Thomas J Trebat Institute of Latin American Studies Columbia University September 2011

1. Pobreza, Desigualdad, y PolíticasSociales en América Latina: ViejosProblemas, NuevasPosibilidades . Thomas J Trebat Institute of Latin American Studies Columbia University September 2011

2. Some progress being made: Will it continue? Better safety nets and social assistance Absolute numbers of the poor have declined Yet poverty and inequality remain very high in Latin America And no doubt contributes to the low rates of economic growth Better, more targeted economic and social policies are needed Tax and expenditure policies Labor market policies Credit and insurance markets Access to education Healthcare policy Social safety nets Early childhood programs to combat malnutrition and begin education Pobreza y Desigualdad en la RegiónLatinoamericana.: Evaluación, Remedios

3. Pobreza – Conceptos y métodos de mensuración • Wide range of definitions: from lack of resources to lack of capabilities or freedom • Lack of resources (“a severe constriction of the choice set [over commodities]” (Watts, H.) • Unmet basic needs (food, shelter, basic services) • Capability deprivation (Sen, A.). • Different concepts lead to different measurements and policy intervention designs • Human Opportunity Index (HOI – World Bank) • Human Development Index (UNDP) • Multidimensional Poverty Index (MPI – Oxford University) • Unmet Basic Needs Index, others

4. Tomado de: CEPAL (2008)

5. Pobreza ha estado en declinio… Evolution of Poverty (4 US$ per day) and GDP 1980 – 2008 in LAC

6. Aunque elevada todavía, desigualdad también está cayendo….(Source: World Bank, September 2009) Gini Coefficient, Latin America (circa 2004-2005) Sub-Saharan Africa (circa 2005) OECD (Average- circa 2005) 6

7. Cambios en tasas de desiguladad entre 2002 e 2008 en AL Tomado de: CEPAL (2009)

8. Dos niñoslatinoamericanos: Probability of completing sixth grade on time Jamaica Argentina Child with four siblings in a rural single-parent household, with illiterate parent and per capita income of US$1 Mexico Chile El Salvador Venezuela Panama Bolivia Paraguay Uruguay Honduras Ecuador Child with one sibling in an urban two-parent household, with completed secondary education and per capita income of US$25 Costa Rica Dominican Rep. Colombia Peru Guatemala Nicaragua Brazil

9. Hiatos enormes en educación básica America Latina em perspectiva global

10. Dos niñosuruguayos: Probability of a preventive dental visit (previous 6 months) Child with four siblings in a rural single-parent household, with illiterate parent and per capita income of US$3 Child with one sibling in an urban two-parent household, with completed secondary education and per capita income of US$30

11. Dos niñosargentinos: Probability of 2-5yo children receiving early education Child with four siblings in a rural single-parent household, with illiterate parent and per capita income of US$4 Child with one sibling in an urban two-parent household, with completed secondary education and per capita income of US$25

12. Dos niñosparaguayos: Probability of having potable water in the house Child with four siblings in a rural single-parent household, with illiterate parent and per capita income of US$1 Child with one sibling in an urban two-parent household, with completed secondary education and per capita income of US$25

14. Índice de Desarrollo Humano (IDH – PNUD) • Desarrollo humano visto como capacidades para llevar una vida digna. • IDH incluye 3 dimensiones: • Ingreso/ “nivel de vida” (PIB per cápita PPA en dólares). • Longevidad (esperanza de vida al nacer). • Nivel educacional (tasa de analfabetismo y tasa de matrícula combinada).

15. Índice de Desarrollo Humano para América Latina en 2011 • http://hdr.undp.org/en/data/trends/

17. * HOY for education calculated as a simple average of HOIs for reading, mathematics and science in PISA. For the US average of mathematics and science only.

