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Inequality Persistence and Policymaking Constraints: Explaining Regional Data Patterns (Discussion Paper)
No full textIn well-functioning democracies, the policymaking process should in principle respond to persistent economic inequality with corrective policies. This process is set in motion through majority demands for redistributive taxation and spending that elected representatives eventually supply through policies designed to alleviate inequality. Policymaking constraints on both the demand side and the supply side have, however, considerably limited the extent of redistributive policies in Latin America. This paper explores recent data patterns from national and micro data to provide several process-centered explanations for the continuing high inequality observed in the region. Countries with stronger democracies have adopted more redistributive policies, even though post-tax inequality remains high in all of the region\u27s democracies. Low citizen interpersonal and political trust both shape policy preferences away from effective redistribution. Electoral participation has risen in the more democratic countries, while economically motivated protests have increased in weakly institutionalized settings
Inequality of Opportunity and Intergenerational Persistence in Latin America
Get PDFHow strong is the transmission of socio-economic status across generations in Latin America? To answer this question, we first review the empirical literature on intergenerational mobility and inequality of opportunity for the region, summarizing results for both income and educational outcomes. We find that, whereas the income mobility literature is hampered by a paucity of representative datasets containing linked information on parents and children, the inequality of opportunity approach which relies on other inherited and pre-determined circumstance variables has suffered from arbitrariness in the choice of population partitions. Two new data-driven approaches one aligned with the ex-ante and the other with the ex-post conception of inequality of opportunity are introduced to address this shortcoming. They yield a set of new inequality of opportunity estimates for twenty-seven surveys covering nine Latin American countries over various years between 2000 and 2015. In most cases, more than half of the current generations inequality is inherited from the past with a range between 44% and 63%. We argue that on balance, given the parsimony of the population partitions, these are still likely to be underestimates
Research Insights: Did Government-Guaranteed Loans Help MSMEs Mitigate the COVID-19 Pandemic Shock?
No full textUsing Chile and Colombia as case studies, we conducted two randomized controlled trials to test how government-guaranteed loans during the COVID-19 pandemic impacted firms liquidity and earnings. COVID-19 loans improved total liquidity of treated micro, small and medium-sized enterprises (MSMEs) by 15.7%. The increase in short-term liquidity may have had a positive impact on MSMEs economic performance during the pandemics economic deterioration
Research Insights: Can Water Use Be Reduced through Policies that Promote Individual Metering of Water Consumption?
No full textUsing administrative data from the Empresa Pública de Agua y Saneamiento (EPMAPS) of Quito, Ecuador, it is found that water consumption decreases by approximately 8 percentage points (pp) after the introduction of individual meters. To obtain an equivalent drop of 8 pp in water consumption, but without individual meters, water consumption prices would have to be doubled. Individual water meters could be a useful tool for reducing water consumption in both developing and developed countries
The Value of Clean Water: Evidence from an Environmental Disaster
Get PDFClean water has a largely unknown economic value, particularly to small communities whose agricultural activities take place on river shores. In November 2015, the rupture of a mining tailings dam in the municipality of Mariana led to a record disposal of toxic residuals in southeast Brazil. A mud avalanche ran out for 600 km (373 miles) until it reached the Atlantic Ocean, leaving behind extreme ecological and economic damage in the Doce River basin. This is the largest environmental disaster in Brazil to date. We quantify the negative externalities using rich, identified, and comprehensive data from firm-to-firm electronic payments and individual-level consumer credit usage. We find that agricultural producers in affected municipalities received cumulatively 41% to 60% fewer inflows (income) from customer firms outside the affected zone three years after the disaster. Effects are driven by municipalities where the river shore is larger relative to the farming area. In these municipalities, individuals also faced an 8% fall in their credit card and consumer finance expenditures. This result is stronger for non-formal and high-risk workers. Thus, water contamination led to (first) production and (later) consumption decline with real effects on municipality-level agriculture and services output, causing a 7% decline in local GDP
