Institute of Latin American Studies Pobreza, Desigualdad, y Políticas Sociales en América Latina: Viejos Problemas, Nuevas Posibilidades . Thomas J Trebat Institute of Latin American Studies Columbia University September 2011

Pobreza y Desigualdad en la Región Latinoamericana Pobreza y Desigualdad en la Región Latinoamericana.: Evaluación, Remedios Some progress being made: Will it continue? Better safety nets and social assistance Absolute numbers of the poor have declined Yet poverty and inequality remain very high in Latin America And no doubt contributes to the low rates of economic growth Better, more targeted economic and social policies are needed Tax and expenditure policies Labor market policies Credit and insurance markets Access to education Healthcare policy Social safety nets Early childhood programs to combat malnutrition and begin education March 24, 2017

Pobreza – Conceptos y métodos de mensuración Wide range of definitions: from lack of resources to lack of capabilities or freedom Lack of resources (“a severe constriction of the choice set [over commodities]” (Watts, H.) Unmet basic needs (food, shelter, basic services) Capability deprivation (Sen, A.). Different concepts lead to different measurements and policy intervention designs Human Opportunity Index (HOI – World Bank) Human Development Index (UNDP) Multidimensional Poverty Index (MPI – Oxford University) Unmet Basic Needs Index, others

Tomado de: CEPAL (2008)

Pobreza ha estado en declinio… Evolution of Poverty (4 US$ per day) and GDP 1980 – 2008 in LAC

Sub-Saharan Africa (circa 2005) Aunque elevada todavía, desigualdad también está cayendo….(Source: World Bank, September 2009) Gini Coefficient, Latin America (circa 2004-2005) Sub-Saharan Africa (circa 2005) El Gini par Africa esta basado en encuestas de gastos para la region, mientras que los Ginis de America Latin estan basados en encuestas de ingreso. Por ende, el resultado del Gini promedio de Africa seria mas alto usando encuestas de ingreso. Uruguay es el pais de America Latina con menor desigualdad. La desigualdad en Uruguay, medida a traves del coeficiente de Gini, esta muy por debajo del promedio para America Latina y de Africa Sub-Sahariana. Sin embargo, la desigualdad en Uruguay es superior a la desigualdad promedio de los paises de la OECD (0.310). OECD (Average- circa 2005) 6 6

Cambios en tasas de desiguladad entre 2002 e 2008 en AL Tomado de: CEPAL (2009)

Dos niños latinoamericanos: Probability of completing sixth grade on time Jamaica Argentina Child with four siblings in a rural single-parent household, with illiterate parent and per capita income of US$1 Mexico Chile El Salvador Venezuela Panama Bolivia Paraguay Uruguay Honduras Ecuador Child with one sibling in an urban two-parent household, with completed secondary education and per capita income of US$25 Costa Rica Dominican Rep. Colombia Peru Guatemala Nicaragua Brazil

Hiatos enormes en educación básica America Latina em perspectiva global

Dos niños uruguayos: Probability of a preventive dental visit (previous 6 months) Child with four siblings in a rural single-parent household, with illiterate parent and per capita income of US$3 Child with one sibling in an urban two-parent household, with completed secondary education and per capita income of US$30

Dos niños argentinos: Probability of 2-5yo children receiving early education Child with four siblings in a rural single-parent household, with illiterate parent and per capita income of US$4 Child with one sibling in an urban two-parent household, with completed secondary education and per capita income of US$25

Dos niños paraguayos: Probability of having potable water in the house Child with four siblings in a rural single-parent household, with illiterate parent and per capita income of US$1 Child with one sibling in an urban two-parent household, with completed secondary education and per capita income of US$25

Índice de Desarrollo Humano (IDH – PNUD) Desarrollo humano visto como capacidades para llevar una vida digna. IDH incluye 3 dimensiones: Ingreso/ “nivel de vida” (PIB per cápita PPA en dólares). Longevidad (esperanza de vida al nacer). Nivel educacional (tasa de analfabetismo y tasa de matrícula combinada).

