverty Reduction in Latin America By Lustig, Nora; Martinez Pabon, Valentina; Pessino, Carola
  3. Inequality of Opportunity and Intergenerational Persistence in Latin America By Brunori, Paolo; Ferreira, Francisco H. G.; Neidhöfer, Guido
  4. Labor Market Turnover and Inequality in Latin America By Menezes-Filho, Naercio Aquino; Narita, Renata
  5. Cash Transfers, Poverty, and Inequality in Latin America and the Caribbean By Stampini, Marco; Medellín, Nadin; Ibarrarán, Pablo
  6. Education Inequalities in Latin America and the Caribbean By Acevedo, Ivonne; Fernández, Raquel; Pagés, Carmen; Székely, Miguel
  7. The Political Economy of Redistribution and (in)Efficiency in Latin America and the Caribbean By Guizzo Altube, Matías; Scartascini, Carlos; Tommasi, Mariano
  8. Health Systems and Health Inequalities in Latin America By Bancalari, Antonella; Berlinski, Samuel; Buitrago, Giancarlo; García, María Fernanda; Mata, Dolores de la; Vera-Hernández, Marcos

  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 regions 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.
    Keywords: public policy;Economics of Minorities;Races;indigenous peoples;Immigrants;Education and Inequality;labor discrimination;Compensation;Labor Costs;Latin America and Caribbean;Socioeconomic inequality;race and ethnicity;antiracism policy
    JEL: J18 J15 I24 J7 J3 O54
    Date: 2023–10
  2. 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 D6 E62 H22 I32
    Date: 2023–10
  3. By: Brunori, Paolo; Ferreira, Francisco H. G.; Neidhöfer, Guido
    Abstract: How strong is the transmission of socio-economic status across generations in Latin America? To answer this question, we first review the empirical literature on intergenerational mobility and inequality of opportunity for the region, summarizing results for both income and educational outcomes. We find that, whereas the income mobility literature is hampered by a paucity of representative datasets containing linked information on parents and children, the inequality of opportunity approach which relies on other inherited and pre-determined circumstance variables has suffered from arbitrariness in the choice of population partitions. Two new data-driven approaches one aligned with the ex-ante and the other with the ex-post conception of inequality of opportunity are introduced to address this shortcoming. They yield a set of new inequality of opportunity estimates for twenty-seven surveys covering nine Latin American countries over various years between 2000 and 2015. In most cases, more than half of the current generations inequality is inherited from the past with a range between 44% and 63%. We argue that on balance, given the parsimony of the population partitions, these are still likely to be underestimates.
    Keywords: Equality of Opportunity;Intergenerational mobility;Latin America
    JEL: D31 I39 J62 O15
    Date: 2023–10
  4. By: Menezes-Filho, Naercio Aquino; Narita, Renata
    Abstract: This paper describes the patterns of worker turnover in selected Latin American countries and their implications for wage inequality. It documents a higher positive annual wage growth rate for job to job changers compared to stayers, due to turnover capturing the immediate gains from search behavior in the short run. Younger workers benefit relatively more from the positive effects of job to job changes, as expected. We also show that transitions are relatively higher within the informal sector for most countries, and particularly so for workers without college education. Moreover, total job separations and transitions from formal into informal employment occur more often among low-skill and young individuals. Next, the paper analyzes wage growth by percentiles for all workers and job-to-job movers for each country over a more extended period. We find that job to job changes are inequality reducing in the short run, consistent with search gains associated with turnover exhausting more rapidly for high-paid workers. In contrast, we find that human capital effects dominate the search effects in the long run, as human capital accumulates over time. Thus, long-run wage growth is lower for job changers than for stayers, so that, while in the short run the search effects tend to dominate those of human capital, in the long run the opposite occurs. As unskilled workers change jobs more frequently, this suggests that job changes are inequality increasing in the long run. A potential explanation for limited wage growth in Latin American economies may include high informality rates. Policies to reduce wage inequality should focus on improving the conditions for positive turnover towards better investment and, thus, higher-quality jobs.
    Keywords: mobility;Unemployment;Vacancies and Immigrant Workers;wages;Compensation and Labor Costs;Human Resource Management;Income distribution
    JEL: J6 J3 J46 O15
    Date: 2023–10
  5. 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 under-coverage 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: 2023–10
  6. By: Acevedo, Ivonne; Fernández, Raquel; Pagés, Carmen; Székely, Miguel
    Abstract: Education is a crucial asset for a countrys economic prospects and for its inhabitants. In addition to its direct impact on growth via the accumulation of human capital, it is a critical ingredient in producing an informed citizenry, enhancing their ability to obtain and exert human and political rights and their facility to adapt to changing environments (generated by, e.g., technological or climatic change) among other benefits. In this chapter, we study education inequality in LAC (both in quantity and quality), assess how it emerges and amplifies or dampens existing inequalities, and examine the interaction of education inequality with other forms of inequality, primarily income and labor market outcomes. Our analysis is based on primary data from multiple sources.
    Keywords: Education and Inequality;Education and Economic Development;returns to education
    JEL: I24 I25 I26
    Date: 2023–10
  7. By: Guizzo Altube, Matías; 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 dont 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: 2023–10
  8. By: Bancalari, Antonella; Berlinski, Samuel; Buitrago, Giancarlo; García, María Fernanda; Mata, Dolores de la; Vera-Hernández, Marcos
    Abstract: The present paper outlines measures of disparity in healthcare access and health outcomes, drawing from the standardized metrics introduced in one related study (Bancalari et al., 2023). Beveridge countries seem to be less unequal than Bismarckian countries. Yet, there is no strong pattern in inequalities across our taxonomy, indicating certain unobserved variables of the health system might wield more influence over health and health care disparities than the overarching features defining our health system taxonomy. Finally, it will be analyzed how differences in healthcare use and health outcomes within countries are related to whether individuals benefit from either the contributory or the non-contributory subsystems and assess main factors explaining such differences by means of Oaxaca decompositions.
    Keywords: Health Insurance;Public and Private;Health and Inequality;Health and Economic Development
    JEL: I13 I14 I15
    Date: 2023–10

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