Sousa, Liliana D.

Person:
Sousa, Liliana D.

Poverty and Equity Global Practice

Fields of Specialization

Labor economics

Departments

Poverty and Equity Global Practice

Last updated: January 31, 2023

Biography

Liliana D. Sousa is an Economist in the Poverty and Equity Global Practice at the World Bank. As such, she provides support to countries in the Latin America and Caribbean region through analytical and operational work on topics related to poverty, labor markets, data quality, and inclusion. She holds a Ph.D. in Economics from Cornell University. Prior to joining the World Bank in 2013, she worked as an Economist in the Center for Economic Studies in the U.S. Census Bureau and as a Research Associate at the Urban Institute. Her areas of interest include labor economics and applied microeconomics.

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Now showing 1 - 10 of 13

Employment in Crisis: The Path to Better Jobs in a Post-COVID-19 Latin America
(Washington, DC: World Bank, 2021-06-17) Packard, Truman G.; Silva, Joana; Sousa, Liliana D.; Robertson, Raymond
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.
April 2022 Update to the Poverty and Inequality Platform (PIP): What's New
(World Bank, Washington, DC, 2022-04) Castaneda Aguilar, R. Andres; Dewina, Reno; Diaz-Bonilla, Carolina; Edochie, Ifeanyi N.; Fujs, Tony H. M. J.; Jolliffe, Dean; Lain, Jonathan; Lakner, Christoph; Ibarra, Gabriel Lara; Mahler, Daniel G.; Meyer, Moritz; Montes, Jose; Moreno Herrera, Laura L.; Mungai, Rose; Newhouse, David; Nguyen, Minh C.; Sanchez Castro, Diana; Schoch, Marta; Sousa, Liliana D.; Tetteh-Baah, Samuel K.; Uochi, Ikuko; Viveros Mendoza, Martha C.; Wu, Haoya; Yonzan, Nishant; Yoshida, Nobu
The April 2022 update to the newly launched Poverty and Inequality Platform (PIP) involves several changes to the data underlying the global poverty estimates. Some welfare aggregates have been changed for improved harmonization, and the CPI, national accounts, and population input data have been updated. This document explains these changes in detail and the reasoning behind them. Moreover, a large number of new country-years have been added, bringing the total number of surveys to more than 2,000. These include new harmonized surveys for countries in West Africa, new imputed poverty estimates for Nigeria, and recent 2020 household survey data for several countries. Global poverty estimates are now reported up to 2018 and earlier years have been revised.
'She Helps Me All the Time': Underestimating Women's Economic Engagement in Rural Honduras
(World Bank, Washington, DC, 2020-04) Muller, Miriam; Sousa, Liliana D.
This study aims to understand women's engagement in economic activities in rural Honduras and why these activities may not be accurately reflected in official statistics. The study finds that women underreport their engagement in economic activities, including production for own consumption, production of market goods, and remunerated services and commerce. Simulations suggest that the rural female labor force participation rate in Honduras is likely to be underestimated by 6 to 23 percentage points. Two main explanations are found. First, women identify themselves (and are identified) primarily as housewives, and the concepts of housework and employment are taken as mutually exclusive. Second, given this duality between housework and employment, women define "employment" based on a set of necessary characteristics that exclude many of their own activities. Specifically, work needs to (i) be conducted physically outside the home; (ii) be in exchange for money; and (iii) entail sufficient time commitment. Importantly, these conditions are not binding constraints for men to identify their own activities as economic activity. These results have implications for understanding the low labor force participation of women in rural communities in countries beyond Honduras, suggesting that low rates obscure a significant amount of economic activity in many countries.
A Reversal in Shared Prosperity in Brazil: Brazil’s Poverty and Inequality since the 2014-2016 Domestic Crisis
(World Bank, Washington, DC, 2020-07-31) Ciaschi, Matias; Damasceno Costa, Rita; Rubião, Rafael M.; Paffhausen, Anna Luisa; Sousa, Liliana D.
The Coronavirus (COVID-19) pandemic arrived in Brazil while the poorest forty percent of the population was still recovering from the 2014-2016 crisis. After boosting Latin America’s reduction in poverty and inequality for the previous decade, Brazil’s 2014-2016 crisis and recovery are a stark departure from the previous decade as Brazil’s inclusive growth turned significantly regressive. As millions of jobs were lost, Brazil’s expansive social protection system was unable to effectively serve as a countercyclical protection system. This note analyses the recently released household data from 2012 through 2019 to better understand the severity of the 2014-2016 crisis across income groups, as well as the uneven and slow recovery experienced following this crisis.
COVID-19, Labor Market Shocks, Poverty in Brazil: A Microsimulation Analysis