18. Cuáles son los factoresqueexplican la caída en tasas de pobreza? Macro stability and growth is necessary for poverty reduction, but what is required is that the poor benefit from that growth. Poverty reduction episodes driven by remittances or “good luck” may or may not be sustainable. Poverty reduction episodes driven by employment or productivity increases seem to be characterized by fundamental changes which may be long-lasting. Social spending help to reduce poverty when well targeted but unlikely to be the main driver. Evidence of infrastructure investment having positive impact on poverty

19. Pobreza y crecimento económico- relación estrecha Poverty and GDP evolution in Latin America and the Caribbean 19

20. Altas tasas de trabajo informal persisten en la región • Extremely high rates in Andes • Lower rates in Chile and Costa Rica • About 50% of the labor force is in the informal sector • Mainly in services • Productivity extremely low in services • See the graph

21. Gastos expresivos con políticas sociales Source: CEPAL.

22. Brasil – ingresos de los máspobresestancreciendo a tasasaltas Source: Brazil Economic Team using data from PNAD (IBGE)

23. Most of the reduction in poverty is due to an increase in labor income Brasil : Factores que explican la caída en la pobreza Source: Barros et al (2010).

24. Las cuentasfiscalesayudan a entender la disminución de la pobreza? Sólo en parte.. • Social spending tends not to be progressive and is probably regressive in many respects • Subsidies to tertiary education, generally high in Latin America, benefit the wealthy disproportionately • The same is true for pension payments : • No pension systems for informal workers • Innovations: Conditional Cash Transfers Do Target the Poor

25. Efectosredistributivos de diferentesgastosgobernamentales en América Latina Social Assistance Progressive Expenditures Education Primary Education Secondary Assistance Tertiary Assistance Regressive Expenditures Health Housing Pensions Total Social Spending - 0.3 - 0.2 - 0.1 0.0 0.1 0.2 0.3 0.4 Source: Americas Quarterly, spring 2008

26. Argentina: Polítcassocialesmejoran la distribución del ingresonacional Inequality Case Studies

27. ProgramastipoBolsaFamila en 1997 Source: Fiszbein & Schady (2009)

28. ProgramastipoBolsaFamilia en 2008 Source: Fiszbein & Schady (2009)

29. Programas condicionados de transferencia de renta en America Latina Source: Americas Quarterly, spring 2008

30. Familias en Acción • Education subsidy: • Cash subsidy for households with children 7 -17 years old, conditioned on enrollment and attendance (80% of the time). • Large cities: subsidy is for children between 11 and 18 yrs old and varies by grade. • Bimonthly subsidy of $30,000/child in elementary school and $60,000/child in secondary school (up to $120,000 for youth in 11th grade in some cities).

31. Beneficiaries are concentrated in the lower deciles Programas bien enfocados sobre las necesidades de los más pobres Source: World Bank 2009 31

32. Por qué se expanden los programas condicionados de tranferencia de renta? • Success as social assistance: good targeting, cost effective • Success in raising service use: schools, health services • Improvements in outcomes: nutrition, health, learning, income gains • Good governance: objective, verifiable targets, etc. • Modest cost for the government: 0.4% of GDP • But not a substitute for jobs

33. Otrosenfoques de la politica social contra la pobreza y desigualdad • Extending pension benefits more broadly • Access to healthcare • The educational system and its impact on inequality • Early childhood programs

34. Cobertura de pensiones y jubilaciones todavía limitada As a percentage of economically active population, 1990s to 2000s Source: World Bank staff calculations, forthcoming Regional Study 34

35. Disponibilidad de seguro salud fuera del alcance de los pobres As a percentage of economically active population, mid-2000s Source: World Bank staff calculations, forthcoming Regional Study 35

36. Falta de atención adecuada a los problemas de los más jovenes Evolution of Chronic Child (<5 year old) malnutrition in Peru 36

37. Baja inversión en programas enfocados sobre la niñez(OECD countries invest up to 1.8% of GDP) 37 Source: UNESCO Global Monitoring Report 2007

38. Oportunidadeshumanas – nuevaspolíticassociales son necesários More Emphasis on Early Childhood: Pregnant Mothers Institutional delivery Invest More on Primary Education: Reading Standards Mathematical Skills Protect Teenagers: Detect Talent Physical Security Open Access to Information: Libraries Local Governments

39. En resumen – la pobreza y la desigualdadseguirán en declínio en América Latina? • Access to higher education remains a huge obstacle • This is significantly lower quality for the poor • And most poor do not make it to universities • A large share of public spending is still regressive • Taxes are severely underused as an instrument of redistribution • “State capture” by elite groups: artificial monopolies, etc. • Substantial tax reform is needed: • Income taxation • Estate taxation • Of course, expansion in employment opportunities most important • Macroeconomic growth • Improvements in the business environment

40. Debate