Person:
Inchauste, Gabriela
Author Name Variants
Fields of Specialization
Fiscal incidence analysis,
Poverty and social impact,
Economic and social mobility,
Informality,
Distributional analysis,
Public finance,
Inequality,
Development economics
Degrees
Departments
Global Practice on Poverty and Equity, The World Bank
Externally Hosted Work
Contact Information
Last updated
July 12, 2023
Biography
Gabriela Inchauste is a Lead Economist in the Poverty and Equity Global Practice of the World Bank. She currently leads work on Fiscal and Social Policies for poverty reduction and shared prosperity. Her research interests revolve around the distributional impact of fiscal policy, ex-ante analysis of the distributional impacts of policy reforms, and understanding the channels through which economic growth improves labor market opportunities for poverty reduction. Prior to joining the Bank, she worked at the International Monetary Fund and the Inter-American Development Bank where she contributed to operational and analytical activities in a number of countries covering topics such as macroeconomic forecasting, public expenditure policy, poverty and social impact analysis, fiscal and debt sustainability analysis, post-disaster needs assessments, and subsidy reform.She has published articles in academic volumes and journals on fiscal policy in low-income countries, decentralization, the distributional impacts of taxes and social spending, macroeconomic shocks and the poor, the informal sector, and the role of remittances in developing countries. A Bolivian national, she holds a Ph.D. in economics from the University of Texas at Austin.
Publication Search Results
1 - 8 of 8
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Publication
When Job Earnings Are Behind Poverty Reduction
(World Bank, Washington, DC, 2012-11)Improvement in labor market conditions has been the main explanation behind many of the poverty success stories observed in the last decade, that is the primary conclusion of an analysis of changes in poverty by income source. Changes in labor earnings were the largest contributor to poverty reduction for a sample of 16 countries where poverty increased substantially. In 10 of these countries, labor income explained more than half of the change in poverty, and in another 4 countries, it accounted for more than 40 percent of the reduction in poverty. A declining dependency rate accounts for over a fifth of the reduction in poverty in 10 out of 16 countries, while transfers and other non-earned incomes account for more than a quarter of the reduction in poverty in 9 of these countries. A further decomposition of the contribution of labor income to poverty reduction in Bangladesh, Peru, and Thailand found that changes in individual characteristics (education, work experience, and region of residence) were important, but that overall, increases in real earnings among the poor matter the most. -
Publication
Decomposing the Recent Inequality Decline in Latin America
(World Bank, Washington, DC, 2013-12)Over the past decade, 12 of 14 Latin American countries have experienced a reduction in inequality. Based on a series of counterfactual simulations, the observed changes in inequality are decomposed in order to identify the main determinants of inequality. In contrast to methods that focus on aggregate summary statistics, the method adopted in this paper generates counterfactual distributions, so that the analysis can account for changes related to demographics, occupation, labor earnings and transfers, pensions, and other nonlabor income sources. The results show that for the majority of countries in the sample, the most important contributor to the observed decline in inequality has been the relatively strong growth in labor earnings at the bottom of the income distribution. In particular, most of the reduction in inequality can be attributed to an increase in earnings per hour for the bottom of the income distribution. The paper also contributes to the literature on inequality in Latin America by providing the Shapley-Shorrocks value of this decomposition. -
Publication
Decomposing Distributional Changes in Pakistan
(World Bank, Washington, DC, 2012-07)This paper quantifies the contributions to distributional changes observed in Pakistan over the last decade. In contrast to methods that focus on aggregate summary statistics, the method adopted in this paper generates entire counterfactual distributions to account for the contributions of demographics, labor and non-labor incomes in explaining poverty reduction. The results show that the most important contributor was the growth in income. Moreover, this growth in income seems to be driven by returns to individual and household endowments, pointing to productivity increases as the driving force behind poverty reduction. Lower dependency ratios, transfers and remittances also contributed to poverty reduction, albeit to a smaller extent. Growth in productivity, particularly between 2001-02 and 2005-06 is consistent with estimates from aggregate accounts, which points to productivity growth led by movements of labor force away from agriculture and into industry and services. If the objective is to reach similar or accelerated poverty reduction and productivity growth going forward, increased investment in rural areas will be needed. -
Publication
Understanding Poverty Reduction in Sri Lanka: Evidence from 2002 to 2012/13
