Poverty impacts of increased openness and fiscal policies in a dollarized economy: a CGE-micro approach for Ecuador

We quantify the effects on poverty and income distribution in Ecuador of bilateral trade liberalization with the US and a budget-neutral value added tax increase which seeks to compensate tariff revenue losses. We stress the study of fiscal policies that the government could tap in order to compensate for tariff revenue loss. This is a very important issue for Ecuador because this country adopted the US dollar as its currency in 2000, forgiving the use of important policy instruments. To study these issues we combine a reduced-form micro household income and occupational choice model (using 2005/6 data from the Ecuadorian LSMS) with a standard single-country computable general equilibrium model (employing a 2004 SAM). We follow a sequential approach that simulates the full distributional impact of trade and tax policies. We find that the impact of these policy changes on extreme poverty and income distribution is small but positive.

Impact on the quality of learning as a result of the use of computers in schools

The educational software and computer assisted learning has been used in schools to promote the interest of students in new ways of thinking and learning so it can be useful in the reading learning process. Experimental studies performed in preschool and school age population have shown a better yield and a positive effect in reading, mathematics and cognitive skills in children who use educative software for fi fteen to twenty minutes a day periods. The goal of this study was to evaluate the progression in verbal, visual-motor integration and reading skills in children who were using educational software to compare them with a group in traditional pedagogic methodology. Results: All children were evaluated before using any kind of pedagogic approach. Initial evaluation revealed a lower–age score in all applied test. 11% of them were at high risk for learning disorders. There was a second evaluation that showed a significant positive change compared with the fi rst one. Nevertheless, despite some items, there were no general differences comparing the groups according if they were using or not a computer. In conclusion, policies on using educational software and computers must be revaluated due to the fact that children in our public schools come from a deprived environment with a lack of opportunities to use technologies.

Natural resources, redistribution and Human capital formation

How do resource booms affect human capital accumulation? We exploit time and spatial variation generated by the commodity boom across local governments in Peru to measure the effect of natural resources on human capital formation. We explore the effect of both mining production and tax revenues on test scores, finding a substantial and statistically significant effect for the latter. Transfers to local governments from mining tax revenues are linked to an increase in math test scores of around 0.23 standard deviations. We find that the hiring of permanent teachers as well as the increases in parental employment and improvements in health outcomes of adults and children are plausible mechanisms for such large effect on learning. These findings suggest that redistributive policies could facilitate the accumulation of human capital in resource abundant developing countries as a way to avoid the natural resources curse.