Since the early 2000s, after a long period of wide and persistent gaps, Latin America has experienced a steady decline in income inequality. This paper presents evidence of a trend reversal in labor income inequality, which is considered the main factor behind such a decline in income inequality across the region.
... See More + The analysis shows that, while labor income inequality increased during the 1990s, with heterogeneous experiences across countries, it fell in a synchronized way across countries beginning in the early 2000s. This systematic decline was supported by an expansion in real hourly earnings among the bottom of the wage distribution and, to a lesser extent, the middle part of the earnings distribution, thus reducing upper and lower tail inequality. This trend reversal is explained by a lower dispersion of earnings among workers with observable different attributes and by a much less extensive dispersion of residual labor inequality. Regarding the earnings differentials among workers with observable different attributes, the analysis concludes that the decline in labor inequality in Latin America has been closely associated with a reduction in the college/primary education premium and in the urban-rural earnings gap, coupled with a steady drop in the high school/primary education premium, which accelerated markedly since the 2000s, as well as a reduction in the experience premium across all age groups.
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Policy Research Working Paper WPS7795 AUG 15, 2016
Over the past three decades, many countries in Latin America and the Caribbean have recognized health as a human right. Since the early 2000s, 46 million more people in the countries studied are covered by health programs with explicit entitlements to care.
... See More + Reforms have been accompanied by a rise in public spending for health, financed largely by general revenues that prioritize or explicitly target the population without capacity to pay. Political commitment has generally translated into larger budgets as well as passage of legislation that ring-fenced funding for health. Most countries have prioritized cost-effective primary care and have adopted purchasing methods that incentivize efficiency and accountability for results and that give stewards of the health sector greater leverage to steer providers to deliver on public health priorities. Despite progress, disparities remain in financing and quality of services provision across health subsystems. Delivering on the commitment to universal health coverage will require concerted efforts to improve revenue generation in a fiscally sustainable manner and to increase the productivity of expenditures. This report shows that evidence from an analysis of 54 household surveys corroborates that investments in extending coverage are yielding results. Although the poor still have worse health outcomes than do the rich, disparities have narrowed considerably, particularly in the early stages of life. Countries have reached high levels of coverage and equity in utilization of maternal and child health services. The picture is more nuanced, and not nearly as positive, regarding adult health status and prevalence of chronic conditions and illnesses. Coverage of noncommunicable disease interventions is not as high, and service utilization is still skewed toward those who are better off. Prevalence of noncommunicable diseases has not behaved as expected given the drop in mortality; better access to diagnosis among wealthier individuals may be masking changes in actual prevalence. Catastrophic health expenditures have declined in most countries. The picture regarding equity, however, is mixed, pointing to limitations in the measure. Although the rate of impoverishment owing to health expenditures is low and generally declining, 2–4 million people in the countries studied still fall below the poverty line after health spending. Efforts to systematically monitor quality of care in the region are still in their infancy. Nonetheless, a review of the literature reveals important shortcomings in quality of care, as well as substantial differences across subsystems. Improving quality of care and ensuring sustainability of investments in health remain an unfinished agenda.
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The movement from a defined benefit to a defined contribution pension system has important implications in the area of portfolio allocation. While the focus of defined benefit pension funds is essentially in the long term, some defined contribution funds might have incentives to invest with shorter-term horizons.
... See More + The case of open pension funds, such as the ones in several countries in Latin America and Central and Eastern European countries, shows that competition on short-term returns may bring pension funds into suboptimal portfolio strategies. As policy makers become increasingly interested in finding long-term sources of financing for infrastructure and other long-term projects, it becomes essential to upgrade the regulatory framework of open pension funds. This paper contributes to the literature by proposing an investment regulatory framework based on strategic asset allocation that can be applicable to open pension funds. Based on the use of lifecycle investment strategies, the paper proposes the implementation of common portfolio benchmarks for pension funds. Three elements are emphasized for implementation of strategic asset allocation: (a) a well-defined pension objective, (b) sound governance of the portfolio benchmark, and (c) a methodology for developing the benchmark. The paper proposes the use of the approximation methodology as a starting point for designing portfolio benchmarks, and illustrates step-by-step how to build these long-term portfolios in a didactical way.
