World Bank Latin American and Caribbean Studies
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This regional flagship series features major development reports from the Latin America and Caribbean region unit of the World Bank. They aim to enrich the debate on the major development challenges and opportunities the region faces as it strives to meet the evolving needs of its people. Titles in this series undergo extensive internal and external review.
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Publication
Employment in Crisis: The Path to Better Jobs in a Post-COVID-19 Latin America
(Washington, DC: World Bank, 2021-06-17)A region known for its volatility, Latin America and the Caribbean (LAC) has suffered severe economic and social setbacks from crises—including the COVID-19 pandemic. These crises have taken their toll on careers, wage growth, and productivity. Employment in Crisis: The Path to Better Jobs in a Post-COVID-19 Latin America provides new evidence on the effects of crises on the region’s workers and firms and suggests several policy responses that can bolster long-term and inclusive economic growth. This report has three key findings. First, crises lead to persistent employment losses and accelerate structural changes away from the formal sector. This change occurs more through reductions in the creation of formal jobs than through job destruction. Second, some workers recover from crises, while others are permanently scarred by them. Low-skilled workers can suffer up to a decade of lower earnings caused by crises, while high-skilled workers rebound fast, exacerbating the LAC region’s high level of inequality. Formal workers suffer smaller employment and wage losses in localities with higher rates of informality. And the reduced job flows caused by crises decrease welfare, but workers in localities with more job opportunities, whether formal or informal, bounce back better. Third, crises’ cleansing effects can increase efficiency and productivity, but these effects are dampened by the LAC region’s less competitive market structure. Rather than becoming more agile and productive during economic downturns, protected sectors and firms gain market share and crowd out others, trapping valuable resources. This report proposes a three-pronged mix of policies to improve the LAC region’s responses to crises: • Create a more stable macroeconomic environment to smooth the impacts of crises, including automatic stabilizers such as unemployment insurance and short-term compensation programs; • Increase the capacity of social protection and labor programs to respond to crises and coalesce these programs into systems that complement income support with reemployment assistance and reskilling opportunities; and • Tackle structural issues, including the lack of product market competition and the spatial dimension behind poor labor market adjustment—a “good jobs and good firms” agenda. -
Publication
Going Viral: COVID-19 and the Accelerated Transformation of Jobs in Latin America and the Caribbean
(Washington, DC: World Bank, 2020-09-28)The economic impact of COVID-19 is unprecedented in size and scope. It has quickly evolved from a health emergency into an employment crisis. It also has far-reaching implications for workers beyond the immediate employment effects, as it most likely has accelerated the transformation process of jobs that had already started in the region and the world. This book focuses on three important pre-pandemic trends observed in the region—namely, premature deindustrialization, servicification of the economy, and task automation—that were significantly changing the labor market landscape in the region and that have been accelerated by the crisis. While there is still uncertainty about the economic impacts of Covid-19, policymakers need to start planning for a rapidly evolving future that will come sooner than expected. A strong focus on productivity, technology development and adoption, and training in relevant skills will be key to adapting and taking advantage of the new opportunities in the post-pandemic world. Importantly, the accelerated transformation of jobs calls for a rethinking of labor regulations and social protection policies geared towards wage earners employed in the formal sector of the economy. The three trends identified in Going Viral, the effects of the pandemic itself, and the growing reliance on electronic platforms raise doubts that wage employment will increase substantially in the coming years. At the same time, earnings and transactions processed through electronic platforms are more visible to the authorities, bringing an opportunity to increase tax revenue and social security contributions. The flexible regulation of the emerging forms of work in a way that encourages employment, supports formalization, and expands the coverage of social protection to larger segments of the population will be of utmost importance for policymakers preparing for a new and changed world. -
Publication
Latin American Entrepreneurs : Many Firms but Little Innovation
