Down and out or up and in? Polarization-based measures of the middle class for Latin America

This document presents a systematic review of empirical approaches to the identification and measurement of the middle class as the concept is used in the applied literature. It then presents an arguably less arbitrary definition of the middle class which is based on sound principles of distributional analysis and derived from income polarization measures. The document illustrates the differences between the existing approaches and the proposed methodology with a comparative analysis of the extent and evolution of the middle classes since the early 1990s in six Latin American countries. The polarization-based measurements of the middle class are shown to exhibit a greater degree of homogeneity in terms of some key socioeconomic characteristics than other measures employed in the literatureFil: Cruces, Guillermo Antonio. Universidad Nacional de La Plata. Facultad de Ciencias Económicas. Departamento de Ciencias Económicas. Centro de Estudios Distributivos Laborales y Sociales; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; ArgentinaFil: Lopez Calva, Luis Felipe. Banco Mundial; Estados UnidosFil: Battistón, Diego Ezequiel. Universidad Nacional de La Plata. Facultad de Ciencias Económicas. Departamento de Ciencias Económicas. Centro de Estudios Distributivos Laborales y Sociales; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; Argentin

Poverty, income fluctuations and work: Argentina, 1991-2002.

This thesis presents results on the economics of poverty and labour markets, using data from Argentina in the 1991-2002 period for empirical applications. The thesis is divided into two Parts. The first Part concentrates on poverty and the effects of income fluctuations on well-being. The 1995-2002 period in Argentina was characterised by recurring economic crises that produced large fluctuations in household income. The empirical applications of this Part rely on a rotating panel dataset from the Greater Buenos Aires region to study the effects of this variability. The first Chapter introduces the data and its characteristics, and describes the economic context of the period. The second Chapter defines a family of indicators of well-being, based on the theory of choice under uncertainty, that account for the negative impact of income fluctuations on household welfare. Chapters 3 and 4 present risk adjusted measures of income and the transient-chronic poverty decomposition, respectively, two methodologies for the study of poverty with panel data which are related to the indicators defined in Chapter 2. In Chapters 3 and 4, the household characteristics associated with income fluctuations and their impact on well-being are identified through regression analysis. Part II deals with fertility and women's labour supply from an empirical perspective, and uses data from the 1991 Argentine Census for its applications. Chapter 5 presents the theoretical and econometric framework employed to deal with the endogeneity of the fertility decision. This identification strategy exploits parental sex preferences as instrumental variables for further child-bearing. Chapter 6 discusses its validity in developing countries, and provides empirical evidence for Argentina. Chapter 7 presents the main results of the estimation, which state that additional children cause a reduction in their mother's labour supply. Finally, Chapter 8 proposes a new test for the generality of instrumental variables results, which is illustrated with the same dataset

The anatomy of behavioral responses to social assistance when informal employment is high

The disincentive effects of social assistance programs on registered employment are a first order policy concern in developing countries. Means tests determine eligibility with respect to some income threshold, and governments can only verify earnings from registered employment. The loss of benefit at some level of formal earnings is an implicit tax that results in a strong disincentive for formal employment. We study an income-tested program in Uruguay and extend previous literature by developing an anatomy of the behavioral responses to this program. Our identification strategy is based on a sharp discontinuity in the program?s eligibility rule and uses information from the program?s records, social security administration data, and a follow-up survey. First, we establish that beneficiaries respond to the program?s incentives by reducing their levels of registered employment by about 8 percentage points. Second, we find the program induces a larger reduction of formal employment for individuals with a medium probability to be a registered employee, suggesting some form of segmentation ? those with a low propensity to work formally do not respond to the financial incentives of the program. Third, we find evidence that the fall in registered employment is due to a larger extent to an increase in unregistered employment, and to a lesser extent to a shift towards non employment. Fourth, we find an elasticity of participation in registered employment of about 1.7, implying a deadweight loss from the behavioral responses to the program of about 3.2% of total registered labor income.Fil: Bergolo Sosa, Marcelo Luis. Universidad Nacional de La Plata. Facultad de Ciencias Económicas. Departamento de Ciencias Económicas. Centro de Estudios Distributivos Laborales y Sociales; ArgentinaFil: Cruces, Guillermo Antonio. Universidad Nacional de La Plata. Facultad de Ciencias Económicas. Departamento de Ciencias Económicas. Centro de Estudios Distributivos Laborales y Sociales; Argentin