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Policy Research Working Paper WPS7784 AUG 04, 2016
Latin America and the Caribbean’s story in the 2000s was one of rapid progress for many. More than 70 million people moved out of poverty and started on the path to a better life for themselves and their families.
... See More + The middle class grew at an impressive rate, and despite recent slowdowns in growth, remains a large segment of Latin American society. Income inequalities shrank between those at the top and those at the bottom, albeit not nearly enough. Despite these improvements, still too many Latin Americans are trapped, unable to see the progress that their compatriots have experienced. One in four people is still living in poverty. And of the millions who have moved out of poverty, most are stuck between poverty and the middle class, making up a growing vulnerable class that remains at risk of losing their hard-won gains. One very concerning group is the focus of this book: the nearly 130 million chronic poor in Latin America and the Caribbean. These are the one in five people in the region who have never known anything but poverty. They have not benefitted from the rising tide driven by the growth over the past fifteen years, and thus have thus been left behind by policies and programs that have otherwise been effective in improving the lives of millions. These are the poorest of the poor, concentrated in communities that share the same issues, and for whom an escape from poverty seems unattainable. This book points to a few areas where policies and programs can have more and better impact. First, improving the enabling environment for the chronically poor to succeed, balancing direct support to poor families with critical improvements in their communities as a whole. It is not enough for people to have skills or education; they need to be able to find good jobs, have access to universal quality health care, and build their businesses in safe neighborhoods.
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Although the Latin American region has shown an impressive growth in educational attainment over the past two decades, that education has failed to yield expected benefits.
... See More + A mounting body of research and policy debates argues that the quantity of education is not an adequate metric of human capital acquisition. Rather, individual skills what they actually know and can do should stand as policy targets and be fostered across the life course. Evidence from around the world shows that both cognitive and socio-emotional skills are demanded by employers and favorably affect a range of outcomes, including educational attainment and employment outcomes. Through original empirical research investigating the role of cognitive and socio-emotional skills in shaping adults labor market outcomes in Bolivia, Colombia, El Salvador, and Peru, supplemented by similar studies in other Latin American countries, this review confirms that cognitive skills matter for reaping labor market gains in terms of higher wages and formal jobs in Latin America; but so do socio-emotional skills. Moreover, socio-emotional skills seem to particularly influence labor force participation and tertiary education attendance as a platform to build knowledge. The study also presents a policy framework for skills development by: (i) providing insights by developmental psychologists about when people are neuro-biologically, socio-emotionally, and situationally ready to develop socio-emotional skills, and (ii) suggesting new directions in cognitive development.
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In the past decades, natural disasters have caused substantial human and economic losses in Central America, with strong adverse impacts on gross domestic product per capita, income, and poverty reduction.
... See More + This study provides a regional perspective on the impact of hurricane windstorms on socioeconomic measures in the short term. Apart from modeling the socioeconomic impact at the macro and micro levels, the study incorporates and juxtaposes data from a hurricane windstorm model categorizing three hurricane damage indexes, which lends a higher level of detail, nuance, and therefore accuracy and comprehensiveness to the study. One standard deviation in the intensity of a hurricane windstorm leads to a decrease in growth of total per capita gross domestic product of between 0.9 and 1.6 percent, and a decrease in total income and labor income by 3 percent, which in turn increases moderate and extreme poverty by 1.5 percentage points. These results demonstrate the causal relationship between hurricane windstorm impacts and poverty in Central America, producing regional evidence that could improve targeting of disaster risk management policies toward those most impacted and thus whose needs are greatest.
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Policy Research Working Paper WPS7692 JUN 01, 2016
Ishizawa Escudero,Oscar Anil; Miranda Montero,Juan JoseDisclosed
Following steep declines in poverty rates over the past decade, the Latin America and Caribbean (LAC) region reduced childhood poverty by a third and childhood extreme poverty almost by half between 2004 and 2014.
... See More + Despite these gains, children in LAC have seen slower reductions in poverty than the overall population and continue to be more likely than adults to live in poverty. The incidence of childhood poverty in Central America and the Caribbean remains the highest in the region. Important socioeconomic and demographic factors are behind the slower gains in poverty reduction for children. The high levels of childhood poverty have significant consequences for the future of the LAC region. Today’s childhood poverty has significant implications for tomorrow’s labor force, limiting their potential to gain the skills necessary to exit poverty as adults. To prepare children for tomorrow’s jobs, policies need to prioritize access to good quality education and basic services, including nutrition, healthcare, and water.
