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No Thumbnail AvailablePublication( 2011) Goni, Edwin ; Lopez, J. Humberto ; Serven, LuisThis paper documents and compares the redistributive performance of Latin American and Western European fiscal systems. Three main conclusions emerge: (i) taxes and transfers widen the difference in income inequality between the two country groups, because (ii) the redistributive impact of the fiscal system is very large in Europe and very small in Latin America; and (iii) where fiscal redistribution is significant, it is achieved mostly through transfers rather than taxes. While the priorities of pro-equity fiscal reforms vary across Latin American countries, overall the prospects for major fiscal redistribution lie mainly in raising the volume of resources available for transfers, and improving their targeting, rather than increasing the progressivity of Latin America's tax systems.
No Thumbnail AvailablePublication( 2011) Cuesta, Jose ; Nopo, Hugo ; Pizzolitto, GeorginaThis paper presents a comparative overview of mobility patterns in 14 Latin American countries between 1992 and 2003. Using three alternative econometric techniques on constructed pseudo-panels, the paper provides a set of estimators for the traditional notion of income mobility as well as for mobility around extreme and moderate poverty lines. The estimates suggest very high levels of time-dependent unconditional immobility for the region. However, the introduction of socioeconomic and personal factors reduces the estimate of income immobility by around 30 percent. There are also large variations in country-specific income mobility (estimated to explain some additional 10 percent of inter-temporal income variation). Analyzing the determinants of changes in poverty incidence within cohorts revealed statistically significant roles for age, gender, and education of the household head, the latter subject to distinctive effects across levels of attainment and transition in and out of poverty.
No Thumbnail AvailablePublication( 2009) Breceda, Karla ; Rigolini, Jamele ; Saavedra, JaimeThis article analyzes the incidence of social spending and taxation by income quintile for seven Latin American countries, the United Kingdom, and the United States. Absolute levels of social spending in Latin America are fairly flat across income quintiles, a pattern similar to that in the United States and differing from the more progressive pattern of spending in the United Kingdom. The structure of taxation in Latin America is also similar to that of the United States. Because of high income inequality in Latin America and the US, the rich bear of most the burden, whereas the United Kingdom taxes the middle class to a greater extent. The analysis suggests that many Latin American countries are trapped in a vicious cycle in which the rich resist the expansion of the welfare state (because they bear most of its tax burden without receiving commensurate benefits), and their opposition to its expansion in turn maintains long-term inequalities.
No Thumbnail AvailablePublication( 2008) Acosta, Pablo ; Calderon, Cesar ; Fajnzylber, Pablo ; Lopez, HumbertoWorkers' remittances have become a major source of income for developing countries. However, little is still known about their impact on poverty and inequality. Using a large cross-country panel dataset, we find that remittances in Latin American and Caribbean (LAC) countries have increased growth and reduced inequality and poverty. These results are robust to the use of different instruments that attempt to correct for the potential endogeneity of remittances. Household survey-based estimates for 10 LAC countries confirm that remittances have negative albeit relatively small inequality and poverty-reducing effects, even after imputations for the potential home earnings of migrants.