Wage share and economic growth in Latin America, 1950-2011

This article builds series of wage shares in gross domestic product (GDP) for 15 Latin American economies individually and as a group for the period 1950-2010. Using different methodologies, it is established that wage share is non-linear and has undergone two major cycles. The article discusses various authors, especially classic and post-Keynesian thinkers, who have explored the relationship between wage share in GDP and economic activity. It is also shown that the post-Keynesian approach is relevant in explaining that the main variables determining real gdp variations include wage share, gross capital formation and exports of goods and services. However, the contribution of wage share to real output growth has declined from the 1980s onwards.

The employment situation in Latin America and the Caribbean: Labour productivity and distribution issues

Although the economies of Latin America and the Caribbean grew more slowly in 2011 than in 2010, there were some improvements on the employment front. Workers benefited from the region’s satisfactory economic performance in an increasingly complex international setting. The unemployment rate fell from 7.3% in 2010 to 6.7% in 2011 thanks to a halfpercentage- point gain in the urban employment rate. Both rates are at levels that have not been seen for a long time. The proportion of formal jobs with social benefits rose as well, and underemployment declined. The average wage and the minimum wage both increased in real terms, albeit only moderately. Economic performance and the employment situation varied widely among the subregions. The unemployment rate dropped by 0.6 percentage points in South America but 0.4 percentage points in the countries of the northern part of Latin America. In the countries of the Caribbean, the employment rate was up by 0.2 percentage points. The data show that substantial labour market gaps and serious labour-market insertion issues remain. This is especially the case for women and young people, for whom unemployment rates and other labour indicators are still unfavourable. The second part of this report looks at whether the fruits of economic growth and rising productivity have been distributed equitably between workers and companies. Between 2002 and 2008 (the most recent expansionary economic cycle), wages as a percentage of GDP fell in 13 of the 21 countries of the region for which data are available and rose in just 8. This points to redistribution that is unfavourable to workers, which is worrying in a region which already has the most unequal distribution of income in the world. Underlying this trend is the fact that, worldwide, wages have grown less than productivity. Beyond the ethical dimension of this issue, it jeopardizes the social and economic sustainability of growth. For example, one of the root causes of the recent financial crisis was that households in the United States responded to declining wage income by borrowing more to pay for consumption and housing. This turned out to be unsustainable in the long run. Over time, it undermines the labour market’s contribution to the efficient allocation of resources and its distributive function, too, with negative consequences for democratic governance. Among the triggers of this distributive worsening most often cited in the global debate are market deregulation and its impact on financial globalization, technological change that favours capital over labour, and the weakening of labour institutions. What is needed here is a public policy effort to help keep wage increases from lagging behind increases in productivity. Some countries of the region, especially in South America, saw promising developments during the second half of the 2000s in the form of a positive trend reversal in wages as a percentage of GDP. One example is Brazil, where a minimum wage policy tailored to the dynamics of the domestic market is considered to be one of the factors behind an upturn in the wage share of GDP. The region needs to grow more and better. Productivity must grow at a steady pace, to serve as the basis for sustained improvements in the well-being of the populace and to narrow the gap between the economies of Latin America and the Caribbean and the more advanced economies. And inequality must be decreased; this could be achieved by closing the productivity gap between upgraded companies and the many firms whose productivity is low. As set out in this report, the region made some progress between 2002 and 2010, with labour productivity rising at the rate of 1.5% a year. But this progress falls short of that seen in other regions such as Sub-Saharan Africa (2.1%) and, above all, East Asia (8.3%, not counting Japan and the Republic of Korea). Moreover, in many of the countries of the region these gains have not been distributed equitably. Therein lies a dual challenge that must be addressed: continue to increase productivity while enhancing the mechanisms for distributing gains in a way that will encourage investment and boost worker and household income. The Economic Commission for Latin America and the Caribbean (ECLAC) and the International Labour Organization (ILO) estimate that the pace of economic growth in the region will be slightly slower in 2012 than in 2011, in a global economic scenario marked by the cooling of several of the main economic engines and a high degree of uncertainty concerning, above all, prospects for the euro zone. The region is expected to continue to hold up well to this worsening scenario, thanks to policies that leveraged more favourable conditions in the past. This will be felt in the labour markets, as well, so expectations are that unemployment will edge down by as much as two tenths of a decimal point.