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Following steep declines in poverty rates over the past decade, the Latin America and Caribbean (LAC) region reduced childhood poverty by a third and childhood extreme poverty almost by half between 2004 and 2014.
... See More + Despite these gains, children in LAC have seen slower reductions in poverty than the overall population and continue to be more likely than adults to live in poverty. The incidence of childhood poverty in Central America and the Caribbean remains the highest in the region. Important socioeconomic and demographic factors are behind the slower gains in poverty reduction for children. The high levels of childhood poverty have significant consequences for the future of the LAC region. Today’s childhood poverty has significant implications for tomorrow’s labor force, limiting their potential to gain the skills necessary to exit poverty as adults. To prepare children for tomorrow’s jobs, policies need to prioritize access to good quality education and basic services, including nutrition, healthcare, and water.
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Natural resource wealth has long played a central role in the fortunes and development of Latin American and Caribbean economies. During much of the 2000s, high prices of the region’s key commodity exports drove unprecedented economic growth, poverty reduction, and declines in income inequality.
... See More + In 2011, for the first time in the region’s history, more people lived in the Latin American and Caribbean middle class than in poverty. However, a slowdown in emerging markets, principally China, that are major consumers of Latin American commodities triggered a sharp deceleration in regional growth in 2012, one that has now persisted into its fifth year. Indeed, the regional economy contracted in 2015 and is expected to do so again in 2016, as demand for and prices of regional commodity exports remain subdued. In the sweep of Latin America’s economic history, natural resources have had both positive and deleterious impacts. Going forward, the region needs to engage in new thinking over how to limit the impact of commodity price downturns, better capitalize on the upswings, and minimize the social and environmental conflicts that natural resource extraction all too frequently signifies. Shaping such a paradigm will take time and the commitment of multiple stakeholders to constructive engagement. The authors hope that the observations contained in this report serve to guide future discussions on how to use natural resource abundance as a source of inclusive, sustainable economic growth and poverty reduction across the region.
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This review focuses specifically on Intimate partner violence (IPV) against women, as opposed to Violence against women and girls (VAWG) more broadly, for several reasons.
... See More + Partner violence is the most prevalent form of violence against women globally: a woman is at the greatest risk for suffering violence in her own home by someone she knows. A recent systematic review found that most of effective evaluations and programs on VAWG have been directed to IPV. This paper emphasizes results of these and other primary prevention programs, not because secondary and tertiary prevention programs are ineffective, but because primary prevention programs allow for macro-level programming that targets root causes of violence, such as harmful gender norms, to create generations of men, women, boys, and girls who not only no longer accept violence, but also feel empowered to eliminate it. To conclude, this methodological annex outlines the steps involved in adapting to new settings a community-based intervention to prevent intimate partner violence. While the precise nature of these steps will vary depending on the setting in which they are applied, the core ethical and effectiveness considerations here should remain true regardless of location. The authors hope that this note will help programmers worldwide to successfully transform community norms and prevent intimate partner violence.
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Working Paper AUS16688 MAY 24, 2016
Contreras-Urbina, Manuel; Heilman, Brian; Von Au,Anne Kathrin; Hill, Amber; Puerto Gómez, Margarita; Zelaya, Jennifer; Arango,Diana JimenaDisclosed
Over recent decades, women in Latin America and the Caribbean have increased their labor force participation faster than in any other region of the world.
... See More + This evolution occurred in the context of more general progress in women’s status. Female enrollment rates have increased at all levels of education, fertility rates have declined, and social norms have shifted toward gender equality. This report sheds light on the complex relationship between stages of economic development and female economic participation. It documents a shift in women’s perceptions whereby work has become a fundamental part of their identity, highlighting the distinction between jobs and careers. These dynamics are made more complex by the acknowledgment that individuals are part of larger economic units—families. As development progresses and the options available to women expand, the need to balance career and family takes greater importance. New tensions emerge, paradoxically made possible by decades of steady gains. Understanding the new challenges women face as they balance work and family is thus crucial for policy.
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