Abstract
The aim of this study is to analyze the effect of fiscal policy by race, disaggregating to consider Uruguayans with primarily European, African and indigenous ancestry. We perform an incidence analysis, an estimation of the effect of fiscal policy on the poverty exit rate and an assessment of the impact on the average ethno-racial gaps. The findings support the idea that fiscal policy reduces (but does not eliminate) ethnic gaps. This result is led by health care and educational transfers, and to a lesser degree by direct transfers. We do not consider quality issues with public services, which may affect the estimated narrowing of gaps. Finally, we find that Afro-descendants and indigenous individuals do not capture the full potential of education transfers because of their high drop-out rate.
Change history
09 May 2019
The article Inequality and fiscal policies in Uruguay by race, written by Maximo Rossi, Marisa Bucheli and Florencia Am��bile, was originally published electronically on the publisher���s internet portal (currently SpringerLink) on 24 January 2018 without open access.
09 May 2019
The article Inequality and fiscal policies in Uruguay by race, written by Maximo Rossi, Marisa Bucheli and Florencia Am��bile, was originally published electronically on the publisher���s internet portal (currently SpringerLink) on 24 January 2018 without open access.
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Acknowledgments
This article was prepared as part of the Commitment to Equity (CEQ) project, a joint initiative of CIPR and the Department of Economics (Faculty of Social Sciences, Universidad de la República), Tulane University and the Inter-American Dialog. This study was partially financed by International Development Bank.
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The original version of this article was revised due to a retrospective Open Access order.
Appendix: The poverty exit rate (hazard rate) and the poverty ratio
Appendix: The poverty exit rate (hazard rate) and the poverty ratio
If the pre-policy poverty rate is higher for group a than for group w, the post-fiscal poverty rate will be equal only if the hazard rate of exiting poverty is higher in group a than in group w.
Suppose that in the pre-policy situation the poverty rate is higher for group a than for group w. If we denote the number of poor by Z and the number of persons in each group by N:
The hazard rate of group i (i = a,w) for leaving poverty is hi:
So, a positive hazard rate indicates that the policy reduces the poverty rate.
If the post-policy poverty rates of the groups are equal:
We can rewrite the equality as:
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Bucheli, M., Rossi, M. & Amábile, F. Inequality and fiscal policies in Uruguay by race. J Econ Inequal 16, 389–411 (2018). https://doi.org/10.1007/s10888-017-9373-7
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DOI: https://doi.org/10.1007/s10888-017-9373-7
Keywords
- Inequality
- Poverty
- Race
- Fiscal policy
- Direct transfers