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How committed are Latin American Governments to equity?

How committed are Latin American Governments to equity?. Otaviano Canuto Vice President Poverty Reduction and Economic Management World Bank. What explains the decline in inequality?. A stronger labor market associated with fewer jobless workers and higher wages for unskilled workers

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How committed are Latin American Governments to equity?

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  1. How committed are Latin American Governments to equity? OtavianoCanuto Vice President Poverty Reduction and Economic Management World Bank

  2. What explains the decline in inequality? • A stronger labor market associated with fewer jobless workers and higher wages for unskilled workers • López-Calva and Lustig (2010), Jaramillo and Saavedra (2010) for Peru, Azevedo et al (2012) • Demographic changes and greater female labor force participation • Gray Molina and Yañez (2009) for Bolivia • A more progressive fiscal policy including redistributive public policies through transfers. • López-Calva and Lustig (2010) and Jaramillo and Saavedra (2010) for Peru • A more active role in the labor market where governments took a more pro-union stance and raised minimum wages and pensions • Gasparini and Lustig (2011)

  3. How important were these forces to inequality reduction? Transfers contributed 14% to the decline in inequality for the region. Pensions accounted for 7%. 45% of the reduction in inequality was due to higher labor incomes per hour. Source: Azevedo, Inchauste and Sanfelice, 2012. The World Bank.

  4. Labor incomes grew much faster for lowest quintiles

  5. How has policy helped to reduce inequality? • Macro stability • (inflation is a regressive tax) • Expansion of access to education and health services • Social protection / safety nets (CCTs)

  6. Maintaining macroeconomic stability… Source: IMF WEO, 2012.

  7. However, this is not enough • Inequality in outcomes continue to be high • Inequality of opportunities perpetuate these trends

  8. TwoLatin-americanchildren: • Probability of finishing 6th grade on time Boywith 4 siblings in a rural home, uneducated head of household, income at extreme povertylevel Childwithonesibling in anurban home, household head hassecondaryeducation, familyincome per capita of US$25 a day

  9. The Case of Brazil It is the best—largest and fastest— performer in reducing inequality Equality of opportunity is a political priority Uses evidence to guide policy

  10. Brazil: Best performer in reducing inequality…

  11. …and the president committed to flatten the slope of this graph by the end of her term...

  12. Thank you…

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