Better spending for better lives: how Latin America and the Caribbean can do more with less: Chapter 4: The Impact of Public Spending on Equity: Not Always as Intended

Pessino, Carola; Alaimo, Veronica

doi:10.18235/0001217-4-en

Cited by 4 publications

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“…Expenditures in health and education are also higher in advanced countries (6.5% and 5.3% of GDP) than in Latin America (3.6% and 4.8% of GDP). However, when comparing countries with similar levels and composition of social spending in the two groups, countries in the region still perform worse in terms of their redistribution capacity (Pessino and Alaimo, 2018). This points to other explanatory factors such as the targeting or the efficiency of each dollar spent.…”

Section: Figure 31 Income Inequality Differences Before and After Dir...mentioning

confidence: 98%

Inclusion in Times of Covid-19

2020

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Section: Figure 31 Income Inequality Differences Before and After Dir...mentioning

confidence: 98%

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“…The savings from avoiding leakages could then be allocated to improve coverage and lift the extreme poor out of poverty. For instance, Pessino and Alaimo (2018) estimate that closing the extreme poverty gap (using the $2.50 PPP per capita a day poverty line) with a perfectly targeted cash transfer would require more than 3 percent of GDP in Honduras and Nicaragua but 1 percent or less in Costa Rica and Uruguay.…”

Section: Taking Efficiency and The Quality Dimension Into Accountmentioning

confidence: 99%

“…Results from Pessino and Alaimo (2018), in Table 3, allow us to analyze the second-round effect of a noncontributory program on prefiscal inequality and poverty in the case of Argentina. The effects were simulated using the estimates of Garganta and Gasparini (2015) on how the Asignacion Universal por Hijo (AUH) (Argentina's flagship program) incentivized informality between 2.8 and 3.6 percentage points.…”

Section: Taking Efficiency and The Quality Dimension Into Accountmentioning

confidence: 99%

Fiscal Policy, Income Redistribution, and Poverty Reduction in Latin America

Lustig,

Martinez Pabon,

Pessino

2023

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This paper uses standard fiscal incidence analysis to study how much income redistribution and poverty reduction are accomplished through the fiscal system in eighteen Latin American and Caribbean (LAC) countries. We show there is considerable heterogeneity in the income inequality and poverty-reducing power of LAC fiscal systems. While all LAC fiscal systems reduce income inequality, fiscal systems in nine LAC countries are poverty-increasing, and this startling characteristic has not improved over time. When analyzing specific fiscal elements, we find that direct taxes, direct transfers, and in-kind transfers are all equalizing, and spending on education and health is often pro-poor. Moreover, contrary to expectations, indirect taxes and subsidies are more frequently equalizing than unequalizing.

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“…but when we analyze disposable income, which is household income after receiving direct government transfers and paying direct taxes, Latin American countries become much more unequal than these countries. This is because in Latin America, government interventions in cash transfers and direct taxes only reduce income inequality, as measured by the Gini coefficient, by 5%, while interventions in developed countries reduce it by nearly 38% (Pessino and Alaimo, 2018). Even when including contributory pensions as part of market income, the difference is smaller but continues to be significant.…”

Section: Introductionmentioning

confidence: 99%

“…It is worth noting that social security benefits such as contributory pensions are pro-rich in most countries in the region (seePessino and Alaimo, 2018).19 An ideal analysis would incorporate net taxation from payroll taxes that are not valued by workers and also take into account the fact that social security benefits in several LAC countries are financed with general tax revenues, since most of today's social security systems have high deficits.…”

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confidence: 99%

Distributional Effects of Taxation in Latin America

Pessino,

Rasteletti,

Artana

et al. 2023

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This chapter analyzes the incidence on income distribution by a comprehensive array of direct and indirect taxes in ten Latin American countries circa 2018. The study finds that although there is a significant heterogeneity, the redistributive impact is equalizing for direct taxes and unequalizing for indirect taxes. Overall, redistribution through taxes, without accounting for spending effects and interactions, is slightly equalizing for some countries and unequalizing for others, but the burden on the poor is high and even higher than on the rich. This is mainly a consequence of the high share of indirect taxes in the tax structures, and of low personal income tax collection and coverage. The inclusion of the redistributive effect of the corporate income tax contributes to improve redistribution and accounts for better comparison with the redistributive impact in more developed countries, where dividends are taxed heavily with personal income taxes rather than corporate income taxes as in Latin America. High levels of evasion and informality make payroll taxes more regressive in integrated labor markets with high informality, but make indirect taxes less regressive, since the poor pay little or no indirect taxes on some of their purchases.

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Better spending for better lives: how Latin America and the Caribbean can do more with less: Chapter 4: The Impact of Public Spending on Equity: Not Always as Intended

Cited by 4 publications

References 0 publications

Inclusion in Times of Covid-19

Inclusion in Times of Covid-19

Fiscal Policy, Income Redistribution, and Poverty Reduction in Latin America

Distributional Effects of Taxation in Latin America

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