Research Topics

Some Insights from an Empirical Stock-Flow Consistent Model

The Argentinean economy has just ended another lost decade. After the peak registered in 2011, the per capita GDP has oscillated with a decreasing trend, leaving the economy poorer than it was ten years before. During these ten years, different governments with conflicting macroeconomic programs were in power, none of them able to save the economy from stagflation. The goal of this paper is to address to what extent the economic performance would have been better had other policy combinations been implemented. The analysis is made through an empirical quarterly stock-flow consistent (SFC) model for the period 2007–19 in order to ensure the coherence of the results and to give the outcomes of the simulations a holistic and dynamically consistent interpretation. From the results of the simulations it seems that the problem that is keeping Argentina in stagflation goes beyond the domain of macroeconomics. The fact that in practice two divergent macroeconomic programs were implemented—neither of them being able to produce good and sustainable macroeconomic performance—is a first symptom that favors the case for that hypothesis. When the model is used to counterfactually test the policy recommendations of these approaches with the external conditions that prevailed while the opposite program was implemented, none of them yield results that can be deemed sustainable. Yet, the model developed in this paper can be useful for studying the different policy combinations that, given a specific context, can bring about more stable and sustainable dynamics for the Argentinean economy.

This paper is a comparison between two programs implemented to combat poverty in Latin America: Prospera (Prosper) in Mexico and Asignación Universal por Hijo (Universal Assignment for Child) in Argentina.
 
The first section offers a review of the emergence of the welfare state, examining economic and urban development in both countries and the underlying trends of social policy instruments.
 
The analysis is based on the political nature of social problems and the actions undertaken to confront them. The paper offers a theoretical perspective, often questioning the very foundation of the social policy that serves as the main framework for the social programs, in order to present the policies’ scope, successes, and disadvantages with reference to social equity and the well-being of their participants.

Why Time Deficits Matter

We describe the production of estimates of the Levy Institute Measure of Time and Income Poverty (LIMTIP) for Buenos Aires, Argentina, and use it to analyze the incidence of time and income poverty. We find high numbers of hidden poor—those who are not poor according to the official measure but are found to be poor when using our time-adjusted poverty line. Large time deficits for those living just above the official poverty line are the reason for this hidden poverty. Time deficits are unevenly distributed by employment status, family type, and especially gender. Simulations of the impact of full-time employment on those households with nonworking (for pay) adults indicate that reductions in income poverty can be achieved, but at the cost of increased time poverty. Policy interventions that address the lack of both income and time are discussed.

Why Time Deficits Matter for Poverty

We cannot adequately assess how much or how little progress we have made in addressing the condition of the most vulnerable in our societies, or provide accurate guidance to policymakers intent on improving each individual’s and household’s ability to reach a basic standard of living, if we do not have a reliable means of measuring who is being left behind. With the support of the United Nations Development Programme and the International Labour Organization, Senior Scholars Rania Antonopoulos and Ajit Zacharias and Research Scholar Thomas Masterson have constructed an alternative measure of poverty that, when applied to the cases of Argentina, Chile, and Mexico, reveals significant blind spots in the official numbers.

The Importance of Time Deficits

Standard poverty measurements assume that all households and individuals have enough time to engage in the unpaid cooking, cleaning, and caregiving that are essential to attaining a bare-bones standard of living. But this assumption is false. With the support of the United Nations Development Programme and the International Labour Organization, Senior Scholars Rania Antonopoulos and Ajit Zacharias and Research Scholar Thomas Masterson have constructed an alternative measure of poverty that, when applied to the cases of Argentina, Chile, and Mexico, reveals significant blind spots in the official numbers.

Implications for the Measurement of Poverty

Customarily, income poverty incidence is judged by the ability of individuals and households to gain access to some level of minimum income based on the premise that such access ensures the fulfillment of basic material needs. However, this approach neglects to take into account the necessary (unpaid) household production requirements without which basic needs cannot be fulfilled. In fact, the two are interdependent and evaluation of standards of living ought to consider both dimensions.

