Areas: MF&P

Abstract

Download

Areas: EPP

Abstract

Download

Areas: GE - MDG

Once the current political crisis in Yemen has been resolved, it will be ever more urgent to speed up progress, including Millennium Development Goal (MDG) achievements. Drawing on simulations with the Maquette for MDG Simulations (MAMS), a model for strategy analysis, and a linked microsimulation model, this paper addresses Yemen’s MDG challenges. A first simulation set considers scaled-up government actions with the aim of fully achieving the 2015 international MDG targets with required additional financing from foreign or domestic sources. The main finding is sobering but not surprising: given the required expansion of MDG-related services, on-time achievement of key MDG targets does not appear to have been a realistic objective even if the government, hypothetically, would have expanded services with grant aid financing starting from 2005; macroeconomic stability, government efficiency, and the production of tradables would all have suffered due to the size of spending and aid increases as well as the resulting real exchange rate appreciation. The results suggest that countries, instead of relying on international targets, should set MDG targets grounded in their own reality. In light of these results, the authors designed a second simulation set that is focused on the remaining period up to 2015, and on what may be feasible once the current conflict has been settled. The simulations introduce moderate increases in foreign aid or government allocative efficiency. The government uses the resulting fiscal space for spending and service expansion in infrastructure and human development without losses in productive efficiency. The results suggest that, under these conditions, substantial improvements could still be achieved.

JEL Code: C68, E62, O15

Download

Areas: P&I - EPP

The objective of this paper is to briefly mention the traditional methods used to assess the distributional impact of public policies, and comment on some of the most relevant breakthroughs over the last two decades. The study focuses on the evaluation of social programs, not considering other kind of public interventions and their cost. The document synthesizes international evidence, providing some results for the case of Argentina.

Download

Areas: P&I

This paper presents an analysis of the Kuznets relationship in Latin America in order to characterize the change in the trend of income inequality in the recent years. Using household surveys, a panel of Latin American regions with data on inequality and development is constructed, with higher quality than those previously used in the empirical literature on the Kuznets hypothesis. Changes in inequality are associated with multiple observable factors related to development such as economic growth, the level of human capital, openness, urbanization and economic stability, among others, with a multiplicity of determinants that are not easily measured by empirical work. The incorporation of conditional quantile analysis allows studying whether this set of non-measurable factors can lead to heterogeneous paths of development and equity. Results show that the practical significance of the Kuznets relationship depends on the interaction with the rest of the variables related to development. Once all these factors are incorporated into the analysis, the findings suggest that it is unlikely that the observed change in the trend in inequality in Latin America is related to economic growth.

Download

Areas: P&I - E&H

This paper makes use of data provided by the Program for International Student Assessment (PISA) in order to provide a quantification of the level and evolution of school segregation by socioeconomic status in the world, and contribute to the discussion of its determinants. Results suggest that Latin America is a region with high relative school segregation, where segregation between public and private schools is relevant. Findings also indicate that school segregation by socioeconomic status is higher in those countries and periods in which inequality and enrollment in private schools are higher, while certain patterns of geographic localization also play a significant role.

JEL Code: D63, I24

Download

Areas: P&I - E&H

It has been argued that a factor behind the decline in income inequality in Latin America in the 2000s was the educational upgrading of its labor force. Between 1990 and 2010, the proportion of the labor force in the region with at least secondary education increased from 40 to 60 percent. Concurrently, returns to secondary education completion fell throughout the past two decades, while the 2000s saw a reversal in the increase in the returns to tertiary education experienced in the 1990s. This paper studies the evolution of wage differentials and the trends in the supply of workers by educational level for 16 Latin American countries between 1990 and 2000. The analysis estimates the relative contribution of supply and demand factors behind recent trends in skill premia for tertiary and secondary educated workers. Supply side factors seem to have limited explanatory power relative to demand side factors, and are only relevant to explain part of the fall in wage premia for high school graduates. Although there is significant heterogeneity in individual country experiences, on average the trend reversal in labor demand in the 2000s can be partially attributed to the recent boom in commodity prices that could favor the unskilled (non tertiary educated) workforce, although employment patterns by sector suggest that other within sector forces are also at play, such as technological diffusion or skill mismatches that may reduce the labor productivity of highly educated workers.

Download

Areas: P&I

This paper studies inequality of opportunity on earnings among young argentines. It aims to contribute to measure this phenomenon and it uses information from household surveys conducted in Argentina from 2004 to the present. Sample selection into employment and co-residence selection is dealt with a multiple selection model. We consider some econometrics methods implemented by Bourguignon, Ferreira y Menéndez (2007) to measure the degree of inequality of opportunity. The results suggest that while income inequality has decreased there seems no clear pattern of inequality of opportunity, moreover in recent periods it has increased.

Download

Areas: P&I - E&H

We use recent unconditional quantile regression methods (UQR) to study the distributive effects of education in Argentina. Standard methods usually focus on mean effects, or explore distributive effects by either making stringent modeling assumptions, and/or through counterfactual decompositions that require several temporal observations. An empirical case shows the flexibility and usefulness of UQR methods. Our application for the case of Argentina shows that education contributed positively to increased inequality in Argentina, mostly due to the effect of strongly heterogeneous effects of education on earnings.

JEL Code: C21, I24, I31, D3

Download

Areas: LM&E - T&P

This paper provides new evidence on the impacts of trade reforms on wages. We first introduce a model of trade that combines a non-competitive wage setting mechanism due to unions with a factor abundance hypothesis. The predictions of the model are then econometrically investigated using Argentine data. Instead of achieving identification by comparing industrial wages before and after one episode of trade liberalization, our strategy exploits the recent historical record of policy changes adopted by Argentina: from significant protection in the early 1970s, to the first episode of liberalization during the late 1970s, then back to a slowdown of reforms during the 1980s, and finally to the second episode of liberalization in the 1990s. These swings in trade policy represent broken trends in trade reforms that we can compare with observed trends in wages and wage inequality. We use unusual historical data sets of trends in tariffs, wages, and wage inequality to examine the structure of wages in Argentina and to explore how it is affected by tariff reforms. We find that i) trade liberalization, ceteris paribus, reduces wages; ii) industry tariffs reduce the industry skill premium; iii) conditional on the structure of tariffs at the industry level, the average tariff in the economy is positively associated with the aggregate skill premium. These findings suggest that the observed trends in wage inequality in Latin America can be reconciled with the Stolper-Samuelson predictions in a model with unions.

JEL Code: F14, F16

Download