The earnings share of total income in Latin America, 1990-2010

This article analyses the share of total income represented by employment earnings in the countries of Latin America over the last two decades. It first considers the wage share of gross domestic product (gdp) and then adds in the earnings of self-employed workers. The findings indicate that both total wages and total earnings declined as a share of gdp in most of the region’s countries over the period, although there were some exceptions. The reduction in earnings inequality seen over the past decade was not usually accompanied by an increase in the gdp share of earnings. This means that the improvement in personal income distribution was not matched by an improvement in functional distribution.

Growth, Poverty and Inequality in the Caribbean

.--Director’s Desk: Growth, Poverty and Inequality in the Caribbean.--Non-Comunicable Diseases: A Growing Epidemic.--Policies and Programmes for an Ageing Population.--Sexual and Reproductive Health and HIV in the Caribbean.--International Migration and Development: Challenges and Opportunites.--Gender Based Violence

Report of the AD HOC Expert Group meeting on social exclusion, poverty, inequality, crime and violence: Towardsa research agenda for informed public policy for Caribbean SIDS

The Economic Commission for Latin America and the Caribbean (ECLAC), Subregional Headquarters for the Caribbean convened an expert group meeting on Social Exclusion, Poverty, Inequality – Crime and Violence: Towards a Research Agenda for informed Public Policy for Caribbean SIDS on Friday 4 April 2008, at its conference room in Port of Spain. The meeting was attended by 14 experts drawn from, the University of the West Indies (UWI), St. Augustine, Trinidad and Tobago; and Mona Campus, Jamaica; the St. Georges University, Grenada; the Trinidad and Tobago Crime Commission and the Ministry of Social Development, Government of Trinidad and Tobago and representative of Civil Society from Guyana. Experts from the United Nations System included representatives from the United Nations Fund for Women (UNIFEM), Barbados; the United Nations Development Programme (UNDP), Port of Spain and UNDP Barbados/SRO and the Organisation of Eastern Caribbean States (OECS). The list of participants appears as an annex to this report. The purpose of the meeting was to provide a forum in which differing theories and methodologies useful to addressing the issues of social exclusion, poverty, inequality, crime and violence could be explored. It was expected that at the end of the meeting there would be consensus on areas of research which could be pursued over a two to four-year period by the ECLAC Subregional Headquarters for the Caribbean and its partners, which would lead to informed public policy in support of the reduction of the growing violence in Caribbean society.

Inclusive social development: The next generation of policies for overcoming poverty and reducing inequality in Latin America and the Caribbean

Foreword by Alicia Bárcena

Economic growth, urbanization and social inequality: Reflections on the conservative Modernization

China is now facing a sudden change of redistribution of population in space as her urban population exceeds rural population. It seems necessary to learn others’ lessons by analyzing the urbanization of other developing countries, especially Brazil’s. To an extent, Brazil and some other developing countries have been unsuccessful in coordination for urbanization and improving living quality. The megacities in Latin America are the examples of swollen cities, and large groups excluded from the system of public services. It reflects in both short of infrastructures in many areas and high-levels of violence unique in the big cities in Latin America. Then the author summarizes Brazil’s lessons. Firstly, he describes the determinants in Brazil’s urbanization, especially the industrialization between 1930 and 1980. Secondly, the incentives for internal migration are analyzed, especially the industrial centralization in the southeast and the recessions in other areas. Finally, the characteristics of the present round of absorption of labor and the roots for the severe social inequality are discussed.

