Socioeconomic Effects of COVID-19 in Mexico: A Multisectoral Approach and Policy Options

The health crisis caused by the spread of COVID-19 has caused a profound social and economic disruption in Mexico. Our purpose in this paper is to contribute to the knowledge about the economic impact of the pandemic in Mexico and to evaluate social policy options to mitigate its effects. We do so based on a multisectoral-multiplier model and the most recent Social Accounting Matrix for Mexico, with which we estimate the direct and indirect impacts of COVID-19 as well the likely effects of two alternatives for mitigating them: an unconditional cash transfer scheme for households living in poverty, and the establishment of an unemployment insurance program for workers who have lost their jobs during the pandemic. We find that the first alternative alleviates more value added and loss of income, and thus has a greater effect in reducing inequality and the incidence of poverty.

The COVID-19 Economic Crisis in Mexico through the Lens of a Financial Conditions Index

The COVID-19 pandemic not only generated real shocks affecting economic activity severely, but also a broad uncertainty that unleashed an extreme shock to financial markets. In this paper, we focus on the financial dimension of the pandemic from the viewpoint of an emerging market economy. Accordingly, we estimate a financial conditions index for Mexico since 1993 and find that the acute turmoil generated by the pandemic stands among the four largest episodes of financial distress experienced by the country. In addition, we find evidence suggesting that real variables have responded differently to shocks that worsen financial conditions than to shocks that improve them.

Equality without equity: The gender pay gap at the National University of Colombia

The National University of Colombia boasts a clear and egalitarian salary regime for its academic staff. Apart from rules concerning maternity and paternity leaves, which follow national Colombian legislation, the Academic Personal Statute is completely free of gender-based norms. Salaries are assigned through a points system that considers training level, productivity, and academic rank. With this in mind, one might expect to find egalitarian male and female salary conditions free of the gender-related gaps existing in other, more arbitrary private work environments. In this article, we present the results of a variance decomposition analysis of the gross salaries of all full-time professors and report the existence of an unadjusted gender pay gap of 0.12 and adjusted or unexplained gaps of 0.07-0.09 obtained through a Mincer earnings regression and a Blinder-Oaxaca decomposition. Partial correlations between these gaps and the different factors that come into play are examined and analyzed. The high impact of professors’ research track record on their salaries appears as the main contribution to the gender differences. It seems plausible that the crucial need for time to dedicate to research opens the window to the patriarchal society to permeate the otherwise egalitarian salary regime of the University, especially for the highest range of salaries corresponding mainly to male full professors who are very active in research.

How do the Tax Burden and the Fiscal Space in Latin America look like? Evidence through Laffer Curves

How much fiscal space do Latin American countries have to increase their tax burdens in the long term? This paper provides an answer through Laffer curves estimates for taxes on labor, capital, and consumption for the six largest emerging economies of the region: Argentina, Brazil, Chile, Colombia, Mexico, and Peru. Estimates are made using a neoclassical growth model with second-generation human capital and employing data from the national accounts system for the period from 1994 to 2017. Our findings allow us to compare the recent effective tax rates on factor returns against those which would maximize the government's revenues, and therefore to derive the potential tax-related fiscal space. Results suggest that joint fiscal space on labor and capital taxes would reach 6.5% of GDP for the region, on average, and that there are important differences among the countries.

From bad to worse: The economic impact of COVID-19 in developing countries. Evidence from Venezuela

Policy responses to COVID-19 affected the dynamic of eco¬nomic growth and labor markets worldwide, hitting econom¬ically harder on developing countries. These policies involved economic lockdowns that included the shutdown of the main statistical exercises, making it almost impossible to assess the breadth and variety of their effects. Using a phone survey, this paper examines the impact of the quarantine implemented in Venezuela on labor market outcomes. The identification strategy exploits the exogenous variation in the severity of the lockdown in different regions of the country. The main result indicates a 16.5 percentage points reduction in employment, while in regions with severe lockdowns the reduction has been 13.8 p.p. larger. In particular, the self-employed and informal¬ly employed were hard hit by the lockdown. To cope with this effect, households sold their productive assets, reduced their savings, sought for alternative income sources and looked for help from relatives. This paper does not find a differential ef¬fect on the number of COVID-19 cases in more severe lock¬down settings. Results are robust to endogenous migration and alternative specifications.