(Washington, DC: World Bank, 2014-01-02)Entrepreneurship is a fundamental driver of growth, development, and job creation. While Latin America and the Caribbean has a wealth of entrepreneurs, firms in the region, compared to those in other regions, are small in size and less likely to grow or innovate. Productivity growth has remained lackluster for decades, including during the recent commodity boom. Enhancing the creation of good jobs and accelerating productivity growth in the region will require dynamic entrepreneurs. Latin American Entrepreneurs: Many Firms but Little Innovation studies the landscape of entrepreneurship in Latin America and the Caribbean. Utilizing new datasets that cover issues such as firm creation, firm dynamics, export decisions, and the behavior of multinational corporations, the book synthesizes the results of a comprehensive analysis of the status, prospects, and challenges of entrepreneurship in the region. Useful tools and information are provided to help policy makers and practitioners identify policy areas governments can explore to enhance innovation and encourage high-growth, transformational entrepreneurship. -
Publication
Economic Mobility and the Rise of the Latin American Middle Class
(Washington, DC: World Bank, 2013)After decades of stagnation, the size of Latin America's middle class recently expanded to the point where, for the first time ever, the number of people in poverty is equal to the size of the middle class. This volume investigates the nature, determinants and possible consequences of this remarkable process of social transformation. We propose an original definition of the middle class, tailor-made for Latin America, centered on the concept of economic security and thus a low probability of falling into poverty. Given our definition of the middle class, there are four, not three, classes in Latin America. Sandwiched between the poor and the middle class there lies a large group of people who appear to make ends meet well enough, but do not enjoy the economic security that would be required for membership of the middle class. We call this group the 'vulnerable'. In an almost mechanical sense, these transformations in Latin America reflect both economic growth and declining inequality in over the period. We adopt a measure of mobility that decomposes the 'gainers' and 'losers' in society by social class of each household. The continent has experienced a large amount of churning over the last 15 years, at least 43% of all Latin Americans changed social classes between the mid 1990s and the end of the 2000s. Despite the upward mobility trend, intergenerational mobility, a better proxy for inequality of opportunity, remains stagnant. Educational achievement and attainment remain to be strongly dependent upon parental education levels. Despite the recent growth in pro-poor programs, the middle class has benefited disproportionally from social security transfers and are increasingly opting out from government services. Central to the region's prospects of continued progress will be its ability to harness the new middle class into a new, more inclusive social contract, where the better-off pay their fair share of taxes, and demand improved public services. -
Publication
Financial Development in Latin America and the Caribbean : The Road Ahead
(World Bank, 2012)The financial systems of the Latin America and the Caribbean region (LAC) are at a crucial juncture. After a history of recurrent instability and crisis (a trademark of the region), they now seem well poised for rapid expansion. Since the last wave of financial crises that swept through the region in the late 1990s and early 2000s, financial systems in LAC have continued to gain in soundness, depth, and diversity. The size of banking systems has increased, albeit from a low base; local currency bond markets have greatly developed, both in volumes and in reach over the yield curve; stock markets have expanded; and derivative markets particularly currency derivatives have grown and multiplied. Institutional investors have become more important relative to banks, making the financial system more complex and diversified. Importantly, much progress has been made in financial inclusion, particularly through the expansion of payments, savings, and credit services to lower income households and microenterprises. As evidence of their new soundness and resiliency, financial systems in the region, except in some Caribbean countries, weathered the recent global financial crisis remarkably well. The progress in financial development in LAC no doubt reflects substantial improvements in the enabling environment, lower macroeconomic volatility, more independent and better-anchored currencies, increased financial liberalization, lower currency mismatches and foreign debt exposures, enhanced effectiveness of regulation and supervision, and notable improvements in the underlying market infrastructures (for example, trading, payments, custody, clearing, and settlement). This regional flagship report aims at providing such a stocktaking and forward looking assessment of the region's financial development. Rather than going into detail about sector-specific issues, the report focuses on the main architectural issues, overall perspectives, and interconnections. The value added of the report thus hinges on its holistic view of the development process, its broad coverage of the financial services industry (not just banking), its emphasis on benchmarking, its systemic perspective, and its explicit effort to incorporate the lessons from the recent global financial crisis.