Famílias e formação ética: a educação das crianças sob a ótica de mulheres

Pós-graduação em Serviço Social - FCHS

Desigualdade social no Brasil: as principais mudanças nos governos Lula

This monograph will focus on the social policies implemented by the Federal Government during the government of Luis Inácio Lula da Silva. The aim of this study is to analyze the main changes in social inequality indicators in the period 2003 - 2010. In the first chapter, we present some ideas of poverty meaning and its history in Brazil. The second chapter is dedicated to the most important cash transfer program in the history of the country, the Bolsa Familia program, and finally, in Chapter 3, is highlighted as stocks in the labor market also contributed to improve social indicators in Brazil and lift millions out of poverty and extreme poverty, such as increasing the level of formal job creation and the real increase in the minimum wage

Poverty Reduction and the Income Inequality in China

In 2000, the United Nations adopted the Millennium Development Goals which set targets for raising living standards in low-income countries. The first goal was to “eradicate extreme poverty and hunger” (United Nations). The World Bank defines extreme poverty as income of less than $1.25 per day (World Bank, 2010a). Based on this definition, the World Bank estimates that the percentage of the population in China living in extreme poverty has fallen from 84 percent in 1981 to about 16 percent in 2005, a period during which China’s population grew by more than 300 million people (see Table 1 on last page). Because China is a very large country with a current population approaching 1.4 billion (more than four times the United States population), its dramatic reduction in poverty over the past 30 years has had a profound effect on global poverty measures. In fact, poverty reduction in China is the main reason that the incidence of extreme poverty in developing countries has fallen from about 52 percent in 1981 to 25 percent in 2005 (Table 1). While the absolute number of poor in China fell by some 627 million, the number of poor in other developing countries actually grew slightly (from 1,065 million to 1,166 million). These figures represent a decline in the percentage of the total population in poverty in other developing countries because of general population growth over that 25-year period (World Bank, 2010b).

SOCIAL POLICY AS REGIONAL POLICY: MARKET AND NONMARKET FACTORS DETERMINING REGIONAL INEQUALITY

We decompose the recent changes in regional inequality in Brazil into its components, highlighting the role of spatially blind social programs. We aggregate personal income micro data to the state level, differentiating nine income sources, and assess the role of these components in the observed changes in regional inequality indicators. The main results indicate that the largest part of the recent reduction in regional inequality is related to the dynamics of the market-related labor income, with manufacturing and services favoring deconcentration. Labor income in agriculture, retirement and pensions, and property rents and other sources favored concentration. The social programs Bolsa Familia and Beneficios de Prestacao Continuada are responsible for more than 24 percent of the reduction in inequality, although they account for less than 1.7 percent of the disposable household income. Such positive impact on regional concentration is impressive, since the goals of the programs are clearly nonspatial.

Linear matrix inequality-based robust model predictive control for time-delayed systems

This work addresses the solution to the problem of robust model predictive control (MPC) of systems with model uncertainty. The case of zone control of multi-variable stable systems with multiple time delays is considered. The usual approach of dealing with this kind of problem is through the inclusion of non-linear cost constraint in the control problem. The control action is then obtained at each sampling time as the solution to a non-linear programming (NLP) problem that for high-order systems can be computationally expensive. Here, the robust MPC problem is formulated as a linear matrix inequality problem that can be solved in real time with a fraction of the computer effort. The proposed approach is compared with the conventional robust MPC and tested through the simulation of a reactor system of the process industry.

Demography and evolution of regional inequality

This paper addresses the importance of life cycle aspects in explaining the evolution of regional income inequality. The analysis of household microdata organized in age cohorts shows that Brazilian regional income inequality has different dynamics across generations, with income convergence being observed only for the older generations. The larger income share of younger generations produces a low speed of convergence in the country. When retirement payments, pensions, and other government transfers are excluded from income, convergence is not observed even for the older generations.