Opportunities for Leveraging New Data Technologies to Inform Disaster Risk Management and Integrated Coastal Zone Management in Latin America and the Caribbean: The Cases of the Bahamas, Belize, and Mexico
Get PDFWe assess how new data technologies are helping innovative assessment methodologies, implementation, and monitoring of nature-based approaches in integrated coastal zone management and disaster risk management in the Latin America and the Caribbean region. We present new information showing how breakthroughs in data and modeling technologies are supporting better quantification of outcomes of nature-based approaches, in biophysical and social metrics, along coastal regions in The Bahamas, Belize and Mexico. Together, this set of diverse decision contexts demonstrates the power of new technologies in advancing nature-based solutions to climate resilience and accountability for integrated development planning
Promoting Cross-border E-Commerce in the Southern Cone
Get PDFE-commerce has boomed around the world, creating new opportunities for firms in the Southern Cone region to reach new customers, diversify their export markets, and grow their sales. E-commerce adoption is also boosting the regions logistics, payments, and financial services providers that service online sellers. Regional governments have also worked to promote e-commerce. This report takes stock of the state of e-commerce in the Southern Cone, leveraging data on e-commerce adoption and transactions; a survey of how firms in Argentina, Brazil, Chile, Paraguay, and Uruguay are using e-commerce and what challenges they face to growing their online sales; and policy data on the regional governments adoption of policies conducive to e-commerce. The report also offers policy recommendations for the region to support firms in growing their cross-border online sales
Exodus to Public School: Parent Preferences for Public Schools in Peru
Get PDFDue to an unprecedented rise in demand, in 2020 the Peruvian Ministry of Education implemented a centralized assignment mechanism that allowed thousands of students at various levels of education to move from the private to the public sector. In this paper, we empirically explore the determinants of accepting a public school assignment and, subsequently, remaining in the public system. Specifically, we exploit the randomness in the assignment of students to new public schools to causally estimate the influence of distance on the decision to accept a public school placement, and we explore its role in the decision to remain there. We also provide insights into various determinants of parental preferences. Our findings reveal that families care about distance from home to the assigned public school as well as the relative academic and peer quality with respect to their school of origin. Parents weigh these factors differently based on their familiarity with them. Consequently, experiencing a new school environment can alter the significance of specific attributes when it comes time to decide whether to stay at the assigned school. These findings offer valuable insights into how governments can strengthen the supply of public schooling
2022 Joint Report on Multilateral Development Banks\u27 Climate Finance: Infographic
No full textThis infographic contains key figures from the 2022 Joint Report on Multilateral Development Banks Climate Finance. For purposes of greater transparency and consistency, 2022 figures report climate finance in all economies where the MDBs operate, with a breakdown by income level
Technical Note: Policy-Based Lending at the IDB
No full textThis note presents findings and insights from different sources and constitutes the first building block for the Office of Evaluation and Oversights (OVE) policy-based lending evaluation. Prior evaluation work by OVE and the evaluation departments of other Multilateral Development Banks (MDBs), as well as Inter-American Development Bank\u27s (IDB) project databases, provide a rich source of information on the use and characteristics of policy-based lending. This paper synthesizes findings and insights from: (i) OVE\u27s 2015 review of the design and use of policy-based lending (document RE-485-6); (ii) OVE\u27s 2020 Lending instruments study (document RE-549); (iii) OVE\u27s review of the demand and performance of policy-based lending in its country products (Country Program Evaluations or CPEs, Extended Country Program Evaluations or XCPE, and Independent Country Program Reviews or ICPR); (iv) OVE\u27s validations of IDB\u27s self evaluations of completed operations (project completion report or PCR); (v) the proceedings of a 2020 conference describing the experience with policy-based lending at the Asian Development Bank (ADB), African Development Bank (AfDB), and the World Bank (WB); and (vi) a portfolio analysis of policy-based operations approved up to December 2022