Reforms and Social Outcomes
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Transcript of Reforms and Social Outcomes
Reforms and
Social OutcomesSuzanne Duryea
Carmen Pagés
Research Department
Inter-American Development Bank
Social outcomes did not improve much in the nineties...
Poverty declined from 43% to 39%Extreme poverty from 16.8 to 15.6%Inequality increased by 2 Gini pointsAverage unemployment increased from 7% in 1990 to more than 10% in 2000 The share of unregistered jobs did not decline
Reforms or lack of Reforms to blame?
-- 10%10%
0%0%
10%10%
20%20%
30%30%
40%40%
50%50%
60%60%
70%70%
80%80%
Total Trade Finance Tax Privatization Labor
Until 1989Until 1989 Until 1994Until 1994 Until 1999Until 1999
--10%10%
0%0%
10%10%
20%20%
30%30%
40%40%
50%50%
60%60%
70%70%
80%80%
Until 1989 Until 1994Until 1994 Until 1999Until 1999
Are reforms to blame?
By the mid nineties:
Rising contention but lack of hard evidence.RES worked with micro data that was increasingly available but hardly used Major contributions in measuring reforms & in assessing their effects
Findings—Trade Reforms
Link between trade reforms and inequality & poverty is still the focus of intense research
• Behrman, Birdsall and Székely find trade reforms did not increase inequality or poverty during the 90´s
• Using pooled household survey data for LAC
Findings—Trade Reforms
Link between trade reforms and inequality & poverty is still the focus of intense research
• Evidence for skill-biased technological change (Colombia, Brazil, Colombia)
• Reduction of tariffs related to initial pattern of protection with lower-skilled more protected (increasing inequality)
(Mexico, Argentina, and Ecuador)
• Growing consensus that overall the effect of the trade reforms on the wage distribution are small
Findings—Trade Reforms
Trade reforms cannot seemingly be blamed for rising unemployment.
Effects on total employment or on unemployment are very small
Effects on employment reallocation also surprisingly small
But some adverse effects in manufacturing employment in Brazil and Uruguay (not in Mexico)
Findings—Trade Reforms
And measured effects on quality of jobs are so far small
Some in ColombiaNo effects in Brazil or Ecuador
But evidence that wages declined
Labor Markets are highly regulated
Job Security Index (0-1)
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8
UruguayJamaica
ChileRep. Dominicana
ArgentinaBolivia
ColombiaVenezuela
EcuadorPanamá
BrasilPerú
MéxicoIndustrial Anglosaxon
South Asian RegionEast Asia and Pacific Islands
Sub-Saharan AfricaIndustrial Continental EuropeMiddle East and North Africa
Eastern Europe and Central Asia Latin America and Caribbean
Findings-Labor Reforms
Labor Institutions & regulations MatterRudimentary social protection Soc. sec. reduces employment & increases unemploymentJob. Sec. reduces turnover & biases employment againts the youth and unskill
But, not clearly linked to rising U
Ongoing research
How to explain rising U? Is it cyclical or structural? Is lower inflation to blame for low wage adjustment? What is the role of institutions and policies?
Role for training, intermediation
What explains cross-country differences?
Ongoing research
Why is wage inequality on the rise?
What is the role of IT? What is the role of capital imports? What implications for skill formation policies? What to do about it?