Catalogue


Good intentions, bad outcomes : social policy, informality, and economic growth in Mexico /
Santiago Levy.
imprint
Washington, D.C. : Brookings Institution Press, c2008.
description
xv, 357 p. : charts, map ; 24 cm.
ISBN
0815752199 (paper), 9780815752196 (paper)
format(s)
Book
Holdings
More Details
imprint
Washington, D.C. : Brookings Institution Press, c2008.
isbn
0815752199 (paper)
9780815752196 (paper)
catalogue key
6427441
 
Includes bibliographical references (p. 343-347) and index.
A Look Inside
About the Author
Author Affiliation
Santiago Levy is nonresident senior fellow in Global Economy and Development at the Brookings Institution.
Full Text Reviews
Appeared in Choice on 2008-12-01:
Levy (Inter-American Development Bank; previously Mexico's deputy finance minister and later its Social Security Institute director) presents an insightful analysis of Mexican social policy. This rare book combines the familiarity and impressive knowledge of one of the main architects of this policy with the type of critique more often provided by outsiders. Levy's focus on the distinction between formal and informal employment makes this volume an interesting extension to the collection of case studies found in Basudeb Guha-Khasnobis, Ravi Kanbur, and Elinor Ostrom's Linking the Formal and Informal Economy. Levy's considerable economics training as well as his strong support for social protections are evident throughout this work. He educates the reader about the shortcomings in Mexican social policy while providing a detailed design for its reform. Although his proposal is quite revolutionary (universal benefits in place of the current social security system, funded by consumption rather than payroll taxes), this is a serious proposal by an author with impeccable credentials. It should generate important debate among scholars and policy makers in Mexico and elsewhere. Summing Up: Highly recommended. Upper-division undergraduate through professional collections. L. W. Young Southern Oregon University
Reviews
Review Quotes
"Levy presents an insightful analysis of Mexican social policy. This rare book combines the familiarity and impressive knowledge of one of the main architects of this policy with the type of critique more often provided by outsiders." -- CHOICE
"Santiago Levy demonstrates how important it is that we consider the systemic implications of individual actions when designing economic and social policies. His comprehensive analytical framework, his thorough interpretation of an unusual data set, and his acute sense of how real people behave combine to make for a fascinating and constructive critique of Mexico's social protection system that would also apply to several other emerging economies." --François Bourguignon, Director, Paris School of Economics
"Santiago Levy makes a compelling case for the reform of the Mexican social protection system. He provides a brilliant in-depth analysis of the shortcomings of the current approach that fails to achieve the basic goal of protecting those in need and also seriously harms Mexico's growth prospects." --James D. Wolfensohn, former president of the World Bank
"The central thesis of this monograph is that the way Mexico's social programs are structured vis-à-vis the labor market is inequitable and inefficient. This excellent book argues that such programs, which the author strongly supports, should be delivered in a manner that does not discriminate between different types of employment arrangements. Benefits should be financed with general taxes, not employment-specific contributions by firms and workers. It will become a standard reference in the development literature because although the focus of the study is Mexico, the issues considered are faced by most developing countries, in Latin America and beyond." --Ravi Kanbur, T. H. Lee Professor of World Affairs and Professor of Economics, Cornell University
"This is a rare study linking misguided social programs to low productivity and wages and disappointing growth in Mexico. Clear, compelling, and worrying, justifying a bold policy prescription, from an author who knows his economics, his politics, and his Mexico." --Nancy Birdsall, President, Center for Global Development
"This is a rare study linking misguidedsocial programs to low productivity and wages and disappointing growth in Mexico. Clear,compelling, and worrying, justifying a bold policy prescription, from an author who knowshis economics, his politics, and his Mexico." _Nancy Birdsall, President, Center for GlobalDevelopment
This item was reviewed in:
Choice, December 2008
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Summaries
Library of Congress Summary
"Argues that incoherent social programs significantly contribute to poverty and little growth. Proposes converting the existing social security system into universal social entitlements. Advocates eliminating wage-based social security contributions and raising consumption taxes on higher-income households to increase the rate of GDP growth, reduce inequality, and improve benefits for workers"--Provided by publisher.
