This paper analyzes six waves of responses from the World Values Survey to understand the determinants of beliefs about women’s roles in society and their relationship with the legal system and outcomes.
Immigration Restrictions as Active Labor Market Policy: Evidence from the Mexican Bracero Exclusion - Working Paper 451
The Impact of the Tax System and Social Expenditure on the Distribution of Income and Poverty in Latin America (Spanish) - Working Paper 450
This paper presents results on the impact of fiscal policy on inequality and poverty around 2010 in sixteen Latin American countries: Argentina, Bolivia, Brazil, Chile, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, Mexico, Nicaragua, Peru, Dominican Republic, Uruguay, and Venezuela.
Expanding Global Liquidity Insurance: Myths and Realities of the IMF’s Precautionary Credit Lines - Working Paper 449
This paper addresses four misconceptions (or ‘myths’) that have likely played a role in the limited utilization of the IMF’s two precautionary credit lines, the Flexible Credit Line (FCL) and the Precautionary and Liquidity Line (PLL). These myths are 1) too stringent qualification criteria that limit country eligibility; 2) insufficient IMF resources; 3) high costs of precautionary borrowing; and 4) the economic stigma associated with IMF assistance. We show, in fact, that the pool of eligible member states is likely to be seven to eight times larger than the number of current users; that with the 2016 quota reform IMF resources are more than adequate to support a larger precautionary portfolio; that the two IMF credit lines are among the least costly and most advantageous instruments for liquidity support countries have; and that there is no evidence of negative market developments for countries now participating in the precautionary lines.
Fiscal Policy, Income Redistribution and Poverty Reduction in Low and Middle Income Countries - Working Paper 448
Current policy discussion focuses primarily on the power of fiscal policy to reduce inequality. Yet, comparable fiscal incidence analysis for 28 low and middle income countries reveals that, although fiscal systems are always equalizing, that is not always true for poverty. To varying degrees, in all countries a portion of the poor are net payers into the fiscal system and are thus impoverished by the fiscal system. Consumption taxes are the main culprits of fiscally-induced impoverishment.
Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers - Working Paper 446
This paper provides a theoretical foundation for analyzing the redistributive effect of taxes and transfers for the case in which the ranking of individuals by pre-fiscal income remains unchanged. We show that in a world with more than a single fiscal instrument, the simple rule that progressive taxes or transfers are always equalizing not necessarily holds, and offer alternative rules that survive a theoretical scrutiny. In particular, we show that the sign of the marginal contribution unambiguously predicts whether a tax or a transfer is equalizing or not.
The Impact of Taxes and Social Spending on Inequality and Poverty in El Salvador - Working Paper 447
We conducted a fiscal impact study to estimate the effect of taxes, social spending, and subsidies on inequality and poverty in El Salvador, using the methodology of the Commitment to Equity project. Taxes are progressive, but given their volume, their impact is limited. Direct transfers are concentrated on poor households, but their budget is small so their effect is limited; a significant portion of the subsidies goes to households in the upper income deciles, so although their budget is greater, their impact is low. The component that has the greatest effect on inequality is spending on education and health. Therefore, the impact of fiscal policy is limited and low when compared with other countries with a similar level of per capita income. There is room for improvement using current resources.
The Impact of Anti-Money Laundering Regulation on Payment Flows: Evidence from SWIFT Data - Working Paper 445
Regulatory pressure on international banks to fight money laundering (ML) and terrorist financing (TF) increased substantially in the past decade. We find countries that have been added to a high-risk greylist face up to a 10% decline in the number of cross border payments received from other jurisdictions, but no change in the number sent. We also find that a greylisted country is more likely to see a decline in payments from other countries with weak AML/CFT institutions. We find limited evidence that these effects manifest in cross border trade or other flows. Given that countries that are placed on these lists tend to be poorer on average, these impacts are likely to be more strongly felt in developing countries.
Internationally comparable test scores play a central role in both research and policy debates on education. However, the main international testing regimes, such as PISA, TIMSS, or PIRLS, include very few low-income countries. For instance, most countries in Southern and Eastern Africa have opted instead for a regional assessment known as SACMEQ. This paper exploits an overlap between the SACMEQ and TIMSS tests—in both country coverage, and questions asked—to assess the feasibility of constructing global learning metrics by equating regional and international scales. I ﬁnd that learning levels in this sample of African countries are consistently (a) low in absolute terms; (b) signiﬁcantly lower than predicted by African per capita GDP levels; and (c) converging slowly, if at all, to the rest of the world during the 2000s. Creating test scores which are truly internationally comparable would be a global public good, requiring more concerted effort at the design stage.