Índice de Desarrollo Humano para América Latina en 2011 http://hdr.undp.org/en/data/trends/ March 24, 2017

Human Opportunity Index Chile Uruguay Argentina Costa Rica Venezuela Mexico Jamaica Colombia Ecuador Brazil Dominican Rep. Paraguay Bolivia Peru Panama El Salvador Guatemala Honduras Nicaragua Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 92 91 88 87 86 81 79 76 73 71 69 53 51 48 46 Doing Business Mexico Peru Colombia Chile Panama Jamaica El Salvador Dominican Rep. Guatemala Paraguay Argentina Nicaragua Uruguay Costa Rica Brazil Ecuador Honduras Bolivia Venezuela Human Development Index Chile Argentina Uruguay Panama Mexico Costa Rica Peru Brazil Venezuela Ecuador Colombia Jamaica Dominican Rep. El Salvador Bolivia Paraguay Honduras Nicaragua Guatemala

1 2 3 4 5 6 7 8 9 10 Canada UK Sweden Germany Norway France Spain US* Rank 1 2 3 4 5 6 7 8 9 10 Human Opportunity Index (Education) Canada UK Sweden Germany Norway France Spain US* Portugal Italy 89 83 82 81 77 73 71 69 67 Doing Business US UK Canada Norway Sweden Germany France Portugal Spain Italy Human Development Index Norway Canada Sweden France US Spain Italy UK Germany Portugal * HOY for education calculated as a simple average of HOIs for reading, mathematics and science in PISA. For the US average of mathematics and science only.

Cuáles son los factores que explican la caída en tasas de pobreza? Macro stability and growth is necessary for poverty reduction, but what is required is that the poor benefit from that growth. Poverty reduction episodes driven by remittances or “good luck” may or may not be sustainable. Poverty reduction episodes driven by employment or productivity increases seem to be characterized by fundamental changes which may be long-lasting. Social spending help to reduce poverty when well targeted but unlikely to be the main driver. Evidence of infrastructure investment having positive impact on poverty Macro stability and growth is necessary for poverty reduction – what is required is that the poor benefit from that growth. Poverty reduction episodes due to remittances or “good luck” may not be sustainable. Poverty reduction due to employment or productivity increases seem to be characterized by fundamental changes (diversification, changes in the business climate and in the regulatory environment, and technological adoption) which may be long-lasting. Public spending can help reduce poverty when targeted or directed to key infrastructure investment. Demographic changes present challenges (employing youth bulge) and opportunities (potential for lower dependency ratios).

Pobreza y crecimento económico- relación estrecha Poverty and GDP evolution in Latin America and the Caribbean 19 19

Altas tasas de trabajo informal persisten en la región Extremely high rates in Andes Lower rates in Chile and Costa Rica About 50% of the labor force is in the informal sector Mainly in services Productivity extremely low in services See the graph

Gastos expresivos con políticas sociales Source: CEPAL.

Brasil – ingresos de los más pobres estan creciendo a tasas altas Growth rates on income of the poor were faster that rtes for the rich (the poor growing at chinese rates, the rich growing at german rates) Source: Brazil Economic Team using data from PNAD (IBGE)

Brasil : Factores que explican la caída en la pobreza Most of the reduction in poverty is due to an increase in labor income Source: Barros et al (2010).

Las cuentas fiscales ayudan a entender la disminución de la pobreza Las cuentas fiscales ayudan a entender la disminución de la pobreza? Sólo en parte.. Social spending tends not to be progressive and is probably regressive in many respects Subsidies to tertiary education, generally high in Latin America, benefit the wealthy disproportionately The same is true for pension payments : No pension systems for informal workers Innovations: Conditional Cash Transfers Do Target the Poor March 24, 2017

Efectos redistributivos de diferentes gastos gobernamentales en América Latina Social Assistance Progressive Expenditures Education Primary Education Secondary Assistance Tertiary Assistance Regressive Expenditures Health Housing Pensions Total Social Spending - 0.3 - 0.2 - 0.1 0.0 0.1 0.2 0.3 0.4 Source: Americas Quarterly, spring 2008 March 24, 2017

Inequality Case Studies Argentina: Polítcas sociales mejoran la distribución del ingreso nacional January 26, 2011 Inequality Case Studies

Programas tipo Bolsa Famila en 1997 Source: Fiszbein & Schady (2009)

Programas tipo Bolsa Familia en 2008 Source: Fiszbein & Schady (2009)

