Luis Felipe López-Calva
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Presentación del Director Regional de PNUD para América Latina y el Caribe, en el pánel: EMPLEO DE CALIDAD Y DESARROLLO DE HABILIDADES PARA EL FUTURO de la Conferencia CAF Productividad e Innovación para el Desarrollo
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Luis Felipe López-Calva
- 1. Quality Employment and Skills Development for the Future Luis F. López-Calva CAF Conference – Productivity and Inclusion or the Future 7 November 2018
- 2. Agenda • The road to development in LAC: Productivity, inclusion and resilience • The joint determination of productivity and inclusion • Challenges in the context of rapid technological change
- 3. Agenda • The road to development in LAC: Productivity, inclusion and resilience • The joint determination of productivity and inclusion • Challenges in the context of rapid technological change
- 4. LAC is a middle income region, but not a middle class society Poverty, Vulnerability, and the Middle Class in Latin America (2000-2016) Source: LAC Equity Lab Tabulations of SEDLAC (CEDLAS and the World Bank) 0 5 10 15 20 25 30 35 40 45 50 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Percentofpopulation Poverty $5.5 (2011 PPP) Vulnerable $5.5-$13 (2011 PPP) Middle Class $13-$70 (2011 PPP)
- 5. Aspirational Line of Sight
- 6. How do we get there?: A three lane road Effective Governance Productivity Inclusion Resilience
- 7. Productivity
- 8. “Productivity is not everything, but in the long-run it is almost everything” - Paul Krugman .5 1 1.5 1950 1970 1990 2010 Year Peru Venezuela Guatemala Ecuador Colombia Brazil Source: FRED St. Louis Total Factor Productivity, relative to USA 0 50000 100000150000 2011PPPUSD 1990 2000 2010 2020 Year Argentina Bolivia Brazil Colombia Costa Rica El Salvador Mexico United States Source: ILO Output per worker
- 9. Despite economic growth, informal employment (as an indicator of misallocation) has not declined 0 20406080 100 China LAC United States 2000 2017 2000 2017 2000 2017 Source: ILO Employment Status, 2017 Employees Employers Self-employed Family Workers
- 10. Inclusion
- 11. Women have entered the labour force, but spend more time in unpaid work than men 2030405060 1990 1995 2000 2005 2010 2015 Year Arg Braz El Salv Mex Col Panama USA Source: World Development Indicators. % of female population ages 15+ Labour force participation of women
- 12. Territorial inequalities correlate with horizontal inequality Health Education Access to Water 19952010 Source: Ceriani, L. and L.F. Lopez-Calva, 2016. A Note on State Discontinuity. Note: A darker shade of blue indicates higher state effectiveness (i.e. a larger share of the population reached by the service. In particular, Health shows the normalized shortfalls from the minimum level of under-5 child mortality in the country; Education shows the normalized shortfalls from the minimum share of illiterate adults in the country; Access to water shows the normalized shortfalls from the minimum share of household having access to piped water in the country.
- 13. Resilience
- 14. Between 25 and 30 million people are at risk of falling into income poverty Income pyramid by area of residence (in millions of people and in percentages) in Latin America, circa 2013 Source: UNDP, 2016. Human Development Report Latin America and the Caribbean
- 15. It is not how fast you grow, but how often you trip 05 1015 NYears Colombia Caribbean CostaRica G7 CentralAmerica Chile Ecuador Bolivia Honduras UnitedStates Mexico Brazil Peru SouthAmerica Argentina Source: IMF Number of Years in recession since 1980
- 16. Governance
- 17. The quality of service delivery is weak and unequal
- 18. “In establishing the rule of law, the first five centuries are always the hardest” - Gordon Brown
- 19. Agenda • The road to development in LAC: Productivity, inclusion and resilience • The joint determination of productivity and inclusion • Challenges in the context of rapid technological change
- 20. Factor misallocation leads to exclusion • Low labour earning and returns to education • Lack of financial inclusion • Poor infrastructure and connectivity • Low quality of service provision is low • Weak contract enforcement and dispute settlement mechanisms • Inefficient and distorting tax systems • Social protection mechanisms reinforce incentives for misallocation and informality Governance (Low trust & perceptions of unfairness) The Productivity Trap Inclusion (Exclusion and social disadvantages) Productivity (Factor misallocation)
- 21. Despite increases in schooling, informality has persisted Years of Schooling and Share of Informal Employment, Mexico 1996-2014
- 22. And regardless of education level, salaries have stagnated Sample Employee Earnings, Mexico 1996-2015 (May 2008 pesos per hour)
- 23. At the household level, low productivity constrains the ability of people to contribute to growth • Precarious employment • Low wages • Lack of access to finance • Employment opportunities based on networks • Lack of land and housing titling Inability to generate income and, thus, contribute to growth Poverty and Vulnerability
- 24. Agenda • The road to development in LAC: Productivity, inclusion and resilience • The joint determination of productivity and inclusion • Challenges in the context of rapid technological change
- 25. Technological change: Why is this time different? • Technology is changing much faster than ever before • Technology has transformed the relationship between employee and employer • Technological innovation is enabling the automatization of non-routine tasks But it still favors capital over labor, with implications for the concentration of the benefits of growth 0 50 100150 Units 1986 1994 2002 2010 2018 Year Brazil Chile Colombia Mexico USA Source: WDI Mobile cellular subscriptions (per 100 people)
- 26. In order to take advantage of emerging technology, skills must catch up
- 27. The race between technology and skills has important implications for inequality 4045505560 Gini 406080 100 %completeduppersecondary,population25+ 2004 2012 Year Brazil Chile Colombia Mexico USA Brazil Chile Colombia Mexico USA Upper panel of legend refers to left axis and lower panel to right axis Source: WDI “Tinbergen’s race” in selected countries: Gini coefficient (right axis) and share of population over 25 with at least upper secondary education (left axis)
- 28. The challenge is the capacity to adapt to change • Education systems will need to adapt to equip the labor force with a new set of skills including critical thinking and problem-solving • Social protection systems will need to adapt to protect workers who do not have access to stable formal employment contracts • Fiscal policy will need to adapt nationally to finance these new educational, social protection needs as well as globally to avoid ‘races to the bottom’ • Instruments for redistribution will need to adapt to address new inequality concerns arising from technological shocks
- 29. References Attanasio, Orazio and Székely, Miguel, Household Savings and Income Distribution in Mexico (December 1998). IDB Working Paper No. 322 Bussolo, Maurizio & López-Calva, Luis Felipe, 2014. “Shared Prosperity: Paving the way in Europe and Central Asia”. Washington, DC: World Bank. López-Calva, Luis Felipe & Rodríguez-Castelán, Carlos, 2016. "Pro-growth equity: a policy framework for the twin goals," Policy Research Working Paper Series 7897, The World Bank. Levy, Santiago & López-Calva, Luis Felipe, 2016. “Labour earnings, Misallocation, and the Returns to Education in Mexico.” The World Bank Economic Review (forthcoming).