Does Education Increase Risk Aversion in Households? Some Evidence Using Artefactual Experiments in Peru

We provide empirical evidence supporting a causal link between education and risk attitudes when using representative data from representative surveys and artefactual or lab-on-the-field experiments in Lima, Peru. We employ three standard experimental measures of risk attitudes and find that each is positively correlated with years of education. Furthermore, we suggest that this relationship may be causal as we take advantage of an identification strategy that exploits an exogenous boom in the construction of new schools in Lima, providing evidence that more education may increase risk attitudes. Our findings are further confirmed when applying a broad set of robustness tests.

Labor Market Indicator for Colombia

Although the unemployment rate is traditionally used to diagnose the current state of the labor market, this indicator does not reflect the existence of asymmetries, mobility costs, and rigidities which impede labor to freely flow over the business cycle. Thus, to get a better portrait of the momentum, we construct the Labor Market Indicator (LMI) focusing on the cyclical similarities of eighteen time series from the Colombian household, industrial, and opinion surveys between 2001 and 2019. Our indicator summarizes the growth cycle of the labor market and its evolution is closely related to the output and unemployment GAP. This indicator is useful for policy analysis as it is useful to forecast headline inflation, it also complements the diagnosis of the current momentum of the labor market, the general economic activity, and the characterization of economic phases and turning points.

Sex-ratios and work in Latin American households: Evidence from Mexico, Peru, Ecuador, Colombia, and Chile

We analyze the relationship between sex-ratios in the region of residence, and the time devoted to paid and unpaid work by couples in Mexico (2002, 2009, 2014), Peru (2010), Ecuador (2012), Colombia (2012, 2017) and Chile (2015). We find that sex-ratios are negatively related to the time devoted by women to paid work in Ecuador, and positively related to the time devoted by men to paid work in Mexico and Chile. In Colombia, sex-ratios are negatively related to the time devoted by men to unpaid work, while in Mexico and Peru they are negatively related to the time devoted by women to unpaid work. These results illustrate the importance of studying this topic in countries where the evidence is scarce, mainly due to limitations in the data.

Macroeconomic Effects of Loan Supply Shocks: Empirical Evidence for Peru

This paper quantifies and assesses the impact of an adverse loan supply (LS) shock on Peru's main macroeconomic aggregates using a Bayesian vector autoregressive (BVAR) model in combination with an identification scheme with sign restrictions. The main results indicate that an adverse LS shock: (i) reduces credit and real GDP growth by 372 and 75 basis points in the impact period, respectively; (ii) explains 11.2% of real GDP growth variability on average over the following 20 quarters; and (iii) explained a 180-basis point fall in real GDP growth on average during 2009Q1-2010Q1 in the wake of the Global Financial Crisis (GFC). Additionally, the sensitivity analysis shows that the results are robust to alternative identification schemes with sign restrictions; and that an adverse LS shock has a greater impact on non-primary real GDP growth.

The dynamics of social deprivation in Mexico

This paper aims to model the dynamics of social deprivation in Mexico using a Markovian approach. First, we establish a scenario where a list of items characterizing social deprivation evolves as a first-order Markov chain under the sample period (2002-2012). Then, we estimate latent states and ergodic vectors of a hidden-Markov model to verify the strength of the conclusions drawn from such a scenario. After collecting results from both kinds of analyses, we find a similar pattern of impoverishment. The paper's conclusions state that the evolution of Mexico's deprivation profile may slightly worsen soon.