Distributional effects of the Panama Canal expansion
AbstractThis paper uses a dynamic macro-micro framework to evaluate the potential distributional effects of the expansion of the Panama Canal. The results show that large macroeconomic effects are only likely during the operations phase (2014 and onward), and income gains are likely to be concentrated at the top of the income distribution. The additional foreign exchange inflows during the construction and operations phases result in the loss of competitiveness of non-Canal sectors (Dutch disease) and in higher domestic prices, which hurt the poorest consumers. In addition, the construction and operation activities increase demand for more educated non-farm formal workers. Although these changes encourage additional labor movement out of agriculture and from the informal to the formal sector, much of the impact is manifested in growing wage disparities and widening income inequality. Using the additional revenues of the Canal expansion in a targeted cash transfer program such as"Red de Oportunidades", the Government of Panama could offset the adverse distributional effects and eradicate extreme poverty.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by The World Bank in its series Policy Research Working Paper Series with number 5848.
Date of creation: 01 Oct 2011
Date of revision:
Economic Theory&Research; Labor Policies; Markets and Market Access; Labor Markets; Emerging Markets;
Other versions of this item:
- Maurizio Bussolo & Rafael de Hoyos & Denis Medvedev, 2012. "Distributional Effects of the Panama Canal Expansion," JOURNAL OF LACEA ECONOMIA, LACEA - LATIN AMERICAN AND CARIBBEAN ECONOMIC ASSOCIATION.
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
- J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Ravallion, Martin & Chen, Shaohua & Sangraula, Prem, 2007.
"New evidence on the urbanization of global poverty,"
Policy Research Working Paper Series
4199, The World Bank.
- Martin Ravallion & Shaohua Chen & Prem Sangraula, 2007. "New Evidence on the Urbanization of Global Poverty," Population and Development Review, The Population Council, Inc., The Population Council, Inc., vol. 33(4), pages 667-701.
- Michael Lokshin & Ruslan Yemtsov, 2005. "Has Rural Infrastructure Rehabilitation in Georgia Helped the Poor?," World Bank Economic Review, World Bank Group, World Bank Group, vol. 19(2), pages 311-333.
- Ferreira, Francisco H. G. & Leite, Phillippe G., 2003. "Policy options for meeting the Millennium Development Goals in Brazil : can micro-simulations help?," Policy Research Working Paper Series 2975, The World Bank.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roula I. Yazigi).
If references are entirely missing, you can add them using this form.