This report provides an analytical and empirical framework that includes unpaid household production work in the very conceptualization and calculations of poverty: the Levy Institute Measure of Time and Income Poverty (LIMTIP). Based on this new analytical framework, empirical estimates of poverty are presented and compared with those calculated according to the official income poverty lines for Argentina, Chile, and Mexico. In addition, an employment-generating poverty-reduction policy is simulated in each country, and the results are assessed using the official and LIMTIP poverty lines.

The undertaking of this work was initiated as a result of joint discussions and collaboration between the Levy Economics Institute and United Nations Development Programme Regional Service Centre for Latin America and the Caribbean, particularly the Gender Practice, Poverty, and Millennium Development Goals areas. It addresses an identified need to expand the knowledge base, conceptually, analytically, and empirically, on the links between (official) income poverty and the time allocation of households between paid and unpaid work.

Supporting documents:
Executive Summary
Appendices
Excel Tables for Chapters 2, 3, 4, and 5

The method for simulation of labor market participation used in the LIMTIP models for Argentina, Chile, and Mexico is described. In each case, all eligible adults not working full-time were assigned full-time jobs. In all households that included job recipients, the time spent on household production was imputed for everyone included in the time-use survey. The feasibility of assessing the quality of the simulations is discussed. For each simulation, the recipient group is compared to the donor group, both in terms of demographic similarity and in terms of the imputed usual hours, earnings, and household production produced in the simulation. In each case, the simulations are of reasonable quality, given the nature of the challenges in assessing their quality.

Lessons from Argentina

The literature on public employment policies such as the job guarantee (JG) and the employer of last resort (ELR) often emphasizes their macroeconomic stabilization effects. But carefully designed and implemented policies like these can also have profound social transformative effects. In particular, they can help address enduring economic problems such as poverty and gender disparity. To examine how, this paper will look at the reform of Argentina’s Plan Jefes into Plan Familias. Plan Jefes was the hallmark stabilization policy of the Argentine government after the 2001 crisis. It guaranteed a public sector job in a community project to unemployed male and female heads of households. The vast majority of beneficiaries, however, turned out to be poor women. For a number of reasons that are explored below, the program was later reformed into a cash transfer policy, known as Plan Familias, that still exists today. The paper examines this reform in order to evaluate the relative impact of such policies on some of the most vulnerable members of society; namely, poor women. An examination of the Argentine experience based on survey evidence and fieldwork reveals that poor women overwhelmingly want paid work opportunities, and that a policy such as the JG or the ELR cannot only guarantees full employment and macroeconomic stabilization, but it can also serve as an institutional vehicle that begins to transform some of the structures and norms that produce and reproduce gender disparities. These transformative features of public employment policies are elucidated by turning to the capabilities approach developed by Amartya Sen and elaborated by Martha Nussbaum—an approach commonly invoked in the feminist literature. This paper examines how the access to paid employment can enhance what Sen defines as an individual’s “substantive freedom.” Any policy that fosters genuine freedom begins with an understanding of what the targeted population (in this case, poor women) wants. It then devises a strategy that guarantees that such opportunities exist and removes the obstacles to accessing these opportunities.

The quality of match of three statistical matches used in the LIMTIP estimates for Argentina, Chile, and Mexico is described. The first match combines the 2005 Uso del Tiempo (UT 2005) with the 2006 Encuesto Annual de Hogares (EAH) for Argentina. The second match combines the 2007 Encuesta Experimental sobre Uso del Tiempo en el Gran Santiago (EUT 2007) with the 2006 Encuesta Caracteristización Socioeconómica Nacional (CASEN 2006) for Chile. The third match combines the 2008 Encuesta Nacional de Ingresos y Gastos de los Hogares (ENIGH 2008) with the 2009 Encuesta Nacional sobre Uso del Tiempo (ENUT 2009) for Mexico. In each case, the alignment of the two datasets is examined, after which various aspects of the match quality are described. In each case, the matches are of high quality, given the nature of the source datasets.