Background

�  The commitment to equity years of interest in the case of Venezuela coincide with the governmental period of Hugo Chavez Frias.

�  Social and fiscal policies can be characterized by two phases: �  The first phase, covering the period between 1999 and

mid-2003, shows the predominance of previous social policy along with some attempts at social reforms.

�  The second phase (2003-the present) is characterized by the gradual abandon of the previous social policies and the arrival of “the missions”.

�  This second phase is characterized by �  An increase in social expenditure that reached, in some of

these years, the highest levels in the history of Venezuelan public finances, in real terms.

�  The increase in school enrollment continues, although more slowly in the Primary and Secondary Sectors, while steadily increasing in the Tertiary sector.

�  Spending on non contributory retirement pensions continues to increase, becoming the main objective of the mission “Amor Mayor” (Love towards the Elderly)

�  The social “missions” are established, becoming a political success, although with debatable results, especially since 2007, when several of them disappeared, revealing problems in the efficiency of their implementation.

�  This second phase can be divided into three periods: �  2003-2006/7: the period of highest social spending ,

particularly on the missions. �  2007-2010: a period of deceleration in social expenditure and

a weakening of many of the first missions (at one stage there were more than 40 missions running throughout the country).

�  2011-2012: a period of partial reinvestment in the social sector, but emphasizing new programs.

�  It is debated whether the marked reduction in poverty is attributable to the missions or to the accelerated increase in the real income of the poorer sectors, particularly between 2004-2008, and the increase of the employment figures, especially in the public sector.

�  Undoubtedly the Commitment To Equity project will play a key role in clarifying these issues.

Venezuela: Real Social Expenditure pc

Central Gov. , General Gov. , GG + Autonomous Inst (PDVSA, FONDEN)

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Grandes misiones, Enero 2013    

736.540  

             

521.618            

346.798        

122.000                      

Hijos de Venezuela Amor Mayor Vivienda Venezuela Saber y Trabajo  

Beneficiarios por Hogar Beneficiarios Beneficiados Año 2012

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Misiones en el área de salud, 2012 !!!

594.409.904 !!!!!!!

18.529.964 !

4.939.422 !!

1.072.573 !!416.569

!!!!!!!!!!!!!!!!

Misión Barrio Adentro (Consultas Atendidas)

Misión Niño Jesús (Beneficiarias)

Misión Sonrisa (Consultas Realizadas)

Misión Milagro (Consultas realizadas)

Misión Barrio Adentro Deportivo (Beneficiarios)

!

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Misiones educativas, 2012 !

!!

12.817.536 !!!!!!!!!!!!

1.756.250 !

!!!

789.436 822.853 !!!!!!!

212.352 !!

23 !!!

Misión Robinson I (Patriotas)

Misión Robinson II (Patriotas)

Misión Ribas (vencedores)

Misión Sucre (Graduados)

Misión Alma Mater (Universidades)

Misión Cultura Corazón Adentro

(Activadores) !!Fuente: Segunda Vicepresidencia para el Área Social

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Misiones en protección social, 2012 !!

17.554.222 !!

6.258.797 !!!!!!!

82.557

!

252.176 336.490

!!!!!!!!!!!!!

39 !!!!!!!!

Misión Alimentación (Beneficiarios)

Misión Madres del Barrio

(Beneficiadas)

Misión Negra Hipólita (Centros de

Atención)

Misión Guaicaipuro (Indígenas Atendidos)

Misión Niños y Niñas del Barrio

(Atendidos)

Misión Dr. José G. Hernández

(Discapacidad) !

Poverty and Inequality

CTE Venezuela: The Surveys �  We use the Venezuelan National Household Survey,

ENHM (Third quarter of 2012), and a special module called “Sistema de Indicadores de Coyuntura, SIC”, (Short term System of Indicators) as the main source of our data.

�  It is the first time that the SIC survey has been carried out. The survey focuses on: �  Subjective Poverty �  Use of Health Services (Types and frequency of use,

satisfaction with the service, etc) �  Missions: Enrollment and direct transfers (yes/no) �  Internet use �  Social participation/envolvement

Scope and Limitations �  The surveys have a National coverage at state level. �  The ENHM Survey is an income survey. There are no

recent consumption surveys. This means that Consumption PPP dollars are not available. This also raises problems with post fiscal estimations.

�  The survey lacks a question on the public or private nature of the school attended.

�  The survey does have data on rents, direct transfers, pensions, several work benefits and the amounts assigned to these benefits.

�  To summarize, at the moment we only provide estimates for: market, net market, disposable and final incomes.

Constructing the Income �  We used simulation of tax rules to impute direct

income taxes. �  Payroll taxes are not declared in the survey. We

grossed up the market income. �  Housing rent is declared in the survey. In order to

impute the value of owner/occupied housing we used survey-adjusted regression on log household income, log rent, type of dwelling and a quality of housing index.

�  There are issues with the estimation of indirect taxes (VAT). This tax represents more than 50% of the non-oil related income.

Inequality: Benchmark Case

Ve ne zue la

Market Income

Net Market Income

Disposable Income

Post-fiscal Income

Final Income

Gini 0.392 0.388 0.382 0.360% change wrt market income -0.4% -0.9% -3.2%Significance (p-value) 0.000 0.000 0.000% change wrt net market income -0.6% -2.9%Significance (p-value) 0.000 0.000Theil Index 0.267 0.260 0.252 0.224% change wrt market income -0.7% -1.5% -4.4%Significance (p-value) 0.000 0.000 0.000% change wrt net market income -0.8% -3.6%Significance (p-value) 0.000 0.00090/10 6.592 6.540 6.305 5.379% change wrt market income -5.2% -28.7% -121.3%Significance (p-value) 0.003 0.000 0.000% change wrt net market income -23.5% -116.1%Significance (p-value) 0.000 0.000

Inequality: Sensitivity Analysis 1

Ve ne zue la

Market Income

Net Market Income

Disposable Income

Post-fiscal Income

Final Income

Gini 0.400 0.396 0.382 0.360% change wrt market income -0.4% -1.8% -4.0%Significance (p-value) 0.000 0.000 0.000% change wrt net market income -1.3% -3.6%Significance (p-value) 0.000 0.000Theil Index 0.280 0.271 0.252 0.224% change wrt market income -0.9% -2.8% -5.7%Significance (p-value) 0.000 0.000 0.000% change wrt net market income -1.9% -4.8%Significance (p-value) 0.000 0.00090/10 7.189 7.052 6.305 5.379% change wrt market income -13.7% -88.4% -181.0%Significance (p-value) 0.000 0.000 0.000% change wrt net market income -74.7% -167.3%Significance (p-value) 0.000 0.000

Lorenz Curves

Concentration Curves

Rent Imputation

139.9222 Otro tipo 287.8333 Rancho campesino 300 310.2108 Vivienda Rustica o Rancho 300 875.8202 644.1703 492.1154 Casa de vecindad 800 600 450 904.1479 973.6826 588.8601Apartamento en quinta o casa-quinta 1000 1000 600 1038.535 139.9222 710.8816 Apartamento en edificio 1400 600 664.2298 480.1106 468.265 Casa 800 500 550 819.7939 Quinta o casa quinta 1000 Tipo de Vivienda Buena Regular Mala Calidad de la vivienda

. table tipviv caliviv [fwei= pesoh], c(med alquiler med alq_imp3)