CAPÍTULO V TABLERO DE CONTROL
5.1 Indicadores Clave de Rendimiento en Transporte y Logística
Most impact evaluation studies have examined the direct impacts of CCT programs on human capital accumulation and poverty reduction. Despite the redistributive potential of CCTs, few studies have examined their indirect impacts on income inequality. While Progresa-Oportunidades does not have an explicit objective to reduce inequality, the fact that the program increases the income of a large percent of the country’s population (between 22 to 30%) has the potential to affect income inequality. By providing cash transfers to the poorest households the program may affect short-term income inequality, and by encouraging educational enrollment the program may influence future wages of recipients and therefore income inequality in the long-term.
Soares et al. (2007) examined the impacts of three of the best-known CCTs on income inequality: Brazil’s ‘Bolsa Familia’, Mexico’s ‘Progresa-Oportunidades’ and Chile’s ‘Chile Solidario’, by decomposing the Gini coefficient in these countries.32 They found that CCTs had an important equalizing impact in the three countries. These programs were responsible for 21 percent of inequality reduction in both the Brazilian and Mexican Gini Index, each of which fell by approximately 2.7 points, and 15 percent in Chile, where it fell by only 0.1 point (2007: 17). The authors attributed this difference to the larger programs’ budgets, coverage and size of the transfers of Brazil and Mexico (0.5 percent of total national income compared to 0.01 percent in Chile). The authors concluded that CCTs in Brazil and Mexico, though small, were sufficiently large to significantly reduce national income inequality. They argued that due to “their excellent targeting, CCTs are a very low cost way of reducing inequality that can be replicated in many other countries” (2007: 223). While having established that CCTs had an equalizing effect, they recognized however, that changes in the concentration of labour income were the most important factor behind the reduction of inequality.
32 Gini coefficient is commonly used to measure income inequality. A low Gini coefficient indicates a more equal distribution, with 0 corresponding to complete equality, while higher Gini coefficients indicate more unequal distribution, with 1 corresponding to complete inequality.
Income inequality declined during the 2000s in most countries in Latin America, including Mexico, and CCTs have been a contributing factor in this process (Esquivel, Lustig and Scott, 2010; Esquivel, 2011; Gasparini, 2011; Campos, Esquivel and Lustig, 2012; Lustig, López-Calva and Ortíz-Juárez, 2012, 2013; Azevedo et al, 2013). For their redistributive impact, CCTs are being promoted as a key strategy to reduce income inequality in the region (Cruces and Gasparini, 2013). According to Lustig et al. (2012) who summarize much of this literature, two main factors are behind the decline of income inequality in the region: 1) a fall in the premium to skilled labour (with education-based indicator of skills) and 2) more progressive government transfers (2012: 11). The authors linked the fall in the skill premium to the fact that unskilled labor became (relatively) less abundant, attributed to changes in public spending on education in the 1990s, which expanded basic and middle education considerably, particularly in rural areas (2012: 11). Of the government transfers, CCTs appeared to have the most significant impact on income inequality.
Esquivel, Lustig and Scott (2010) studied changes in income inequality in Mexico by decomposing the Gini coefficient. They found that from 1996 to 2006, the country’s Gini coefficient fell from 0.543 to 0.498 (2010: 175). Their analysis suggested that there were factors “that benefited the bottom part of the rural income distribution as well as some factors that hurt, in relative terms, the upper part of the urban income distribution”
(2010: 180). The significant change in the composition of the labour force reflected the decrease in the relative number of unskilled workers, and was due to increased and more progressive spending in education and the expansion of schools in rural areas, addressing supply-side constraints and through Progresa-Oportunidades, addressing demand-side constraints.33 The authors found that non-labor income (which includes government transfers, and remittances, among others) was the second-most important contributing factor in the reduction of inequality during the period of 2000-2006. For them, government transfers became the income source with the largest equalizing effect, with Progresa-Oportunidades having the most significant impact (2010: 195).
They describe Progresa-Oportunidades as an example of redistributive “efficiency”, with
33 The authors suggest that the expansion of assembly-line plants in Mexico has increased demand for less-skilled workers (2010: 189).
as little as 0.36 percent of GDP the program accounts for 18 percent of the change in the post-transfer Gini (2010: 198). These and other authors, provide a distinction that is important to emphasize: while labour income has become an important equalizing force in urban areas in Mexico, public transfers have been especially important in reducing income inequality in the rural sector (Esquivel, 2011: 164).
These studies highlight the important role of Progresa-Oportunidades in reducing income inequality at the national level in two ways, by increasing the income of the poorest (mostly rural) households through cash transfers, and by encouraging school enrollment particularly among the rural population, which in turn affects the labour composition in both rural and urban areas via migration. Nonetheless, the impact of Progresa-Oportunidades on reducing (labour income) inequality in the long-term depends to a large extent on how the youth are incorporated into the labour market.
Little is known about the conditions Progresa-Oportunidades into which graduates are incorporated into the labour market and even less, on what effect this is having on the urban labor market. Studies have examined the impacts of Progresa-Oportunidades at the national level, but more studies are needed to determine the impacts at the regional level, particularly in those areas where the program has a large coverage, and where presumably, the impacts of cash transfers on income inequality in the short and long-term would be greater. There is a need to track the cash transfers to capture the ultimate impacts of the program on income inequality at a sub-national level.
3.3. Conclusions
Progresa-Oportunidades has helped to reduce the intensity of extreme poverty in Mexico by increasing the income of the country’s poorest households, which has increased consumption and led to improved human capital indicators related to nutrition, health and education. However, these impacts are moderate and heterogeneous, reflecting the different contexts in which the program operates. Studies also show that Progresa-Oportunidades has had limited impact on the reduction of short and long-term poverty, in part because the program is dependent on factors over which it has no direct influence (e.g. provision of infrastructure, quality of services and employment
Oportunidades may be temporarily moving recipient households closer to the poverty line, rather than lifting them out of extreme poverty definitely. They remain vulnerable to falling back into extreme poverty due to market fluctuations and rising food prices.
There is a growing perception among scholars, and a former top program official (Yaschine), that Progresa-Oportunidades has not been the ‘magic bullet’ for poverty reduction as promoted by international institutions such as the World Bank and the Inter-American Development Bank.
At the same time, the review identified a number of ways in which the program may lead to increasing regional and intraregional inequality. To begin with, the exclusion of the poorest households living in small communities and remote areas, without access to basic services has created a ‘second-tier’ of poverty within the extremely poor population (Sariego, 2008; Ulrichs and Roelen, 2012). Although program recipients are completing more years of schooling, Mexico’s highly segmented educational system means that the existing gap in quality of services between urban and rural and indigenous and non-indigenous remains (Agudo, 2008; Yaschine, 2012). Finally, migration of the most educated program graduates from the poorest areas due to lack of local non-farming jobs tends to reproduce the cycle of marginalization and poverty at a regional level (Agudo, 2008: 131).
The review of literature on the indirect impacts of Progresa-Oportunidades identified other ways in which this program may lead to increasing regional and intraregional inequality, mainly through economic spill overs, and rural out migration, which also affects the non-recipient population. Considering the indirect impacts adds a layer of complexity to the impacts of Progresa-Oportunidades on poverty and inequality.
Considering economic spill overs and rural out migration, may provide a better understanding of the relationship between Progresa-Oportunidades and inequality. A territorial approach allows an examination of the direct and indirect impacts of Progresa-Oportunidades on inequality, which goes beyond its impacts on income inequality at the national level. The following chapter further examines the ways in which the program may increase regional and intraregional inequality and worsen labour conditions.