Woodrow Wilson Center Washington DC – January 26, 2015 Inequality in a Lower Growth Latin America From Analysis to Action Ángel Melguizo Head, Latin American and Caribbean Unit OECD Development Centre
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Woodrow Wilson Center
Washington DC – January 26, 2015
Inequality in a Lower Growth Latin America
From Analysis to Action
Ángel Melguizo
Head, Latin American and Caribbean Unit
OECD Development Centre
Inequality in a Lower Growth Latin America
2
GDP growth in Latin America and the Caribbean and the OECD (annual %)
Source: OECD-ECLAC-CAF (2015), Latin American Economic Outlook 2015. Education, Skills and Innovation for Development
-4
-2
0
2
4
6
8
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
OECD Latin American and the Caribbean
Outline
3
• High inequality in Latin America, curse or
policies?
• Education: How is the social elevator working?
• From analysis to action: can we rely on the
emerging middle class?
Income inequality is very high in Latin America
4
Source: OECD (2014), “Does income inequality hurt economic growth?”, Focus in Inequality and Growth.
Inequality in Chile, Mexico, the US and the OECD (Gini of income inequality)
0.20
0.25
0.30
0.35
0.40
0.45
0.50
0.55
1975 1980 1985 1990 1995 2000 2005 2010
Gin
i co
effi
cien
t o
f in
com
e in
equ
alit
y
Inequality is similar in OECD and Latin America before
paying taxes and getting transfers and services
5 Source: ECLAC (2014), El impacto distributivo de la accion fiscal en America Latina.
Inequality in Latin America and the OECD (Gini indexes before direct taxes, education and health services)
0.2
0.3
0.4
0.5
0.6A
RG
BO
L
BR
A
CH
L
CO
L
CR
I
ECU
SLV
HN
D
MEX NIC
PA
N
PA
R
PER
DO
M
UR
Y
OEC
D
Redistribution in Latin America is much weaker
6
Inequality in Latin America and the OECD (Gini indexes before and after direct taxes, education and health services)
0.2
0.3
0.4
0.5
0.6A
RG
BO
L
BR
A
CH
L
CO
L
CR
I
ECU
SLV
HN
D
MEX NIC
PA
N
PA
R
PER
DO
M
UR
Y
OEC
D
Market income Disposable extended income
Source: ECLAC (2014), El impacto distributivo de la accion fiscal en America Latina.
Key differences arise from direct taxes and cash transfers
7
Source: OECD (2011), Latin American Economic Outlook 2012: Transforming the State for Development
Inequality in Chile, Mexico and the OECD (Gini indexes before and after taxes and public spending)
0.2
0.3
0.4
0.5
0.6
Chile Mexico OECD
Market income
+ Monetary transfers
- Direct taxes
+ Education (in kind)
+ Health (in kind)
Public sector size (for many Latin American countries) and
design (for most of them) matter
8 Source: OECD-ECLAC-CIAT (2014), Revenue Statistics in Latin America 1990-2012
Tax revenue in Latin America and the OECD (% GDP, 2012)
0 10 20 30 40
OECD (34)
LAC (18)
Guatemala
Dominican Republic
Venezuela
El Salvador
Honduras
Paraguay
Peru
Panama
Nicaragua
Colombia
Mexico
Ecuador
Chile
Costa Rica
Bolivia
Uruguay
Brazil
Argentina
Outline
9
• High inequality in Latin America, curse or
policies?
• Education: How is the social elevator working?
• From analysis to action: can we rely on the
emerging middle class?
10
Latin America lags behind in terms of performance and
equity in education
Student performance and equity in secondary school (PISA 2012 database)
CHLMEX
ARG
BRA
COL
CRI
PER
URY
Others
OECD
LA
350
400
450
500
550
600
650
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
Performance in math, PISA points 2012
Percentage of the variation on the performance explained by socio-economic status from the student and school
Source: OECD-ECLAC-CAF (2015), Latin American Economic Outlook 2015. Education, Skills and Innovation for Development
Education inequality is evident not only in access, also in
performance
Source: OECD-ECLAC-CAF (2015), Latin American Economic Outlook 2015. Education, Skills and Innovation for Development
Source: OECD-ECLAC-CAF (2015), Latin American Economic Outlook 2015. Education, Skills and Innovation for Development
Education inequality beyond money
13
Quality of schools’ resources and students’ socio-economic status (Correlation; value between 0=no impact and 1=full impact; PISA 2012 database)
Resource allocation might be deepening socio-economic
inequalities
Source: OECD-ECLAC-CAF (2015), Latin American Economic Outlook 2015. Education, Skills and Innovation for Development
14 Source: Echenique, J.A. and S. Urzua (2013), Desigualdad, Segregación y Resultados Educacionales Evidencia desde el
Metro de Santiago. Centro de Estudios Publicos.
Grafico del metro santiago
Next stop: Inequality?
Per capita income in Line 1 of Metro de Santiago (Per capita income in each comuna; CASEN 2011)
15 Source: Echenique, J.A. and S. Urzua (2013), Desigualdad, Segregación y Resultados Educacionales Evidencia desde el
Metro de Santiago. Centro de Estudios Publicos.
Grafico del metro santiago
Next stop: Inequality?
Student performance and per capita income in Line 1 of Metro de Santiago (Per capita income in each comuna; CASEN 2011 – SIMCE 4o basico results in maths)
Outline
16
• High inequality in Latin America, curse or
policies?
• Education: How is the social elevator working?
• From analysis to action: can we rely on the
emerging middle class?
Growing middle sectors in Latin America
Trends in middle class, vulnerability, and poverty in Latin America (Percentage of population; excluding affluent population >50USD)
-
10
20
30
40
50
60
70
80
90
100
1995 2000 2005 2010
Poor (< 4 USD/day) Vulnerable (4-10 USD/day) Middle Class (10-50 USD/day)
Source: Ferreira, F.H.G., J. Messina, J. Rigolini, L.-F. Lopez-Calva, M.A. Lugo and R. Vakis (2013), Economic Mobility and the Rise of the Middle Latin American Middle Class.
Support for democracy in Latin America (Percentage of surveyed population, by income quintiles, circa 2010)
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
Q1 Q2 Q3 Q4 Q1
Source: OECD (2010), Latin American Economic Perspectives 2011. How middle-class in Latin America?
Middle sectors show high support for democracy and
moderate political ideas
But, they mostly informal (notably the vulnerable)
Informality among the middle-sectors in Latin America (Percentage of middle level households with no contributor to social insurance, circa 2010)
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
URY CRI BRA MEX COL PER BOL SLV GTM
Vulnerable Middle class
Source: Lustig, N. and A. Melguizo (2015), How middle class is the middle class in of Macondo? On labour informality in Latin America
… and as unsatisfied with public services as the poor
20 Source: OECD (2010), Latin American Economic Perspectives 2011. How middle-class in Latin America?
-
10
20
30
40
50
60
70
80
90
100
Q1 Q2 Q3 Q4 Q5
Satisfied Unsatisfied Not covered
Satisfaction with health-care public services in Latin America (Percentage of surveyed population, by income quintiles, circa 2010)
Inequality in a Lower Growth Latin America: always look at
the bright side
21
• High inequality in Latin America
Braver policies are needed
• Education
Fixing the elevator is possible
Double dividend: growth and equity
• Middle class
A new social contract (taxes and
services) is to be written
Thank you!
www.oecd.org/dev