The decline in inequality in Latin America: How much, since when and why

Between 2000 and 2009, the Gini coefficient declined in 13 of 17 Latin American countries for which comparable data exist. The decline was statistically significant and robust to changes in the time interval, inequality measures and data sources. In depth country studies for Argentina, Brazil, Mexico and Peru suggest that there are two phenomena which underlie this trend: (i) a fall in the premium to skilled labor (as measured by returns to education); and (ii) higher and more progressive government transfers. The fall in the premium to skills results from a combination of supply and demand factors and, in Argentina—and to a lesser extent in Brazil--, from more active labor market policies as well.Income inequality, wage gap, government transfers, Latin America.

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

Evidence and Policy Lessons on the Links between Disaster Risk and Poverty in Latin America

Extreme climate-related events have a direct impact on the welfare of households. The frequency and magnitude of those shocks appear to be closely linked to increasing vulnerability of households and communities in developing countries. Yet, the link between natural disasters and living standards is complex and causality is difficult to capture empirically. Among other reasons, there is a two-way relationship between the vulnerability to natural disasters and poverty, and disentangling the direction of the causal impacts is rather challenging, especially in terms of the intensity of the effects of the events and not only their incidence. This paper pursued two main goals. First, the empirical analysis estimated the relation between natural events and social indicators at the local level, establishing a causal link whenever possible. Second, analysis was carried out at the household level in order to determine the potential role played by coping mechanisms to influence long-term impacts on welfare

Income and beyond: Multidimensional poverty in six Latin American countries

This paper presents empirical results of a wide range of multidimensional poverty measures for: Argentina, Brazil, Chile, El Salvador, Mexico and Uruguay, for the period 1992–2006. Six dimensions are analysed: income, child attendance at school, education of the household head, sanitation, water and shelter. Over the study period, El Salvador, Brazil, Mexico and Chile experienced significant reductions of multidimensional poverty. In contrast, in urban Uruguay there was a small reduction in multidimensional poverty, while in urban Argentina the estimates did not change significantly. El Salvador, Brazil and Mexico together with rural areas of Chile display significantly higher and more simultaneous deprivations than urban areas of Argentina, Chile and Uruguay. In all countries, access to proper sanitation and education of the household head are the highest contributors to overall multidimensional poverty.Multidimensional poverty measurement, counting approach, Latin America, Unsatisfied Basic Needs, rural and urban areas.

Economic Crises, Maternal and Infant Mortality, Low Birth Weight and Enrollment Rates: Evidence from Argentina’s Downturns

This study investigates the impact of recent crises in Argentina (including the severe downturn of 2001–02) on health and education outcomes. The identification strategy relies on both the inter-temporal and the cross-provincial co-variation between changes in regional GDP and outcomes by province. These results indicate significant and substantial effects of aggregate fluctuations on maternal and infant mortality and low birth weight, with countercyclical though not significant patterns for enrollment rates. Finally, provincial public expenditures on health and education are correlated with the incidence of low birth weight and school enrollment for teenagers, with worsening results associated with GDP declines

Permanent Effects of Economic Crises on Household Welfare: Evidence and Projections from Argentina’s Downturns

The quantification of the impact of crises on household welfare and socioeconomic outcomes is a fundamental input for the design of ex ante safety nets and ex post alleviation programs. Economic downturns have direct effects through employment and household income, but whether these and other impacts are permanent rather than transitory is harder to establish. This study of Argentina estimates the relationship between GDP growth and severe crises on poverty, youth unemployment, and a series of human capital related outcomes, such as infant and maternal health, and school enrollment and progression. The identification strategy relies on provincial variation in GDP, and on a difference in differences estimation from the severe 1999-2002 crisis. The objective is twofold. On the one hand, the study documents the effects of past episodes. On the other hand, it extrapolates past results to provide bounds for the impact of the 2007-2009 financial crisis in Argentina. Besides the expected and well-documented relationship between crises and poverty levels, the main finding of this study is a strong effect on infant mortality and low weight at birth. Moreover, there is an asymmetry in these effects: the negative impact of downturns is greater than the positive evolution during recoveries. The results for education variables are more ambiguous, and even counter-cyclical in some cases. The document discusses the implications of these estimates for the current episode. Overall, these results provide evidence of permanent effects of economic crises through lower levels of human capital, worsening health outcomes and increased mortality

