Essays on Inequality and Poverty: Uruguay 1986-97
Máximo Rossi
Advisor: Prof. Thomas Sterner
Göteborg University
ABSTRACT
Paper N° 1
Inequality, Poverty and Deprivation in Uruguay (1989-97)
Máximo Rossi
Abstract: The purpose of this paper will be to study the evolution of inequality and
poverty in Uruguay between 1989 and 1997. We found that from 1991 there was an
increase wage inequality in Uruguay and poverty changed little, decreased until 1993 and
then increased and deprivation increased. Near a half of poor people in Uruguay are children
and old people contribute very little to poverty.
Paper N° 2
Poverty status in Montevideo (Uruguay) in the 1980s
Marisa Bucheli and Máximo Rossi
Published in Revista de Economía y Administración, Vol. 38, No. 56, June 2001, Chile
Abstract: This paper analyzes the evolution of poverty in Montevideo in the 1980s. Although there
were external shocks and changes in macroeconomic and income policies, the poverty indexes did
not register important variations. But the fluctuations in average income suggest that the levels of
absolute poverty could have been affected. Anyway, the decomposition of the indexes using a
relative poverty line permits to measure the short-term differences of impacts among occupations
during the decade. Thus, in spite of the fact that the regional environment affects all the economy, the
informal sector appears to be particularly sensitive to its changes but in the opposite direction. When
relative prices in the region induce a high demand for Uruguayan goods, smuggling decreases and so
self-employment without establishment activity. As formal sector has the most important weight in
national income, the positive external shocks allowed a decline of global poverty indexes. The
decomposition of poverty indexes also permits a study of the structural links between head of
household characteristics and poverty. The relation between education and poverty status shows that
low schooling of the household head is associated with low household income. A trend of increasing
schooling in population is changing the structure of household head education. A more homogenous
labor force suggests that the contribution of higher educated to poverty could increase in the future.
On the other hand, the different quality between private and public education could be useful to
explain poverty status in the future: the restrain of investment in public education will affect its quality
and therefore the education of the poorest, who are outside the private system. Finally,
decomposition permits a more complete characterization of the poor. Even with a low contribution in
percentage, individuals belonging to households where the head is a woman present a high poverty
1
level. These poor households are affected by the low education of the heads and the absence of other
sources of income. In addition, a percentage of them have one or more children, contributing to a high
percentage of children below the poverty line. Children situation is explained also by the higher rate of
birth of poor couples. Combined with the restrain of social spending, specifically in education, these
cohorts have a little possibility of leaving poverty.
Paper N° 3
Wage discrimination in Uruguay (1991-1997)
Fernanda Rivas and Máximo Rossi
Working Paper 7/2000: Department of Economics, University of Uruguay
Abstract: The purpose of this paper is study the evolution, during the nineties, of the wage
differential between men and women, and in particular the labor market discrimination. We try to
analyze if in a frame of increasing openness to international trade, decreasing inflation, wage
negotiation decentralization and increasing wage inequality, the labor market discrimination against
women has experimented any change. We estimate the total wage differential and decompose it in
three components: I) men advantage or overpayment due to the existence of discrimination
(favoritism), ii) women disadvantage (pure discrimination) and iii) differences due to different human
capital levels and labor insertion. It is observed that the wage gap between men and women
diminished. Although the three factors go in the same way to improve women condition in the labor
market, it is the differences due to different human capital levels and labor insertion the main factor
that contributed to narrow the wage gap during the period of study (1991–1997). The decomposition
of the wage gap shows that the men start the period with an advantage in terms of human capital
and labor insertion that soon disappears and stars to be favorable for women, being the main factor
that explains the diminishing in the wage gap. Not only the advantage of men but also the
disadvantage of women had very moderate changes thus in a frame of wage gap diminishing, at the
end of the period, they remained as the main explanation of the wage gap.
Paper N° 4
The evolution of differences in wages between the public and the private sector in Uruguay.