Programas condicionados de transferencia de renta en America Latina COUNTRY DATE START BOLSA FAMILIA (EX-COLSA ESCOLA, BOLSA ALIMENTAÇÃO BRAZIL 1995 AND 2003 (BF) OPORTUNIDADES (EX-PROGRESA) MEXICO 1997 PROGRAMA DE ASIGNACIÓN FAMILIAR (PARF) HONDURAS 1998 SUPERÉMONOS COSTA RICA 2000 RED DE PROTECCIÓN SOCIAL MI FAMILIA (RPS) NICARAGUA FAMILIAS EN ACCIÓN COLOMBIA 2001 BONO DE DESARROLLO HUMANO AND BECA ESCOLAR ECUADOR 2001 AND 2003 CHILE SOLIDARIO CHILE 2002 PATH JAMAICA RED SOLIDARIA EL SALVADOR 2004 FAMILIAS POR LA INCLUCIÓN SOCIAL ARGENTINA 2005 TARJETA SOLIDARIA DOMINICAN REPUBLIC RED DE PROMOCIÓN Y PROTECCIÓN SOCIAL PARAGUAY PROGRAMA JUNTOS PERU Source: Americas Quarterly, spring 2008 March 24, 2017

Familias en Acción Education subsidy: Cash subsidy for households with children 7 -17 years old, conditioned on enrollment and attendance (80% of the time). Large cities: subsidy is for children between 11 and 18 yrs old and varies by grade. Bimonthly subsidy of $30,000/child in elementary school and $60,000/child in secondary school (up to $120,000 for youth in 11th grade in some cities). Podemos decir que (en teoría) combina a asistencia social (CP) y prevención (LP).

Programas bien enfocados sobre las necesidades de los más pobres Beneficiaries are concentrated in the lower deciles Source: World Bank 2009 31

Por qué se expanden los programas condicionados de tranferencia de renta? Success as social assistance: good targeting, cost effective Success in raising service use: schools, health services Improvements in outcomes: nutrition, health, learning, income gains Good governance: objective, verifiable targets, etc. Modest cost for the government: 0.4% of GDP But not a substitute for jobs An idea of magnitudes: Targeting: Costs – on the order of .4% of GDP for larger programs Education: increases may be only 2-3% where rates started on the order of 95% - not large absolutely but very large in terms of closing the gap; and are much bigger where initial rates lower, an astonishing xx in Cambodia Health use: Colombia – attendance to health and growth controls increased 44 percentage points among children ages 3 to 7 in urban areas Nutrition: Mexico, increase in child height of about 1 cm. Earnings among graduates: Mexico

Otros enfoques de la politica social contra la pobreza y desigualdad Extending pension benefits more broadly Access to healthcare The educational system and its impact on inequality Early childhood programs March 24, 2017

Cobertura de pensiones y jubilaciones todavía limitada As a percentage of economically active population, 1990s to 2000s Source: World Bank staff calculations, forthcoming Regional Study 34

Disponibilidad de seguro salud fuera del alcance de los pobres As a percentage of economically active population, mid-2000s Source: World Bank staff calculations, forthcoming Regional Study 35

Falta de atención adecuada a los problemas de los más jovenes Evolution of Chronic Child (<5 year old) malnutrition in Peru 36

Baja inversión en programas enfocados sobre la niñez (OECD countries invest up to 1.8% of GDP) 37 Source: UNESCO Global Monitoring Report 2007 37

Oportunidades humanas – nuevas políticas sociales son necesários More Emphasis on Early Childhood: Pregnant Mothers Institutional delivery Invest More on Primary Education: Reading Standards Mathematical Skills Protect Teenagers: Detect Talent Physical Security Open Access to Information: Libraries Local Governments

En resumen – la pobreza y la desigualdad seguirán en declínio en América Latina? Access to higher education remains a huge obstacle This is significantly lower quality for the poor And most poor do not make it to universities A large share of public spending is still regressive Taxes are severely underused as an instrument of redistribution “State capture” by elite groups: artificial monopolies, etc. Substantial tax reform is needed: Income taxation Estate taxation Of course, expansion in employment opportunities most important Macroeconomic growth Improvements in the business environment March 24, 2017

Debate March 24, 2017