Policy implications of suboptimal choice: theory and evidence: misperceptions about tax audits

For some entities, such as self-employed individuals reporting income taxes or firms reporting value-added taxes, the optimal evasion rate depends substantially on audit features like audit probabilities and penalty rates (Allingham and Sandmo 1972). Whereas it is easy for firms to find other important information such as inflation rates or exchange rates, it is difficult to find information about the probability of being audited and penalty rates. Indeed, Bérgolo et al. (2017) show evidence that firms have large misperceptions about these audit features.1 In this paper, we expand their analysis to explore the sources of these misperceptions.Fil: Bérgolo, Marcelo. Universidad de la República; UruguayFil: Ceni, Rodrigo. Universidad de la República; UruguayFil: Cruces, Guillermo Antonio. Universidad Nacional de La Plata. Facultad de Ciencias Económicas. Departamento de Ciencias Económicas. Centro de Estudios Distributivos Laborales y Sociales; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; ArgentinaFil: Giaccobasso, Matias. University of California at Los Angeles; Estados UnidosFil: Perez Truglia, Ricardo. University of California at Los Angeles; Estados Unido

Social Assistance, Labour Markets and Intra-household Decision-making: Evaluation of the AFAM-PE Programme in Uruguay

The expansion of conditional cash transfer (CCT) programmes in Latin America and the Caribbean (LAC) over the past two decades has renewed interest in how these policies affect the behaviour of beneficiaries in the labour market—in particular, whether or not they discourage labour supply or labour market formalisation. Moreover, the view that women’s empowerment is conducive to efficiency and development has shaped the political debate and influenced socioeconomic policies in the region. Thus, most CCT programmes in countries of the LAC region target poor and vulnerable families and see that women are the primary recipient of benefits; the main argument supporting such a distribution is that money received or earned by women is allocated differently in the household budget compared to money received or earned by men. Women tend to use the money in a way that improves the welfare of the household—and particularly of children—as a whole (Thomas 1990). Though women are the main recipients of CCTs, the gender implications of these programmes and their impact on the lives of women, particularly in terms of their behaviour in the labour market, has not been thoroughly studied (see Bosch and Manacorda 2012 for a recent survey).Centro de Estudios Distributivos, Laborales y Sociale

It takes two to tango: Labour responses to an income tax holiday in Argentina

We exploit a large, quasi-randomized, 2.5-year-long income tax holiday to identify intertemporal labor responses of high-wage earners to net wage changes. In August 2013, the Argentine government exempted a group of wage earners from the income tax for 2.5 years while leaving in place the tax on other high-wage earners. Eligibility was based on whether past wage earnings were below a fixed threshold, thus levying sharply different marginal and average tax rates—effectively 0% for workers below the threshold. Using rich population-wide administrative data and a regression discontinuity design, we estimate a precise and very small wage earnings elasticity of 0.017 for this large, salient, and temporary income tax change. Responses are larger for more flexible outcomes (overtime hours) and for more elastic groups (job switchers and managers). We also find avoidance responses from new entrants who faced no tax if their first monthly wage was below the fixed threshold. This strategic entry below the threshold to dodge taxes required coordination with employers. Our findings indicate rigidities in the labor market that require employer-employee cooperation to be overcome for wage earners to be able to respond to tax changes.Fil: Tortarolo, Dario. Nottingham University ; Reino UnidoFil: Cruces, Guillermo Antonio. Nottingham University ; Reino Unido. Universidad Nacional de La Plata. Facultad de Ciencias Económicas. Departamento de Ciencias Económicas. Centro de Estudios Distributivos Laborales y Sociales; Argentina. Consejo Nacional de Investigaciones Científicas y Técnicas. Centro Científico Tecnológico Conicet - La Plata; ArgentinaFil: Castillo, Victoria. Ministerio de Trabajo, Empleo y Seguridad Social; Argentin

