Nora Lustig

• PhD in Economics
• Professor at Tulane University

Using microsimulations, we project the effect of instructional losses caused by COVID-19 on secondary school completion rates and intergenerational mobility of education in eight countries in Sub-Saharan Africa. On average, secondary school completion rates could decrease by 12 percentage points overall and by 16 points for children with low-educat...

Using microsimulations this paper analyzes the poverty and tax implications of replacing current transfers and subsidies by a budget-neutral (no change in the fiscal deficit) universal basic income program (UBI) in Brazil, Chile, India, Russia, and South Africa. We consider three UBI transfers with increasing levels of generosity and identify scena...

We use microsimulations to assess whether budget-neutral universal income floors are fiscally viable in twelve Sub-Saharan African countries. We consider three universal basic income scenarios of decreasing levels of generosity: poverty line, average poverty gap and current spending on transfers and subsidies per person. The first two may not be vi...

Latin American countries experienced a significant reduction in income inequality at the turn of the twenty-first century. From the early 2000s to around 2012, the average Gini coefficient fell from 0.51 to 0.47. The period of falling inequality coincided with leftist presidential candidates achieving electoral victories across the region: by 2009,...

The Kakwani index of progressivity is commonly used to establish whetherthe effect of a specific tax or transfer is equalizing. In the presence ofreranking or Lambert’s conundrum, however, a progressive tax could beunequalizing. While it is mathematically possible for counter-intuitiveresults to occur, how common are they in actual fiscal systems?...

We study the dynamics of wage inequality in Latin America in the past two decades. We find a consistent trend reversal in wage inequality in the region since the early 2000s: wage inequality fell across all countries in a way not predicted by the trends each country had experienced in the 1990s. The decline in wage inequality is explained by a disp...

This chapter explores the role of public expenditure in fostering inclusive growth. It starts with a presentation of salient features of public expenditure. Then, it lays out an analytical framework that describes the channels through which public expenditure affects inequality and poverty in the short and long term. Based on a review of the empiri...

The shock on human capital caused by COVID-19 is likely to have long lasting consequences, especially for children of low-educated families. Applying a counterfactual exercise we project the effects of school closures and other lockdown policies on the intergenerational persistence of education in 17 Latin American countries. First, we retrieve det...

This chapter focuses on income inequality in Mexico, which increased between 1989 and 1994. Between 1994 and 2006, inequality declined; between 2006–14, inequality was again on the rise. The authors apply decomposition techniques to analyse the proximate determinants of labour income inequality and fiscal incidence analysis to estimate the first-or...

Mexico and Brazil, both among the region’s hardest hit by COVID-19, took strikingly different steps to mitigate the economic impact of the pandemic. Although President Jair Bolsonaro dismissed the need for social distancing measures, the government provided substantial financial aid to citizens though cash transfer programs, avoiding potentially sh...

Desigualdad y política fiscal en América Latina / 51 Latinoamérica se ha convertido en epicentro de la pandemia. Esto amenaza con dañar fuertemente las economías y retroceder décadas en el progreso social.

El impacto distributivo del COVID-19 en el corto plazo se estima mediante microsimulaciones. Si bien el incremento potencial de la pobreza es significativo, cuando se compara con el ingreso pre-shock los grupos que más pierden son los pobres y los vulnerables a la pobreza. El impacto sobre la pobreza es más severo para hogares urbanos. La pobreza s...

Brasil y México enfrentaron los primeros efectos de la pandemia al mismo tiempo en febrero-marzo de 2020. En ambos países, los presidentes minimizaron la gravedad de la crisis sanitaria es sus meses iniciales, cuestionaron el uso de máscaras, y dieron prioridad a que sus economías continuaran operando a pesar del costo en vidas causado por la pande...

The shock on human capital caused by COVID-19 is likely to have long lasting consequences, especially for children of low-educated families. Applying a counterfactual exercise we project the effects of school closures and other lockdown policies on the intergenerational persistence of education in 17 Latin American countries. First, we retrieve det...

We simulate the short-and long-term distributional consequences of COVID-19 in the four largest Latin American economies: Argentina, Brazil, Colombia and Mexico. We show that the short-term impact on income inequality and poverty can be very significant, but that additional spending on social assistance has a large offsetting effect in Brazil and A...

20 How COVID-19 could be like the Global Financial Crisis (or worse) Nora Lustig and Jorge Mariscal Tulane University; Columbia University The world is living its worst scare since the Global Financial Crisis (GFC) in the form of COVID-19, now officially declared a pandemic. The virus that causes this disease, like the flu, affects the respiratory...