(World Bank, Washington, DC, 2015-10)This paper quantifies the contributions to poverty reduction observed in Sri Lanka between 2002 and 2012/13. The methods adopted for the analysis generate entire counterfactual distributions to account for the contributions of demographics, labor, and non-labor incomes in explaining poverty reduction. The findings show that the most important contributor to poverty reduction was growth in labor income, stemming from an increase in the returns to salaried nonfarm workers and higher returns to self-employed farm workers. Although some of this increase in earnings may point to improvements in productivity, defined as higher units of output per worker, some of it may simply reflect increases in food and commodity prices, which have increased the marginal revenue product of labor. To the extent that there have been no increases in the volumes being produced, the observed changes in poverty are vulnerable to reversals if commodity prices were to decline significantly. Finally, although private transfers (domestic and foreign) helped to reduce poverty over the period, public transfers were not as effective. In particular, the reduction in the real value of transfers of the Samurdhi program during 2002 to 2012/13 slowed down poverty reduction. -
Publication
Is Labor Income Responsible for Poverty Reduction? A Decomposition Approach
(World Bank, Washington, DC, 2013-04)Demographics, labor income, public transfers, or remittances: Which factor contributes the most to observed reductions in poverty? Using counterfactual simulations, this paper accounts for the contribution labor income has made to the observed changes in poverty over the past decade for a set of 16 countries that have experienced substantial declines in poverty. In contrast to methods that focus on aggregate summary statistics, the analysis generates entire counterfactual distributions that allow assessing the contributions of different factors to observed distributional changes. Decompositions across all possible paths are calculated so the estimates are not subject to path-dependence. The analysis shows that for most countries in the sample, labor income is the most important contributor to changes in poverty. In ten of the countries, labor income explains more than half of the change in moderate poverty; in another four, it accounts for more than 40 percent of the reduction in poverty. Although public and private transfers were relatively more important in explaining the reduction in extreme poverty, more and better-paying jobs were the key factors behind poverty reduction over the past decade. -
Publication
The Distributional Impact of Taxes and Social Spending in Croatia
(World Bank, Washington, DC, 2017-09)This paper describes the impact of fiscal policy on inequality and poverty, and examines recent policy changes and whether there is room for an increased role for fiscal policy in improving the well-being of the poor. Taxes and social spending reduced inequality in Croatia; however, once the impacts of indirect taxes are considered, the system is unable to reduce poverty, especially for families with children and retirees. Beginning in the second decile, households are net payers to the treasury, as the share of taxes paid exceeded the cash benefits received for all but the poorest 10 percent of the population. Microsimulations of recent tax changes find that inequality after taxes and transfers is expected to increase slightly in 2017, as most of the benefits of the reform were concentrated at the top of the distribution. Although the impact of lower value-added taxes on electricity and utility bills is expected to be slightly poverty reducing, this effect is small relative to the relief that is needed. A reduction in the standard value-added tax rate from 25 to 24 percent would result in a small decline in poverty and inequality. However, the impact may be much smaller, depending on how this measure would be financed. -
Publication
The Distributional Impact of Taxes and Social Spending in Romania
(World Bank, Washington, DC, 2018-08)The combined effect of taxes and social spending in Romania helps to reduce inequality, although less so than in other European Union countries. However, the combination of direct and indirect taxes and transfers leads to an increase in poverty, as direct cash transfers to poor households are not large enough to compensate them for the burden of indirect taxes. This is especially important for rural households and families with children. Moreover, recent reductions in the rates for personal income and value-added taxes are expected to have led to an increase in inequality, as most of the tax relief accrued to the top of the income distribution. Although these changes likely helped to reduce poverty, they were an expensive way to achieve a small decline in the poverty rate. Higher and better targeted social assistance spending could have achieved better distributional results at a much lower fiscal cost. These results call for greater use of simulation tools that could inform policy makers and the public of the fiscal costs and redistributive impacts of proposed reforms. -
Publication
The Distributional Impact of Taxes and Transfers: Evidence From Eight Developing Countries
(Washington, DC: World Bank, 2017-08-24)The World Bank has partnered with the Commitment to Equity Institute at Tulane University to implement their diagnostic tool—the Commitment to Equity (CEQ) Assessment—designed to assess how taxation and public expenditures affect income inequality, poverty, and different economic groups. The approach relies on comprehensive fiscal incidence analysis, which measures the contribution of each individual intervention to poverty and inequality reduction as well as the combined impact of taxes and social spending. The CEQ Assessment provide an evidence base upon which alternative reform options can be analyzed. The use of a common methodology makes the results comparable across countries. This volume presents eight country studies that examine the distributional effects of individual programs and policy measures—and the net effect of each country’s mix of policies and programs. These case studies were produced in the context of Bank policy dialogue and have since been used to propose alternative reform options.