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Ex‐Ante Simulations Of Direct And Indirect Effects Of Welfare Reforms

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  • José Cuesta
  • Juan Ponce

Abstract

This paper estimates an ex‐ante structural model that incorporates behavioral labor responses to analyze the distributive impacts of a long proposed reform in Ecuador: the shift from regressive consumer gas subsidies to the progressive Human Development Bonus (HDB). Even the most radical reform options may not have the expected sizeable distributive gains. This is the case even after the targeting instrument, SelBen, substantially corrects the current targeting deficiencies of the HDB. Poverty reduction is maximized (reduing poverty by about five percentage points) when the targeting instrument redirects resources to households close to the pre‐reform poverty line. Most of this estimated impact accrues from direct effects with a minimal contribution from indirect effects. Labor‐driven indirect effects are multiple and complex, tending to cancel out one another.

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  • José Cuesta & Juan Ponce, 2007. "Ex‐Ante Simulations Of Direct And Indirect Effects Of Welfare Reforms," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 53(4), pages 645-672, December.
    • Handle: RePEc:bla:revinw:v:53:y:2007:i:4:p:645-672
    DOI: 10.1111/j.1475-4991.2007.00249.x
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    Cited by:

    1. H. Xavier Jara, 2015. "Tax-benefit microsimulation in Ecuador: A feasibility study," WIDER Working Paper Series 128, World Institute for Development Economic Research (UNU-WIDER).
    2. Xavier Jara, 2015. "Tax-benefit microsimulation in Ecuador: A feasibility study," WIDER Working Paper Series wp-2015-128, World Institute for Development Economic Research (UNU-WIDER).
    3. Jose Cuesta & Fidel Jaramillo, 2009. "Taxonomy of Causes, Impacts and Policy Responses to the Food Price Crisis in the Andean Region," Research Department Publications 4623, Inter-American Development Bank, Research Department.
    4. Jose Cuesta & Jon Jellema & Lucia Ferrone, 0. "Fiscal Policy, Multidimensional Poverty, and Equity in Uganda: A Child-Lens Analysis," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 0, pages 1-32.
    5. Jose Cuesta & Jon Jellema & Lucia Ferrone, 2021. "Fiscal Policy, Multidimensional Poverty, and Equity in Uganda: A Child-Lens Analysis," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 33(3), pages 427-458, June.
    6. Jose Cuesta & Jon Jellema & Yekaterina Chzhen & Lucia Ferrone, 2018. "Commitment to Equity for Children, CEQ4C: Fiscal Policy, Multidimensional Poverty, and Equity in Uganda," Commitment to Equity (CEQ) Working Paper Series 81, Tulane University, Department of Economics.
    7. Jose Cuesta & Michael Danquah, 2022. "Urban cash transfers and poverty in Ghana," Review of Development Economics, Wiley Blackwell, vol. 26(1), pages 133-155, February.

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