Taxation and public spending are key policy levers the state has in its power to change the distribution of income determined both by market forces and institutions and the prevailing distribution of wealth and property. One of the most commonly used methods to measure the distributional impact of a country’s taxes and public spending is fiscal inc...

We analyse the evolution and proximate determinants of labour income inequality in Mexico between 1989 and 2017. Labour income inequality increased between 1989 and 1994 and declined between 1994 and 2006. What happened after 2006 is subject to uncertainty. The national labour force survey shows a steady decline and the income expenditure survey su...

La pandemia en América Latina: una crisis económica sin culpables El FMI, el Banco Mundial y el BID deben tomar nota y hacer que sus apoyos financieros sean lo suficientemente generosos y flexibles. La austeridad solo exacerbaría el impacto económico y sería un obstáculo frente a la crisis sanitaria NORA LUSTIG | JORGE MARISCAL 19 MAR 2020-13:22 ED...

COVID19 could be worse than the Global Financial Crisis

This paper presents a survey of causes and correction approaches to address the “missing rich” problem in household surveys. “Missing rich” here is a catch-all term for the issues that affect the upper tail of the distribution of income: undercoverage, sparseness, unit and item nonresponse, underreporting and top coding. Upper tail issues can resul...

Using the Iranian Household Expenditure and Income Survey for 2011/12, we estimate the impact and effectiveness of various components of Iran’s fiscal system on reducing inequality and poverty. We utilize the marginal contribution analysis to determine the impact of each component, and we introduce newly developed indicators of effectiveness to cal...

http://dx.doi.org/10.18235/0001429 Las brechas étnicas y raciales en desempeño económico, oportunidades laborales y acceso a servicios básicos, tales como educación y salud, permanecen como un gran reto pendiente en América Latina. Los impuestos y el gasto público son dos de los instrumentos más efectivos que los gobiernos tienen a su disposición...

This paper estimates the impact of Tunisia's tax and transfer system on inequality and poverty and assesses the benefits from public spending on education and health. Results show that Tunisia's redistributive fiscal policy reduces inequality and extreme poverty significantly. However, based on the national poverty line, the headcount ratio increas...

Afro-descendants and indigenous peoples in Latin America face higher poverty rates and are disproportionately represented among the poor. The probability of being poor is between two and three times higher for indigenous and Afro-descendants than whites. Using comparable fiscal incidence analyses for Bolivia, Brazil, and Guatemala, I analyze how mu...

El estudio presenta una reseña de los principales enfoques metodológicos que se han utilizado para evaluar el impacto de la apertura comercial sobre la distribución del ingreso y la pobreza en América Latina. La gran cantidad de estudios en la materia fueron clasificados según el indicador de bienestar utilizado: desigualdad (salarial e ingresos de...

Este artículo presenta resultados sobre el impacto de la política fiscal en la desigualdad y la pobreza en dieciséis países de América Latina para alrededor del año 2010. Los países que más redistribuyen son Argentina, Brasil, Costa Rica y Uruguay, y los que menos, Guatemala, Honduras y Perú. A mayor gasto social, mayor redistribución pero países c...

En este artículo se analizan la relación entre salud, crecimiento económico y pobreza, los niveles, desigualdad y evolución de los indicadores de salud así como la equidad y eficiencia de la acción pública en materia de salud en México. Este país tiene niveles promedio de salud inferiores a los esperados para su desarrollo y, aunque en general han...

This report focuses on the dimensions of poverty, and how to create a better world, free of poverty. The analysis explores the nature, and evolution of poverty, and its causes, to present a framework for action. The opportunity for expanding poor people's assets is addressed, arguing that major reductions in human deprivation are indeed possible, t...

Current policy discussion focuses primarily on the power of fiscal policy to reduce inequality. Yet, comparable fiscal incidence analysis for twenty-eight low and middle income countries reveals that, although fiscal systems are always equalizing, that is not always true for poverty. In Ethiopia, Tanzania, Ghana, Nicaragua, and Guatemala the extrem...

How much redistribution and poverty reduction is being accomplished through the tax system and social spending in Latin America? This paper summarizes results from applying a comparable fiscal incidence analysis to nine countries: Bolivia, Brazil, Costa Rica, Ecuador, El Salvador, Guatemala, Mexico, Peru, and Uruguay. Using the Gini coefficient as...

