Inequality of Opportunities and Long Term Earnings Measures: Evidence for Chile

By:	Dante Contreras Osvaldo Larrañaga Esteban Puentes Tomás Rau
URL:	http://d.repec.org/n?u=RePEc:udc:wpaper:wp352&r=ltv
In this paper we assess the sensitivity of measures of inequality of opportunity to long-term earnings data. We compare indicators using four and seven year earnings with indicators that use the most commonly available yearly and monthly earnings. We argue that four and seven year earnings are preferable since they are a more precise measure of permanent income and are less affected by short-term variability. We use data available for Chile and found that the use of seven and four year earnings produces a 25% higher share of inequality of opportunity compared to yearly and monthly earnings measures. We find that parental education contributes most to income inequality in Chile. Finally, we perform Monte Carlo simulations, finding that our results are robust to several income processes.

Changes in wage structure in Mexico going beyond the mean: An analysis of differences in distribution, 1987-2008

By:	Claudia Tello (AQR-IREA, Universitat de Barcelona, Spain) Raul Ramos (AQR-IREA, Universitat de Barcelona, Spain) Manuel Artís (AQR-IREA, Universitat de Barcelona, Spain)
URL:	http://d.repec.org/n?u=RePEc:xrp:wpaper:xreap2012-07&r=ltv
This paper conducts an empirical analysis of the relationship between wage inequality, employment structure, and returns to education in urban areas of Mexico during the past two decades (1987-2008). Applying Melly’s (2005) quantile regression based decomposition, we find that changes in wage inequality have been driven mainly by variations in educational wage premia. Additionally, we find that changes in employment structure, including occupation and firm size, have played a vital role. This evidence seems to suggest that the changes in wage inequality in urban Mexico cannot be interpreted in terms of a skill-biased change, but rather they are the result of an increasing demand for skills during that period.
Keywords:	wage inequality, quantile regressions, decomposition.
JEL:	J31

Fiscal Incidence, Fiscal Mobility and the Poor: A New Approach

By:	Nora Lustig (Department of Economics, Tulane University) Sean Higgins (Department of Economics, Tulane University)
URL:	http://d.repec.org/n?u=RePEc:tul:wpaper:1202&r=ltv
Taxes and transfers can have significant impacts on poverty and inequality. All standard measures are by definition anonymous in the sense that we do not know the identity of winners and losers. That a given combination of taxes and transfers makes some of the poor poorer, however, may be important information to incorporate into a fiscal incidence analysis. The directional mobility literature provides a useful framework to identify which individuals are adversely/favorably impacted by a particular policy. This paper introduces a "fiscal mobility matrix" to identify winners and losers. We show that taxes and transfers can lower inequality and poverty (including the severity of poverty) but still make a subgroup of the poor worse off. We use Brazilian data to illustrate how indirect taxes make around 11 percent of the non-poor poor, 15 percent of the moderate poor extremely poor, and 4 percent of the extremely poor "ultra-poor" despite any cash transfers they receive, even when standard poverty and inequality indicators decline and overall taxes are progressive.
Keywords:	fiscal incidence, taxes and transfers, inequality, poverty, redistribution, mobility
JEL:	D31

Financial Development in Latin America and the Caribbean: The Road Ahead

By AUGUSTO DE LA TORRE, World Bank
Email: adelatorre@worldbank.org
ALAIN IZE, World Bank
Email: Aize@worldbank.org
SERGIO L. SCHMUKLER, World Bank - Development Research Group (DECRG)
Email: sschmukler@worldbank.org

Link: http://papers.ssrn.com/sol3/PIP_Journal.cfm?pip_jrnl=561341

During the 1980s and 1990s, the financial sector was the Achilles heel of Latin America and the Caribbean (LAC). Since then, LAC’s financial systems have continued to gain in soundness, depth and diversity, becoming more integrated and competitive, with new actors, markets, and instruments springing up, and financial inclusion broadening. For all the gains, however, many challenges remain. There is still a nagging contrast between the intensity of financial sector reforms that LAC implemented since the early 1990s and the actual size and depth of LAC’s financial systems. For example, bank credit has stagnated and only few firms actively use equity and bond markets. This study takes an in-depth stock-taking of LAC’s financial systems and a forward-looking assessment of the region’s financial development issues. Rather than going in detail into sector-specific issues, the study focuses on the main architectural issues, overall perspectives, and interconnections inherent to globalized financial systems. The value added of the study thus hinges on its holistic view of the development process, its broad coverage of the financial services industry (not just the banking sector), its emphasis on benchmarking, its systemic perspective, and its explicit effort to incorporate the lessons from the 2008-09 global financial crisis.

Rising Food Prices and Children’s Welfare

By:	Nora Lustig (Division of Policy and Practice,UNICEF)
URL:	http://d.repec.org/n?u=RePEc:uce:wbrief:1201&r=lam
After three consecutive decades of decline, world prices of food commodities have risen over the past few years at an alarming pace. Rising food prices are a cause of major concern because high food prices bring significant and immediate setbacks for poverty reduction, nutrition, social stability, inflation and a rules-based trading system. Food prices are unique since food is unlike any other good. Food is essential for survival; it is the most basic of basic needs
Keywords:	child poverty, child disparities, policy design, measuring poverty, development strategies,food prices,basic needs,poverty reduction, nutrition, social stability

Health Perceptions in Latin America

By:	Eduardo Lora
URL:	http://d.repec.org/n?u=RePEc:idb:wpaper:4757&r=lam
This is the first study that uniformly analyzes health perceptions in all of Latin America and tests in a systematic way their relation to economic conditions at the country, income group and individual levels. The study uses three types of health self-assessment questions: i) health satisfaction; ii) health status on a scale of 0- 10; and iii) the EuroQol 5D instrument (EQ-5D), which asks about mobility, self- care, usual activities, pain/discomfort, and anxiety/depression. The empirical analysis finds support for the hypothesis that cultural differences between countries prevent cross-national comparisons of health perceptions, but it does not find support for the widely held view that the same applies within countries, presumably because the poor are more tolerant of their health problems.
JEL:	I10

Protecting Workers against Unemployment in Latin America and the Caribbean: Evidence from Argentina

By:	Martín Gonzalez Rozada Lucas Ronconi Hernan Ruffo
URL:	http://d.repec.org/n?u=RePEc:idb:wpaper:4759&r=lam
This paper takes advantage of several reforms that provide time and cross sectional variation to identify the effects of unemployment insurance and severance payments on the duration of unemployment and on the separation probability in Argentina. Administrative data permits analysis of the duration of unemployment of covered spells with detailed information about transfers and their duration, while household surveys permit the study of separation probability and transitions to informal jobs, which are not observed in administrative data. It is found that unemployment duration increases significantly when unemployment insurance transfers are higher or are provided for a longer period; the effects of severance pay on unemployment duration are less robust. On the other hand, higher severance pay is found to reduce separation probability, while unemployment insurance transfers have a positive but small effect on separations.
JEL:	I38