Transcript Quantity of Education

BRASIL
Las Realidades de una
Nueva Etapa de
Desarrollo
Prof. Aloísio Araujo
EPGE/FGV - IMPA
Growth
GDP Growht Rates in 1930-2000
8
7
6
5
4
3
2
1
0
1931-50
1951-80
Brazil
1981-93
Latin America
1994-2000
World
Income per Capita of Korea / Income per Capita of Brazil
Growth Rate Decomposition
Mankiw, Romer & Weil’s Decomposition
Y=AKHL1--
TFP = GDPGrowth – 0,3*
CapGrowth –0,5*SchoolGrowth
– 0,2*LaborForceGrowth
Human Capital
Quantity of Education
 Latin America and the World
Quantity of Education
Brazil is Getting Better
Quality of Education
 Barros (2001): Quantity vs. Quality
Relationship between Growth Rates and Years of Schooling and Scores in International Standardized.
Correlation between Growth Rates and International Tests Scores is much
higher than between Growth Rates and Years of Schooling.
Quality of Education: Brazil
Quality of Education: Brazil & Latin America
Student’s grades from the First International Compared Study
(UNESCO) Mathematics Results from Third Grade
Mathematics Results - Third Grade
Peru
Rep. Dominicana
Paraguay
Colombia
Brazil
Cuba
0
50
100
150
200
250
300
350
400
Student’s grades from the First International Compared Study
(UNESCO) Mathematics Results from Fourth Grade
Mathematics Results - Fourth Grade
Peru
Rep. Dominicana
Paraguay
Colombia
Brazil
Cuba
0
50
100
150
200
250
300
350
400
Wage Inequality: Brazil and United States
 Income inequality in Brazil is mainly due to education inequality
Education Inequality is Deaceasing for Youngsters
(13 years of age)
Source:A Agenda Perdida, 2002
Credit
Credit to Private setor (1998)
Investiment
Chile and Mexico are
very similar
Investments as a Percent of GDP
Government Surplus as a Percent of
GDP
Source: Kehoe et al., 2002
Private Credit as a Percent of GDP
... However, they differ on
Credit and Growth
Real GDP per Working-Age (15-64) person detrended by 2%
per year
Index of Real Wages in
Manufacturing
Source: Kehoe et al., 2002
Structural Reforms Already Done
StateBanks
 Privatization
Telecommunication
Mining, Steel
Electricity (?)
Water and Sewage (?)
 Fiscal Responsibility Law
 Renegotiation of Municipal and State Debts
Income Redistributive Policies
 Bolsa Escola to avoid child
labor
 Early Childhood Education
Erradication
of illiteracy
 Adult Education
Young adult
(Supletive)
 University Quota for Blacks?
 Zero Hunger Program
Structural Reforms: To Be Implemented
 Independence of Central Bank
 Retirement System
 Tax Law
 Labor Regulation
 Bankrupcy Law
Current Negotiations with State Governors
Retirement System
• Increase the minimum
age of retirement: women
from 48 to 55 and men
from 53 to 60
• Tax on the pension of
retired workers with
higher salaries
• Create conditions for
development of pension
funds for public
employees
Tax Law
• Diminish the tax on
labor and increase
tax on consumption descrease degree of
informality in the
labor market
•Diminish tax
distortion
New Bankrupcy Law (Chapter 11)
• Maintain current “concordata”, a pre-package
convenient for small and medium business
• Allow for broader scope of negotiation in other cases
• Create creditor´s comittee to avoid hold-up problem
• Mitigate priority (labor and fiscal) problems
• Mitigate sucession problems
• Incentivate debt-equity swaps (?)
Final Comments
 Flexible exchange rates and serious macroeconomic
policies (high interest rate and increase in primary
fiscal surplus) led to fall on “Brazil Risk” from 24 to 13
Further decline depending on new reforms which are,
however, politically difficult to implement
Once economic growth resumes, decline on Debt/GDP
ratio will allow long run sustentability of government
debt and further decline expected