Between 1995 and 2012, the wage distribution of male workers in Brazil shifted to the right and became less dispersed. This paper attempts to identify the reasons for that movement in male wage distribution, focusing on the impact of education expansion on wage distribution. The Oaxaca-Blinder (OB) and Recentered Influence Function (RIF) decomposit...

This paper examines the redistributive impact of fiscal policy for Brazil, Chile, Colombia, Indonesia, Mexico, Peru and South Africa using comparable fiscal incidence analysis with data from around 2010. The largest redistributive effect is in South Africa and the smallest in Indonesia. Success in fiscal redistribution is driven primarily by redist...

Monitoring progress and determining whether the goal of ending poverty by 2030 is met crucially depends on how poverty is measured. In particular, it crucially depends on the global poverty line and how the line is adjusted over time. A special issue of the Journal of Economic Inequality, which this paper introduces, is dedicated to present alterna...

To analyze anti-poverty policies in tandem with the taxes used to pay for them, comparisons of poverty before and after taxes and transfers are often used. We show that these comparisons, as well as measures of horizontal equity and progressivity, can fail to capture an important aspect: that a substantial proportion of the poor are made poorer (or...

A reduction in the wage premium for skilled labor -and a consistent reduction of overall wage inequality-has played an important role in explaining the fall of income inequality in Latin America during the 2000-2014 period. Consistent with that pattern, wage inequality declined in Mexico since 2000. This paper investigates the possible channels on...

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 th...

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. Net direct and indirect taxes combined reduce the Gini coefficient by 0.0644 points and the head...

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 in...

Although inequality has been falling since 2000, Latin America is still the most unequal region in the world and poverty rates are high for Latin America’s GDP per capita.1 Given these facts, the extent to which governments use fiscal policy to reduce inequality and poverty is of great relevance. This short chapter summarizes the results of applyin...

High inequality is a characteristic feature of Latin America. After rising in the 1990s, however, income inequality in the region has declined while it has increased in other parts of the world. For the region as a whole, the Gini co efficient declined from an average of 0.550 in the early 2000s to 0.496 circa 2012. Of the 18 countries with availab...

Guatemala is among the most unequal countries in Latin America. It also has the highest incidence of poverty, especially for the indigenous population. In this paper we do a fiscal incidence analysis using the 2009-10 household survey ENIGFAM. The results show that fiscal policy does very little to reduce inequality and poverty overall and along et...

In response to a growing interest in comparing inequality levels and trends across countries, a number of cross-national inequality databases are now available. These databases differ considerably in purpose, coverage, data sources, inclusion and exclusion criteria, and quality of documentation. This special issue reviews and compares eight such da...

This paper uses the 2010/11 Income and Expenditure Survey for South Africa to analyze the progressivity of the main tax and social spending programs and quantify their impact on poverty and inequality. The paper also assesses the redistributive effectiveness of fiscal interventions given the resources used. Because it applies the Commitment to Equi...

Guatemala is one of the most unequal countries in Latin America and has the highest incidence of poverty. The indigenous population is more than twice as likely of being poor than the nonindigenous group. Fiscal incidence analysis based on the 2009-2010 National Survey of Family Income and Expenditures shows that taxes and transfers do almost nothi...

Whether the poor are helped or hurt by taxes and transfers is generally determined by comparing income distributions before and after fiscal policy using stochastic dominance tests and measures of progressivity and horizontal inequity. We formally show that these tools can fail to capture an important aspect: that a substantial proportion of the po...

This book has been a collective endeavor and has benefited from contributions from both inside and outside the IMF. We would like to thank the contributing authors for their close collaboration and enthusiasm for the topic. The research presented here has benefited from the comments of staff in the IMF’s Fiscal Affairs Department and other departme...

What is the link between middle class and income inequality? This chapter will assess the relationship between changes in income distribution and the growth of the middle class. Interest in the latter has peaked worldwide, as the rise of the global middle class is increasingly recognized as a key megatrend (Global Trends 2030, 2013). Zooming in on...

How much do social spending and taxation contribute to achieving the goals of poverty reduction and expanding the access to education and health services among the poor? Standard fiscal incidence analyses applied to Argentina, Bolivia, Brazil, Mexico, Peru, and Uruguay using a comparable methodology yields the following results. Direct taxes and ca...

We identify a group of people in Latin America that are not poor but not middle class either—namely “strugglers” in households with daily income per capita between $4 and $10 (at constant 2005 PPP). This group will account for about a third of the region’s population over the next decades; as the size and income of the middle class rises, they coul...