(World Bank, Washington, DC, 2020-07-31) Cereda, Fabio; Rubiao, Rafael M.; Sousa, Liliana D.
In this note we estimate the short-term economic impact of the COVID-19 crisis on Brazilian families vis-a-vis labor shocks. The analysis, using a microsimulation model which incorporates subnational shocks from a computable general equilibrium growth model, shows that over 30 million workers in Brazil may see significant reductions in their labor income in 2020 due to the COVID-19 pandemic. Two-thirds of these workers are informal workers or own-account workers, groups without access to unemployment protection. These household shocks would reduce average per capita income by 7.6 percent, with the largest impact on the second and third quintiles of the income distribution. These income shocks are inequality-increasing: without any mitigation measures, inequality would increase by 4 percent. The country’s first line of defense, its existing unemployment insurance system, reduces the income shock to 5.3 percent. Even so, an additional 8.4 million Brazilians could fall into poverty. The policy responses announced by the government, and particularly the Auxilio Emergencial (AE) transfer, have the potential to fully absorb the labor income shock for the poorest 40 percent and reduce poverty. Yet, these results reflect annualized income, obscuring the sharp reduction in monthly income if demand shocks persist after the AE ends. Looking towards the next phase of the response, considering extensions of AE that are either less generous or more restricted provide a fiscally prudent approach for continuing to support Brazil’s most vulnerable.
A Reforma do Bolsa Família: Avaliação das Propostas de Reforma Debatidas em 2019
(Washington, DC : World Bank, 2019-11) Morgandi, Matteo; Sousa, Liliana D.; Farias, Alison; Cereda, Fabio
As part of the ongoing debate on the modernization of the Bolsa Familia (BF) program, several reform proposals were presented through 2019, including by the Ministry of Citizenship (MoC), Congress and the think tank IPEA, the latter as part of a broader proposal to consolidate various expenditures. This note uses the BraSIM microsimulation model to evaluate the 2019 proposals in the context of Brazil’s tax benefit system. All proposals lead to a higher number of beneficiaries, with the poorest families, especially children and youth, benefitting the most. In general, the progressive incidence of the current program would vary little in the MoC and Congress reforms, but is reduced in IPEA’s, which includes a universal component. The three proposals have different contributions on poverty-reduction: IPEA’s reform is significantly less efficient than the current scenario and other reforms in terms of cost-effectiveness. However, IPEA’s proposal most contributes to the reduction of inequality, and is the only one that identifies financing sources through the extinction of more regressive expenditures. Through this comparative analysis, the Note also highlights the main dilemmas about the future of the program, which remain relevant even in the post-COVID-19 reality: the tension between generosity and coverage; the priorization of certain groups for poverty-reduction; reconciling the program's objective of encouraging human capital for children with its role of minimum income guarantee; the risks of eliminating a “basic benefit”. While only IPEA’s proposal identified financing sources for the program’s expansion, the Note reveals additional potential sources of financing for the BF program in the tax benefit system.
Fiscal and Welfare Impacts of Electricity Subsidies in Central America
(Washington, DC: World Bank, 2017-10-11) Sánchez, Luis Álvaro; Hernández Oré, Marco Antonio; Tornarolli, Leopoldo; Sousa, Liliana D.; Hernández Oré, Marco Antonio; Sánchez, Luis Álvaro; Sousa, Liliana D.; Tornarolli, Leopoldo; Korczyc, Ewa; Olivera, Laura; Rizo Patrón, Luis
Central American countries spend approximately one percent of their aggregate gross domestic product subsidizing residential electricity consumption. This amount is comparable with what these countries spend on education and social assistance. The pressure that electricity subsidies exert on government budgets is particularly high when international energy prices rise. Electricity subsidies also provide perverse incentives for the overconsumption of electricity as households do not pay the true cost of their consumption, which in turn reduces incentives to increase energy efficiency. This book answers key questions regarding residential electricity subsidies in Central America. In particular: How do the subsidy mechanisms function in each country? What are their fiscal costs? Are these subsidies good value for the money? How efficient are subsidies in reaching households in need, and what drives this efficiency? What are the reform options? The main message of this book is that there is considerable scope for improving the efficiency of electricity subsidies in Central America by better targeting them to low-income households. The book shows that electricity subsidies help reduce the burden of electricity costs on the lowest-income groups. However, the