Permanent Effects of Economic Crises on Household Welfare: Evidence and Projections from Argentina’s Downturns

The quantification of the impact of crises on household welfare and socioeconomic outcomes is a fundamental input for the design of ex ante safety nets and ex post alleviation programs. Economic downturns have direct effects through employment and household income, but whether these and other impacts are permanent rather than transitory is harder to establish. This study of Argentina estimates the relationship between GDP growth and severe crises on poverty, youth unemployment, and a series of human capital related outcomes, such as infant and maternal health, and school enrollment and progression. The identification strategy relies on provincial variation in GDP, and on a difference in differences estimation from the severe 1999-2002 crisis. The objective is twofold. On the one hand, the study documents the effects of past episodes. On the other hand, it extrapolates past results to provide bounds for the impact of the 2007-2009 financial crisis in Argentina. Besides the expected and well-documented relationship between crises and poverty levels, the main finding of this study is a strong effect on infant mortality and low weight at birth. Moreover, there is an asymmetry in these effects: the negative impact of downturns is greater than the positive evolution during recoveries. The results for education variables are more ambiguous, and even counter-cyclical in some cases. The document discusses the implications of these estimates for the current episode. Overall, these results provide evidence of permanent effects of economic crises through lower levels of human capital, worsening health outcomes and increased mortality

Economic Crises, Maternal and Infant Mortality, Low Birth Weight and Enrollment Rates: Evidence from Argentina’s Downturns

This study investigates the impact of recent crises in Argentina (including the severe downturn of 2001–02) on health and education outcomes. The identification strategy relies on both the inter-temporal and the cross-provincial co-variation between changes in regional GDP and outcomes by province. These results indicate significant and substantial effects of aggregate fluctuations on maternal and infant mortality and low birth weight, with countercyclical though not significant patterns for enrollment rates. Finally, provincial public expenditures on health and education are correlated with the incidence of low birth weight and school enrollment for teenagers, with worsening results associated with GDP declines

The potential effects of the COVID-19 pandemic on learning

In this paper, we use a new database for Mexico to model the possible long-run effects of the pandemic on learning. First, based on the framework of Neidhöffer, Lustig, and Tommasi (2021), we estimate the loss of schooling due to the transition from in-person to remote learning using data from the National Survey on Social Mobility (ESRU-EMOVI-2017), census data, and national statistics of COVID-19 incidence. In this estimation, we account for the attenuation capacity of households by considering the parental educational attainment and the economic resources available to the household in the calculation of the short-run cost. Secondly, we estimate the potential long-run consequences of this shock through a calibrated learning profile for five Mexican regions following Kaffenberger and Pritchett (2020). Assuming the distance learning policy adopted by the Mexican government is entirely effective, our results indicate that a learning loss equivalent to the learning during a third of a school year in the short run translates into a learning loss equivalent to an entire school year further up the educational career of students. On the other hand, if the policy was ineffective, the short-run loss increases to an entire school year and becomes a loss of two years of learning in the long run. Our results suggest substantial variation at the regional level, with the most affected region, the South experiencing a loss thrice as large as that of the least affected region, the Centre region

Declining Wages for College-Educated Workers in Mexico: Are Younger or Older Cohorts Hurt the Most?

Wage inequality declined in Mexico since 2000. This paper investigates the possible channels on why the wages of high-skilled workers have declined. Using data from Mexican labor surveys for the period between 2000 and 2014, we investigate if the decline was driven by wages declining more sharply for younger or older workers. We find that wages of older workers declined and the decline was more pronounced the older the cohort.  This would seem to support the hypothesis that older workers’ skills became obsolete