Learning from Potentially-Biased Statistics: Household Inflation Perceptions and Expectations in Argentina

When forming expectations, households may be influenced by the possibility that the information they receive is biased. In this paper, we study how individuals learn from potentially-biased statistics using data from both a natural and a survey-based experiment obtained during a period of government manipulation of inflation statistics in Argentina (2006 2015). This period is interesting because of the attention to inflation information and the availability of both official and unofficial statistics. Our evidence suggests that rather than ignoring biased statistics or navively taking them at face value, households react in a sophisticated way, as predicted by a Bayesian learning model, effectively de-biasing the official data to extract all its useful content. We also find evidence of an asymmetric reaction to inflation signals, with expectations changing more when the inflation rate rises than when it falls. These results are useful for understanding the formation of inflation expectations in less extreme contexts than Argentina, such as the United States and Europe, where experts may agree that statistics are unbiased but households do not.Centro de Estudios Distributivos, Laborales y Sociale

Learning from Potentially-Biased Statistics: Household Inflation Perceptions and Expectations in Argentina

When forming expectations, households may be influenced by the possibility that the information they receive is biased. In this paper, we study how individuals learn from potentially-biased statistics using data from both a natural and a survey-based experiment obtained during a period of government manipulation of inflation statistics in Argentina (2006 2015). This period is interesting because of the attention to inflation information and the availability of both official and unofficial statistics. Our evidence suggests that rather than ignoring biased statistics or navively taking them at face value, households react in a sophisticated way, as predicted by a Bayesian learning model, effectively de-biasing the official data to extract all its useful content. We also find evidence of an asymmetric reaction to inflation signals, with expectations changing more when the inflation rate rises than when it falls. These results are useful for understanding the formation of inflation expectations in less extreme contexts than Argentina, such as the United States and Europe, where experts may agree that statistics are unbiased but households do not.Centro de Estudios Distributivos, Laborales y Sociale

Learning from Potentially-Biased Statistics: Household Inflation Perceptions and Expectations in Argentina

When forming expectations, households may be influenced by the possibility that the information they receive is biased. In this paper, we study how individuals learn from potentially-biased statistics using data from both a natural and a survey-based experiment obtained during a period of government manipulation of inflation statistics in Argentina (2006 2015). This period is interesting because of the attention to inflation information and the availability of both official and unofficial statistics. Our evidence suggests that rather than ignoring biased statistics or navively taking them at face value, households react in a sophisticated way, as predicted by a Bayesian learning model, effectively de-biasing the official data to extract all its useful content. We also find evidence of an asymmetric reaction to inflation signals, with expectations changing more when the inflation rate rises than when it falls. These results are useful for understanding the formation of inflation expectations in less extreme contexts than Argentina, such as the United States and Europe, where experts may agree that statistics are unbiased but households do not.Centro de Estudios Distributivos, Laborales y Sociale

Living up to expectations: how job training made women better off and men worse off

We study the interaction between job and soft skills training on expectations and labor market outcomes in the context of a youth training program in the Dominican Republic. Program applicants were randomly assigned to one of 3 modalities: a full treatment consisting of hard and soft skills training plus an internship, a partial treatment consisting of soft skills training plus an internship, or a control group. We find strong and lasting effects of the program on personal skills acquisition and expectations, but these results are markedly different for young men and young women. Shortly after completing the program, both male and female participants report increased expectations for improved employment and livelihoods. This result is reversed for male participants in the long run, a result that can be attributed to the program’s negative short-run effects on labor market outcomes for males. While these effects seem to dissipate in the long run, employed men are substantially more likely to be searching for another job. On the other hand, women experience improved labor market outcomes in the short run and exhibit substantially higher levels of personal skills in the long run. These results translate into women being more optimistic, having higher self-esteem and lower fertility in the long run. Our results suggest that job-training programs of this type can be transformative – for women, life skills mattered and made a difference, but they can also have a downside if, like in this case for men, training creates expectations that are not met.Centro de Estudios Distributivos, Laborales y Sociale