Diego F. Angel-Urdinola

Can the Introduction of a Minimum Wage in FYR Macedonia Decrease the Gender Wage Gap

This paper relies on simple framework to understand the gender wage gap in Macedonia and then simulates how the gender wage gap would behave after the introduction of a minimum wage. First, it presents a new albeit simple decomposition of the wage gap into three factors: (i) a wage level factor, that measures the extent to which the gender gap is driven by differences in wage levels among low-skilled workers of opposite sex; (ii) an skills endowment factor, that quantifies the extent to which the gender wage gap is driven because the share of high-skilled workers differs by gender; and (iii) returns to education factor, that measures the extent to which the gender gap exists is driven by differences by gender in returns to education. Second, the paper presents simple set of simulations that indicate that the introduction of a minimum wage in Macedonia can contribute to decrease the gender wage gap by up to 23 percent. Nevertheless, in order to get a significant improvement in the wage gap a rather high minimum wage may required, which may contribute to reductions in employment.

The Gender Wage Gap and Poverty in Colombia

Using 19 years of cross-section wage data, we look at two factors that may explain the lower wages earned by women as compared to men in Colombia. First, we observe a long-term trend towards an increase in the gender wage gap which may be related to new labor regulations giving more protection to women and thereby raising the cost of female employment for firms. Second, as predicted by the literature, we observe an inverse relationship between the relative supply of labor by women and the gender wage gap. The combination of these two factors has led to an increase in the wage gender gap over the period in review, which in turn has led to an increase in relative poverty because less educated women were affected the most by the underlying trends.

Does Increasing Access to Infrastructure Services Improve the Targeting Performance of Water Subsidies

There is ample evidence that utility subsidies imbedded in inverted block and other tariff structures are not well targeted to the poor, simply because the poor tend to have much lower access rates to water and electricity networks than richer households. This paper provides an analysis of the changes over time in the targeting performance of water consumption subsidies in Nicaragua. Because access rates to piped water increased substantially between 2001 and 2005, the targeting performance of consumption subsidies improved, despite the fact that the tariff structure remained essentially the same over time. It is shown that the observed changes in access rates had a much higher impact for improving the targeting performance of consumption subsidies than changes in the tariff structure could have had if they had been implemented. The results suggest that one of the best ways to improve the targeting of consumption subsidies may be to increase access rates, so that the poor have a better chance of receiving the subsidies.

Do subsidized health programs in Armenia increase utilization among the poor

This article analyzes the extent to which the Basic Benefit Package (BBP), a subsidized health program in Armenia, increases utilization and affordability of outpatient health care among the poor. The authors find that beneficiaries of the BBP pay approximately 45 percent less in fees for doctor visits (and display 36 percent higher outpatient utilization rates) than eligible users not receiving the BBP. However, even among BBP beneficiaries the level of outpatient health care utilization remains low. This occurs because the program mainly provides discounted fees for doctor visits, but fees do not constitute the main financial constraint for users. The authors estimate suggest that other non-fee expenditures, such as prescription medicines, constitute a more significant financial constraint and are not subsidized by the BBP. As a result, outpatient health care remains expensive even for BBP beneficiaries.

A reform agenda for improving the delivery of ALMPs in the MENA region

Given the labor market challenges that countries in the Middle East and North Africa (MENA) region are facing (notably high unemployment, prevalence of skills mismatches, low labor market mobility, and lack of formal employment networks), Active Labor Market Programs (ALMPs) could be a relevant policy instrument to assist unemployed individuals find jobs. This study first introduces a conceptual framework for ALMPs and describes their overall impact on employment outcomes. The study then reviews the provision of ALMPs in a selected group of countries in the MENA region, with a focus on public provision through existing public employment agencies. The study also presents the results of some of the few available robust evaluations of AMLPs the region, in a context where information about program effectiveness and efficiency is largely lacking. Finally, the study identifies key challenges in the delivery of publicly provided ALMPs in MENA countries, namely poor administrative capacity, system fragmentation, lack of governance and accountability, regulation bottlenecks, and flaws in program design. To address these challenges, the study proposes a reform agenda based on a four-pillar policy framework: (i) develop results-based Public Private Partnerships (PPPs); (ii) promote systems and program integration; (iii) develop results-based monitoring and evaluation (M&E) frameworks; and (iv) promote entrepreneurship/self-employment, on-the-job training and life skills training among job seekers.JEL codesJ20, J30, J40, J50

Opportunities for Human Development: Access and Quality of Education in Nicaragua

Analysis of poverty in Nicaragua emphasizes the welfare gains from education: non-poor households have higher levels of educational attainment than poor ones (especially in post-primary education), and welfare gains have been associated with higher educational attainment. Despite rather equitable access to primary school, we find that there are substantial inequities in access and quality of preschool and post secondary education between richer and poorer households, between urban and rural areas, and between regions. Furthermore, Nicaragua still falls behind in the Latin America Contexts in primary and secondary education service delivery (both in relation to access and quality).

A Minimum Wage Increase Can Have an Adverse Distributional Impact: The Case of Colombia

A rise in the minimum wage may contribute to decrease earnings inequality by promoting larger wage increases for workers in the low tail of the wage distribution, but it may also increase inequality by promoting layoffs. This paper uses a semiparametric model to analyze the impact on inequality of a 6.3 percent increase in the real minimum wage in Colombia between 1995 and 1999, a period of economic downturn. Simulations suggest that if the employment effects of the minimum wage increase are ignored, the underlying policy would contribute to reduce earnings inequality. On the contrary, by considering the drop in wages of those who lost their jobs, simulations suggest that the policy in question would increase earnings inequality under some assumptions about the employment elasticity of the minimum wage and the new level of earnings unemployed workers rely upon.

Is Social Assistance Contributing to Higher Informality in Turkey

Although still low for European standards, investments in Social Assistance (SA) transfers in Turkey have been increasing in recent years. The government is expanding access to subsidized health for individuals in the informal sector through a rapid expansion of the Green Card program. Generous non-contributory programs, such as the Green Card, may create perverse incentives for individuals to join or remain in the informal sector as they can access free services without paying taxes and/or contributions, thus potentially being able to get higher “net” labor earnings than in the formal sector. Despite the fact that the Green Card is a large and generous program offered to individuals in the informal sector, empirical analysis in this report does not find an actual impact of the program (or of its rapid expansion) on informality. The reason behind this finding is the existence of a very large differential in wages between formal and informal workers explained by differences worker’s productivity. Low-wage workers facing the possibility to move from the informal sector to the formal sector would have strong incentives to do so even if this would imply losing all SA benefits. As such, the expected monetary and job security gains of having a formal job dominate those of having an informal job even after accounting for SA transfers.