Transition problems in economic reform : agriculture in the Mexico - U.S. free trade agreement

The authors use Mexican agriculture as a case study to analyze the transition problems that arise in most major economic reforms. They focus on the implications for policy design of the absence of efficient capital markets; on the welfare costs of reforming only gradually; on incentive problems created by trade adjustment policies; and on the redistribution aspects of policy reform in the presence of realistic limits on available intervention instruments. They emphasize that adjustment should focus on increasing the value of assets owned by the groups affected, and not on direct income transfers of programs targeted to output or other characteristics controlled by the beneficiaries. That is, they contend that adjustment should betargeted to improving what people have, as opposed to what people do.Environmental Economics&Policies,Economic Theory&Research,Banks&Banking Reform,Drylands&Desertification,Agricultural Research

La pobreza extrema en México: una propuesta de política

This paper: One, pulls together the implications of recent research on poverty indices, nutrition, fertility, incentives and related topics for the design of poverty allevation programs. Two, measures the magnitude and regional composition of extreme poverty. And three, makes a concrete policy proposal to deal with extreme poverty.

Poverty alleviation in Mexico

This paper is concerned with the problem of poverty in Mexico. Its four objectives are to : i) present evidence; ii) analyze economic determinants; iii) discuss policy options; and iv) assess existing poverty programs. The author begins by giving a very brief discussion of recent economic events, as these set the stage for poverty programs in the 1990's. The paper goes on to discuss the concept of poverty measurement. The author presents evidence of the extent of poverty in Mexico. He aims at answering the question : who, where and how poor are the poor? Also, why are the poor poor? The paper reviews issues of rural development, urban bias and macroeconomic policy. As regards policy, what should the Government's objectives be, and what are appropriate instruments to use? In answering these questions, the author reviews"stylized facts"about the behavior of the poor, as well as information and incentive issues that bear on the design of poverty alleviation programs. Policies are suggested for alleviating extreme and moderate levels of poverty. The paper concludes by assessing, in the light of previous findings, current Government programs to alleviate poverty and offers some suggestions for improvement. A summary of results and unanswered questions is also presented.Environmental Economics&Policies,Safety Nets and Transfers,Rural Poverty Reduction,Services&Transfers to Poor,Poverty Reduction Strategies

Labor Market Search, Informality and Schooling Investments

We develop a search and matching model where firms and workers are allowed to form matches (jobs) that can be formal or informal. Workers choose the level of schooling acquired before entering the labor market and whether searching for a job as unemployed or as self-employed. Firms post vacancies in each schooling market, decide the formality status of the job, and bargain with workers over wages. The resulting equilibrium size of the informal sector is an endogenous function of labor market parameters and institutions. We focus on an increasingly important institution: a "dual" social security system where contributory benefits in the formal sector coexist with non-contributory benefits in the informal sector. We estimate preferences for the system - together with all the other structural parameters of the labor market { using labor force survey data from Mexico and the time-staggered entry across municipalities of a non-contributory social program. Counterfactual experiments taking into account equilibrium effects show that changing the parameters of the dual social security system can increase output, schooling and long-term productivity at a small fiscal cost

El sur también existe: un ensayo sobre el desarrollo regional de México

The desing of a regional development policy for the southeast of Mexico should go beyond and increase in social expenditure: it requires a trough policy review to attack the structural problems which have inhabited the region’s economic development. This paper presents evidence of social and economic backwardness of Mexico’s southeast. It analyses how different public policies implemented ui the last decades have inhibited the economic development or the region. Finally, using the results derived from modeis of imperfect competition and mixed programming, the paper proposes a combination of policies designed to correct the existing distortions and to promote the region’s economic development.regional development, Mexico location economics, public policy

Can Social Programs Reduce Productivity and Growth? A Hypothesis for Mexico

Social programs can reduce productivity and growth as they inadvertently generate perverse incentives for workers and firms. The core hypothesis is that these programs segment the labor market, tax formal salaried employment and subsidize informal salaried and non-salaried employment. Larger than optimal self-employment and employment by informal firms lowers aggregate labor productivity. In turn, differences in the cost of labor produce differences in returns to capital across firms, some formal legally hiring salaried workers and some informal illegally hiring salaried workers. Given the cost of credit, higher labor costs for formal firms distort the allocation of investment in favor of the informal sector; this investment is distributed in many small firms that may fail to exploit advantages of size as a result of firms’ strategies to evade social security contributions. This lowers the average productivity of capital causing dynamic productivity losses. The analytical argument is linked to empirical evidence indicating that differences in labor and capital productivity between sectors and firms contribute to explain differences in productivity growth across countries, on one hand; and to evidence suggesting a negative association between productivity and informality, on the other. A subsidiary hypothesis is that social programs are partly financed by reducing public investment rather than raising taxes, limiting the expansion of growth-promoting public infrastructure. The paper suggests that social programs that lower total factor productivity together with the effects of lower public investment partly account for Mexico’s lackluster growth and productivity performance in the context of intensified international competition and the erosion of the advantages of the North American Free Trade Agreement.https://deepblue.lib.umich.edu/bitstream/2027.42/55751/4/IPC-working-paper-037-Levy.pd

Empleo rural y combate a la pobreza: una propuesta de política

In 1993 two thirds of the labour force were working in the informal sector, without the benefits of both social security and labor legislation. Three facts will reinforce this: the working population grows at a faster rate than the global population, the participation of women in labor will increase, and the opening of the economy will reduce the demand for rural labor. Even with optimistic expectations of economic growth, and modifications in the labor legislation, the probability that the formal sector can absorb a considerable part of informal workers is low. Governmental programs aimed to develop rural employment can contribute to reduce extreme poverty over the next few years by implementing low salaries programs that induce to self selection in the poor population, and by selecting projects of rural infrastructure which increase labour productivity. The programs should consider seasonality aspects, and focus only on certain regions of the country.

Coevolution of agents and networks: Opinion spreading and community disconnection

We study a stochastic model for the coevolution of a process of opinion formation in a population of agents and the network which underlies their interaction. Interaction links can break when agents fail to reach an opinion agreement. The structure of the network and the distribution of opinions over the population evolve towards a state where the population is divided into disconnected communities whose agents share the same opinion. The statistical properties of this final state vary considerably as the model parameters are changed. Community sizes and their internal connectivity are the quantities used to characterize such variations.Comment: To appear in Phys. Lett.