International Monetary Fund. Western Hemisphere Dept.
This paper discusses whether there is a more efficient way of taxing labor in Argentina that has a minimal cost in terms of foregone revenues. Social security contributions for dependent workers are generally high in Argentina, despite the plethora of different regimes and exceptions. A reform of labor taxation in Argentina would need to address these inefficiencies. Reducing the tax wedge would stimulate employment and formalization, especially if targeted to low-paid workers, as there is evidence that it’s their employment that mostly responds to tax incentives. Argentina’s tax and transfer system appears to be less progressive than the estimated optimal one. The simulations suggest that the proposed changes would have a positive impact on economic activity and formality, with a minor cost in terms of foregone revenues. Greater labor supply and wages in the formal sector push up revenue from labor taxation, compensating part of the direct cost of the reform.
Gains in labor force participation rates in Chile have slowed in recent years. We examine
their determinants using a cohort-model analysis. Allowing for both age- and cohort-specific
effects in the context of a seemingly unrelated regression equations (SURE) approach, we
find that age factors play an important role in determining participation decisions, especially
for males. For females, we find that strong positive time trends dominate the downward
pressure from demographics, although those trends have recently dissipated. In addition, we
find that both cohort effects and the business cycle shape participation decisions. Using our
cohort-based analysis, we construct projections of participation rates, which suggest
population aging will put downward pressure on labor inputs, and thus potential output, in
coming years. Further increases in female labor force participation—supported by policies—
could more than offset the downward pressure from demographics.
Women across the world remain an underutilized resource in the labor force. Participation in
the labor force averages around 80 percent for men but only 50 percent for women – nearly
half of women’s productive potential remains untapped compared to one-fifth for men. Latin
America and the Caribbean (LAC), as a region, saw the largest gains in female labor force
participation (LFP) in the world during the last two decades. Women in LAC are becoming
increasingly active in paid work, closing the gap with men and catching up to their
counterparts in advanced economies at an impressive rate. In this paper, we document the
recent trends in female LFP and female education in the LAC region, discuss the size of
potential gains to GDP from increasing female LFP and policies which could be deployed
towards this goal.
Mr. Christian Gonzales, Ms. Sonali Jain-Chandra, Ms. Kalpana Kochhar, Ms. Monique Newiak, and Mr. Tlek Zeinullayev
This study shows empirically that gender inequality and income inequality are strongly interlinked, even after controlling for standard drivers of income inequality. The study analyzes gender inequality by using and extending the United Nation’s Gender Inequality Index (GII) to cover two decades for almost 140 countries,. The main finding is that an increase in the GII from perfect gender equality to perfect inequality is associated with an almost 10 points higher net Gini coefficient. For advanced countries, with higher gender equity in opportunities, income inequality arises mainly through gender gaps in economic participation. For emerging market and developing countries, inequality of opportunity, in particular in education and health, appear to pose larger obstacles to income equality.
International Monetary Fund. External Relations Dept.
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