The Impact of Taxes, Transfers, and Subsidies on Inequality and Poverty in Uganda - Working Paper 443
This paper uses the 2012/13 Uganda National Household Survey to analyze the redistributive effectiveness and impact on poverty and inequality of Uganda’s revenue collection instruments and social spending programs. Fiscal policy—including many of its constituent tax and spending elements—is inequality-reducing in Uganda, but the reduction of inequality due to fiscal policy in Uganda is lower than other countries with similar levels of initial inequality, a result tied to low levels of spending in Uganda generally. The impact of fiscal policy on poverty is negligible, while the combination of very sparse coverage of direct transfer programs and nearly complete coverage of indirect tax instruments means that many poor households are net payers into, rather than net recipients from, the fiscal system. As Uganda looks ahead to increased revenues from taxation and concurrent investments in productive infrastructure, it should take care to protect the poorest households from further impoverishment from the fiscal system.
Fiscal Policy, Inequality and Poverty in Iran: Assessing the Impact and Effectiveness of Taxes and Transfers the Poor in the Developing World - Working Paper 442
Using the Iranian Household Expenditure and Income Survey (HEIS) for 2011/12, we apply the marginal contribution approach to determine the impact and effectiveness of each fiscal intervention, and the fiscal system as a whole, on inequality and poverty in Iran.
Using comparable fiscal incidence analysis, this paper examines the impact of fiscal policy on inequality and poverty in twenty-five countries for around 2010. Success in fiscal redistribution is driven primarily by redistributive effort (share of social spending to GDP in each country) and the extent to which transfers/subsidies are targeted to the poor and direct taxes targeted to the rich. While fiscal policy always reduces inequality, this is not the case with poverty. While spending on pre-school and primary school is pro-poor (i.e., the per capita transfer declines with income) in almost all countries, pro-poor secondary school spending is less prevalent, and tertiary education spending tends to be progressive only in relative terms (i.e., equalizing but not pro-poor). Health spending is always equalizing except for Jordan.
We experimentally test the impact of expanding access to basic bank accounts in Uganda, Malawi, and Chile. Over two years, 17 percent, 10 percent, and 3 percent of treatment individuals made five or more deposits, respectively. Average monthly deposits for them were at the 79th, 91st, and 96th percentiles of baseline savings. Survey data show no clearly discernible intention-to-treat effects on savings or any downstream outcomes. This suggests that policies merely focused on expanding access to basic accounts are unlikely to improve welfare noticeably since impacts, even if present, are likely small and diverse.
In spite of recent progress in the usage of alternative financial services by adult populations, Latin America’s financial inclusion gaps have not reduced, relatively to comparable countries, and, in some cases, have even increased during the period 2011-2014. Institutional weaknesses play the most salient role through direct and indirect effects. Lack of enforcement of the rule of law directly reduces depositors’ incentives to entrust their funds to formal financial institutions. Indirectly, low institutional quality reinforces the adverse effects of insufficient bank competition on financial inclusion.
Glimpsing the End of Economic History? Unconditional Convergence and the Missing Middle Income Trap - Working Paper 438
This paper suggests a reinterpretation of global growth—encompassing notions of unconditional convergence and the middle income trap—in the past 50 years through the lens of growth theory. The last 20-30 years have been a golden era of convergence, challenging the new conventional wisdom of secular stagnation.
Governments buy about $9 trillion worth of goods and services a year, and their procurement policies are increasingly subject to international standards and institutional regulation. Using a database of World Bank financed contracts, we explore the impact of a relatively minor procurement rule governing advertising on competition using regression discontinuity design and matching methods. Our findings suggest the potential for more significant and strongly enforced transparency initiatives to have a sizeable effect on procurement outcomes.
Unauthorized Mexican Workers in the United States: Recent Inflows and Possible Future Scenarios - Working Paper 436
The U.S. economy has long relied on immigrant workers, many of them unauthorized, yet estimates of the inflow of unauthorized workers and the determinants of that inflow are hard to come by. This paper provides estimates of the number of newly arriving unauthorized workers from Mexico, the principal source of unauthorized immigrants to the United States, and examines how the inflow is related to U.S. and Mexico economic conditions. Our estimates suggest that annual inflows of unauthorized workers averaged about 170,000 during 1996-2014 but were much higher before the economic downturn that began in 2007. Labor market conditions in the U.S. and Mexico play key roles in this migrant flow. The models estimated here predict that annual unauthorized inflows from Mexico will be about 100,000 in the future if recent economic conditions persist, and higher if the U.S. economy booms or the Mexican economy weakens.
Elections have emerged as a leading area for the application of biometric technology in developing countries, despite its high costs and uncertainty over its effectiveness. This paper finds that a reduction in the probability of post-election violence by only a few percentage points could offset the cost of the technology. However, this is possible only in particular situations.