existing electricity subsidy schemes are very inefficient at targeting resources to low-income households, with the majority of government spending going to higher-income households. Indeed, most countries in the region have the opportunity to significantly reduce the fiscal costs of electricity subsidies without imposing significant costs on households, particularly poor households. Given the limited fiscal space in the region and the major needs of the countries in terms of social services and physical infrastructure, this study seeks to provide Central American policymakers with the analytical foundations necessary to assess the costs and benefits of their electricity subsidy mechanisms, and design effective reform strategies that reflect their unique circumstances and policy priorities.
Remittances and Labor Supply in the Northern Triangle
(World Bank, Washington, DC, 2018-09) Garcia-Suaza, Andres; Sousa, Liliana D.
Through substitution and income effects, remittances can alter an individual's allocation of time between market activities and household production, decreasing labor supply. This paper uses propensity score matching and household surveys for 2006 and 2014 to estimate the impact of remittances on labor supply in the three countries of the Northern Triangle (El Salvador, Guatemala, and Honduras). The results show that remittances are associated with a reduction in labor force participation, particularly among women. This effect is largest for Salvadoran women (13 percentage points). A sensitivity analysis finds that the negative effect on labor force participation rates of men in El Salvador and Guatemala and women in El Salvador is robust to potential selection bias. Receiving remittances is also associated with a lower likelihood of young adults being in school or at work, with this effect being robust to selection bias for young men in Guatemala. At the same time, the evidence suggests that remittances may be supporting small enterprises and self-employment in El Salvador and Guatemala. The analysis does not find robust evidence of remittances affecting the labor supply in Honduras in 2014.
Honduras: Unlocking Economic Potential for Greater Opportunities
(World Bank, Washington, DC, 2015-10-26) Hernandez Ore, Marco Antonio; Sousa, Liliana D.; Lopez, J. Humberto
Honduras is Central America’s second-largest country with a population of more than 8 million and a land area of about 112,000 square kilometers. The 20th century witnessed a profound economic transformation and modernization in Honduras. Honduras’ persistent poverty is the result of long-term low per capita growth and high inequality, perpetuated by the country’s high vulnerability to shocks. First, over the past 40 years the country has experienced modest growth rates marked by considerable volatility. Second, high levels of inequality have weakened the ability for growth to reduce poverty by limiting the extent to which a large segment of the population is able to fully access physical and human capital. Third, a large share of the population is vulnerable and exposed to regular shocks - both large and small which has exacerbated poverty by destroying or slowing asset accumulation. This systematic country diagnostic (SCD) explores the drivers of these development outcomes in Honduras, and reflects on the policy priorities that should underlie a development strategy focused on eradicating poverty and boosting shared prosperity. After identifying a number of critical factors affecting the country’s development outcomes, the SCD concludes that there is a need for a comprehensive agenda that tackles simultaneously the problems that have kept the country in a low development equilibrium for many decades, as well as emerging challenges that have the potential not only to prevent progress but also worsen the current situation. The SCD also argues that the policy agenda needs to be ambitious and move away from marginal interventions in order to move Honduras from a situation where its economic potentials are just potentials to another where they become actuals.
Hit and Run? Income Shocks and School Dropouts in Latin America
(World Bank, Washington, DC, 2018-02) Cerutti, Paula; Crivellaro, Elena; Reyes, German; Sousa, Liliana D.
How do labor income shocks affect household investment in upper secondary and tertiary schooling? Using longitudinal data from 2005-15 for Argentina, Brazil, and Mexico, this paper explores the effect of a negative household income shock on the enrollment status of youth ages 15 to 25. The findings suggest that negative income shocks significantly increase the likelihood that students in upper secondary and tertiary school exit school in Argentina and Brazil, but not in Mexico. For the three countries, the analysis finds evidence that youth who drop out due to a household income shock have worse employment outcomes than similar youth who exit school without a household income shock. Differences in labor markets and safety net programs likely play an important role in the decision to exit school as well as the employment outcomes of those who exit across these three countries.