Main Description
Despite various reform efforts, Mexico has experienced economic stability but little growth. Today more than half of all Mexican workers are employed informally, and one out of every four is poor. Good Intentions, Bad Outcomes argues that incoherent social programs significantly contribute to this state of affairs and it suggests reforms to improve the situation.Over the past decade, Mexico has channeled an increasing number of resources into subsidizing the creation of low-productivity, informal jobs. These social programs have hampered growth, fostered illegality, and provided erratic protection to workers, trapping many in poverty. Informality has boxed Mexico into a dilemma: provide benefits to informal workers at the expense of lower growth and reduced productivity or leave millions of workers without benefits. Former finance official Santiago Levy proposes how to convert the existing system of social security for formal workers into universal social entitlements. He advocates eliminating wage-based social security contributions and raising consumption taxes on higher-income households to simultaneously increase the rate of growth of GDP, reduce inequality, and improve benefits for workers.Go od Intentions, Bad Outcomes c onsiders whether Mexico can build on the success of Progresa-Oportunidades, a targeted poverty alleviation program that originated in Mexico and has been replicated in over 25 countries as well as in New York City. It sets forth a plan to reform social and economic policy, an essential element of a more equitable and sustainable development strategy for Mexico.
Table of Contents
Forewordp. ix
Acknowledgmentsp. xv
Introductionp. 1
Main Hypothesisp. 6
Organizationp. 9
Institutions, Workers, and Social Programsp. 11
Salaried and Nonsalaried Laborp. 11
Labor Status and Social Programsp. 16
Resources for Social Programs from 1998 to 2007p. 26
Formality and Informalityp. 33
Definitionsp. 33
Interpretation and Implicationsp. 40
Workers' Valuation of Social Programsp. 47
Determinants of Workers' Valuation of Social Securityp. 47
Determinants of Workers' Valuation of Social Protectionp. 61
Wages and Social Benefitsp. 63
An Assessmentp. 66
Social Programs and Poor Workersp. 71
Households and Workers in Progresa-Oportunidadesp. 71
Poor Workers' Valuation of Social Programsp. 79
Mobility of Workers in the Labor Marketp. 85
Labor Forcep. 85
Mobility of Workers: Some Examplesp. 91
Evidence of Mobility from Social Security Registriesp. 96
Evidence of Mobility from Employment Surveysp. 111
Mobility and Wage Ratesp. 114
Implications of Mobility for Social Policyp. 129
Social Programs, Welfare, and Productivityp. 134
Demand for Salaried and Nonsalaried Laborp. 136
The Labor Market with Formal and Informal Sectorsp. 142
The Static Efficiency Costs of the Formal-Informal Dichotomyp. 155
Empirical Estimates of Static Efficiency Costsp. 160
The Labor Market with Different Valuations for Poor Workersp. 163
Productivity and Illegal Firmsp. 166
The Labor Market When Social Security Is Evadedp. 166
Illegal and Legal Firmsp. 177
Informality and the Size Distribution of Firmsp. 179
Informality and the Demand for Legal and Illegal Laborp. 193
Informality and the Composition of Outputp. 199
Investment and Growth under Informalityp. 208
Investment in the Formal and Informal Sectorsp. 208
Social Programs and the Allocation of Aggregate Investmentp. 211
Investments in Labor Training and Technology Adoptionp. 214
Remarks on Saving under Informalityp. 216
Growth and Job Creation under Persistent Informalityp. 219
Static and Dynamic Efficiency Losses under Informalityp. 223
Implications for Poverty Reduction and Progresa-Oportunidadesp. 225
Social Programs and the Fiscal Accountsp. 234
Government Subsidies for Social Securityp. 234
Feedback from Social Programs to the Fiscal Accountsp. 240
Is Social Policy Redistributive?p. 243
Can Social Policy Increase Welfare and Growth?p. 253
The Case for Reformp. 253
A Reference Equilibrium: Universal Social Entitlementsp. 256
What Should Universal Social Entitlements Be?p. 269
How Much Would Universal Social Entitlements Cost?p. 270
Implications for Noncontributory Pensionsp. 280
From Here to There: Isolated Reforms versus Step-by-Step Reformp. 283
A Final Wordp. 288
Appendixes
Resources for Social Programsp. 293
Regional Coverage of Social Programsp. 298
Land Holdings of Progresa-Oportunidades Householdsp. 304
Estimation of Mexico's Economically Active Populationp. 306
Mean Wage-Rate Comparisons by Matching Methodsp. 313
Equilibrium in the Labor Market with Differences in Workers' Valuationsp. 317
Equilibrium in the Labor Market with Evasion of Social Securityp. 327
Profit Maximization under Informalityp. 329
Further Remarks on Retirement Pensions as a Social Entitlementp. 336
Referencesp. 343
Indexp. 349
Table of Contents provided by Ingram. All Rights Reserved.

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