Fernanda Rivas and Máximo Rossi
Working Paper 2/2002. Department of Economics, University of Uruguay
Abstract: The aim of this paper was: i) to study the evolution of the wage differential between the
public and the private sector and, ii) to analyze the impact of said evolution on income distribution.
The main conclusions of this paper are the following:
-The average hourly wage is higher in the public sector than in the private sector.
-The basic wage is substantially higher in the public sector than in the private sector, although the
returns to human capital are higher in the private sector. Differences in the basic wage have varied
significantly since 1996.
-The decomposition of differences in wages between the public and private sector has shown a total
advantage for the public sector since 1996.
-Wage inequality levels are always higher in the private sector than in the public one. During the
period under study there has been an important change in terms of the contribution of each sector
to total inequality. The explanation of total inequality by public wages increased considerably.
2
Paper N° 5
Wage Polarization and Inequality in Uruguay, 1986-97.
Carlos Gradín and Máximo Rossi
Published in El Trimestre Económico, Vol. 67, No. 267, July-September 2000, México
Abstract: The aim of this paper is to study the evolution of wage polarization in Uruguay during the
last twelve years. The results show that wage distribution in Uruguay has gradually become more
unequal and, in particular, more bipolarized. At the root of this process there lie the increasing
premiums for qualification and experience, as well as the increasing wage differential among the
different industries.
Paper N° 6
Occupational Segregation by Gender in the Uruguayan Labor Market (1986-1997)
Máximo Rossi
Abstract: The objetive of this paper has been to analyze the evolution of occupational segregation
by gender in Uruguay and in particular if the evolution was associated to the wage gap trends.
There are high level of segregation in Uruguay and they wew not important changes during the
1990s.
Paper N° 7
Are Environmental Goods a Luxury?
Andrés Pereyra and Máximo Rossi
Published in Revista de la Escuela de Economía y Negocios, Año 1 Nº 3, 1999.Universidad
Nacional de General San Martín, Argentina
Abstract: In environmental literature there has been an increasing interest in analyzing the income
elasticity of environmental amenities, and particularly, of the willingness to pay for an environmental
improvement (see Kristrom and Riera, 1996). In this paper we are only concerned with estimating
the income elasticityof environmental amenities, leaving aside the discussion about its use as an
approximation to the elasticity of willingness to pay.
Paper N° 8
Health care expenditure in Uruguayan families.
Andrés Pereyra, Máximo Rossi y Patricia Triunfo
3
Forthcoming in El Trimestre Económico, México
Abstract: Engel curves are estimated for a series of health care expenditures, using the data
obtained from the Household Expenditures and Income Survey of 1994-1995 (NSO). The estimates
are made using parametrical techniques, controlling for Heckman´s sample selection bias. Income
elasticities and their trust interval are calculated at 95%, using the boostraping procedure. The
paper concludes that health care is a necessity (the increase in household income entails an
increase in health care expenditure) except for drugs and dental services, which can be considered
luxury goods. Considering health care expenditure as a whole, we can conclude that it is a
necessity, but income elasticity is very close to the unit. However, when making the estimates by
income strata, it can be verified that the hypothesis of health care being a luxury good can only be
rejected for 30% of the richer households. In other words, for lower income strata, health care is
probably a luxury good, while for higher income strata it is a necessity.
Paper N°9
Income Distribution in Uruguay: The Effects of Economics and Institutional Reforms
Carlos Gradín and Máximo Rossi
Working Papers: Department of Economics, University of Uruguay
Abstract:
This paper is concerned with distributive aspects of crucial economic and
institutional reforms experienced by earners of several income sources in Uruguay after the
late eighties. These reforms involved both the labor market and the pensions system, and
we provide empirical evidence about the different way they affected the distribution of
income. The distribution of income across all earners at the end of the eighties exhibited
two well-distinguished poles, each associated with one income source. This bimodality
diminished with time during the nineties due to the general improvement in retirement
pensions, and polarization by income sources. In the same period we find in the case of
labor earnings a net transfer of population mass from the middle of the distribution to both
extremes, which results in increasing polarization within this income source.
4