The Unassuming Economist

Source: Poverty Action Lab, Paris School of Economics

In 1997, the Mexican government designed the conditional cash transfer program Progresa, which became the
worldwide model of a new approach to social programs, simultaneously targeting human capital accumulation
and poverty reduction. This paper studies the differential long-term impact of children’s exposure to Progresa, 20 years after its launch. The two focus groups include (a) children who were in-utero or in their initial years of life, and (b) children who were transitioning from primary to secondary school.

Results show that children exposed to the program in their early childhood witnessed better educational attainment and labor market outcomes, and the study of impacts on the second group shows that even the short-term impact of the program was sustained in the long run. Positive impacts manifested as larger labor incomes, more geographical mobility including through international migration, and later family formation. Besides, results from this paper also confirm that while conditional cash transfers are helpful in enhancing the educational and nutritional development of children in their formative stages, there is still a need for complementary policies to be rolled out so that the full range of households (not just ones with infants at the time of program rollout) are able to realize the full range of newly available labor market opportunities.

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Source: VoxEU CEPR

Abstract:

The real pay of typical workers has grown much more slowly than productivity over recent decades in several developed economies. This column uses data from the US and Canada to examine whether productivity growth actually benefits typical workers by raising their pay. The authors find strong evidence of linkage between productivity and pay in the US but more mixed evidence for Canada, possibly due to it being a smaller, more internationally open economy. Overall, the findings suggest that measures to boost productivity growth are important for raising pay for the average and typical worker.

Source: VoxEU CEPR

Despite the commitments of the 2021 UN Climate Change Conference, countries’ climate mitigation policies are not enough to meet their ambitious emissions reduction targets. This column puts forward a framework for designing comprehensive decarbonisation strategies that promote growth and social inclusion. A policy mix based on three components is needed: (1) emission pricing, (2) standards and regulations, and (3) complementary policies that offset distributional effects. A robust and independent institutional framework and credible communications campaigns are key to managing policy constraints and enhancing public acceptance of mitigation policies.

Source: NBER Working Paper (2022)

Researchers Sergey Chernenko and David S. Scharfstein write about the significant racial disparities in borrowing through the Paycheck Protection Program (PPP) using data gathered from a large sample of restaurants in Florida and then investigate the causes of these disparities. They find that- “Black-owned restaurants are 25% less likely to receive PPP loans. Restaurant location explains 5 percentage points of this differential. Restaurant characteristics explain an additional 10 percentage points of the gap in PPP borrowing. On average, prior borrowing relationships do not explain disparities. The remaining 10% disparity is driven by a 17% disparity in PPP borrowing from banks, which is partially offset by greater borrowing from nonbanks, largely fintechs. Disparities in PPP borrowing cannot be attributed to lower awareness of PPP loans or lower demand for PPP loans by minority-owned restaurants. Black-owned restaurants are significantly less likely to receive bank PPP loans in counties with more racial bias. In these counties, Black-owned restaurants are more likely to substitute to nonbank PPP loans. This substitution, however, is not strong enough to eliminate racial disparities in PPP borrowing”.

Source: IMF Working Paper

Abstract:

“This paper provides an overview of the relation between tax policy and gender equality, covering labor, capital and wealth, as well as consumption taxes. It considers implicit and explicit gender biases and corrective taxation. On labor taxes, we (the authors) discuss the well-established findings on female labor supply and present new empirical work on the impact of household taxation. We also analyze the impact of progressivity on pay gaps and labor supply. On capital and wealth taxation, we discuss the implications of lower effective capital income taxation on the personal income tax burden gap across genders. We show that countries with relatively low female shares of capital income and wealth also tend to tax property and inheritances particularly lightly. On consumption taxes, we cover taxes on female hygiene products and excise taxes, which we assess in relation to externalities and differences in consumption patterns across genders.”