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on Central and South America |
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Issue of 2023‒05‒29
three papers chosen by |
| By: | Abhijit Banerjee; Claudia Martínez A; Esteban Puentes |
| Abstract: | Individual behavioral biases can affect savings behavior. We conduct an experiment to evaluate different strategies to increase savings. We compare an automatic savings plan (or default rule), monthly reminders, and a rule-of-thumb savings package that appeals to careful spending. We find that rule-of-thumb and default rules can increase savings for one year after the intervention. In contrast, reminders can reduce account balances and debt levels. The increase in savings under the default rule is produced by a (mechanical) increase in deposits, but savings is later decreased by an increase in withdrawals. |
| Date: | 2023–04 |
| URL: | http://d.repec.org/n?u=RePEc:udc:wpaper:wp545&r=lam |
| By: | Julia Fonseca (University of Illinois at Urbana-Champaign); Adrien Matray (Princeton University, NBER, and CEPR) |
| Abstract: | We study a financial inclusion policy targeting Brazilian cities with low bank branch coverage using data on the universe of employees from 2000–2014. The policy leads to bank entry and to similar increases in both deposits and lending. It also fosters entrepreneurship, employment, and wage growth, especially for cities initially in banking deserts. These gains are not shared equally and instead increase with workers’ education, implying a substantial increase in wage inequality. The changes in inequality are concentrated in cities where the initial supply of skilled workers is low, indicating that talent scarcity can drive how financial development affects inequality. |
| Keywords: | Brazil, Financial Inclusion Policy, Wage Inequality, Banks |
| JEL: | D63 E24 E58 G21 J30 |
| Date: | 2022–09 |
| URL: | http://d.repec.org/n?u=RePEc:pri:cepsud:308&r=lam |
| By: | Andres García-Suaza; Fernando Jaramillo; Marlon Salazar |
| Abstract: | Developing countries have a vast informal sector generally associated with low productivity levels. The response of informal employment to tax policies might depend on labor market rigidities. This paper proposes a theoretical framework consisting of a search and matching model with segmentation in the labor market to understand how tax policies and enforcement interact to determine the size of the formal sector. The analytical results show that decreasing payroll taxes increases formal employment demand, and enforcement expenditure decreases informal employment offers. The model suggests that a tax policy combination leads to a significant impact on informality reduction. Moreover, the magnitude of the effect of tax policies depends on real wage rigidities, i.e., when the economy faces high real wage rigidities, the tax policies have a higher effect on informality reduction |
| Keywords: | Informality, payroll taxes, fiscal policy, enforcement, search frictions, shirking, developing countries. |
| JEL: | E26 E62 J21 J46 J31 O17 K42 |
| Date: | 2023–04–28 |
| URL: | http://d.repec.org/n?u=RePEc:col:000092:020744&r=lam |