Abstract: Latin America has made significant progress in financial development and poverty reduction in recent decades. Nevertheless, its persistent levels of inequality have further potential to be reduced, and financial development could be an effective way to accomplish this. This paper analyzed the causal relationship between income inequality and financial development in 15 Latin American countries between 1990 and 2020 by applying an instrumental variables model that addresses the limitations of some previous studies on the subject. The results showed a significant negative relationship between these two variables, mainly due to the impact of financial institutions, rather that financial markets, on income inequality. However, this negative relationship declines at a higher level of financial development. These results suggest that development must promote a deeper, more accessible, and more efficient financial sector in an inclusive and sustainable manner, at both the institutions and market levels, in order to achieve a greater equalization of financial opportunities and a reduction in income inequality in the Latin American population.

Abstract: In this paper, we analyse retirees’ decision-making from the different bids made available by life insurance companies in the Chilean annuity market. We find that choosing the highest annuity payout was positively (negatively) correlated with the advice given by independent brokers (sales agents and average years of education in the municipality) for a January 2008–May 2018 sample. We also found that retirees were willing to pay for firm reputation. In addition, people who are more likely to take a pension payout without consulting intermediaries are older, married, have a higher pension balance and purchase an immediate annuity. These findings are of interest to those seeking to improve the efficiency and effectiveness of the annuity system.

Abstract: The Chilean insurance industry has experienced significant growth in recent years through annuity sales, requiring life insurance companies to actively manage longevity and reinvestment risks. As a result, the regulator opened up investment options in international instruments in order to diversify portfolios and increase the expected internal rate of return on annuity policies. We analyse both the determinants of Chilean life insurance companies’ investment abroad and what effect investment abroad has on the internal interest rates paid on annuities. We fit regression models by OLS fixed effects and GMM to information on 15 life insurance companies for the period of March 2008–September 2019. Investments abroad persist over time and managers are seen to actively allocate these. Furthermore, companies with greater investments abroad are more likely to increase annuity payouts in the range of 2.2% to 4.2%. Finally, we find that a more competitive insurance market could increase pension payouts from 3.1% to 3.7%. Policymakers may use these results to continue diversifying portfolios and to manage the structure of the life insurance market to further increase annuitants’ welfare.

Abstract: Productivity is a complex variable to determine in practice, beyond the simple theoretical relationship between output and input. However, studies have applied different practical approaches to capture the impact of COVID-19 on labour productivity, mainly considering the shift to working-from-home (WFH) during the pandemic. From the novel literature analysed, it is possible to identify three particular approaches to determining productivity: (i) productivity determined on the basis of accounting data; (ii) productivity determined on the basis of systems for monitoring the activities and hours worked by employees; and (iii) productivity determined on the basis of self-assessment by workers. While the first two approaches show a mainly negative relationship between WFH and labour productivity during the pandemic, the self-assessment approach reports mixed results. Hence, the results associated with the impact of COVID-19 on productivity seem to imply that a return to the workplace is necessary to recover economic performance. However, the preferences and perceptions of employees, as well as the investments made by firms and the management framework implemented by them during the pandemic, seem to suggest that WFH may become a permanent option in the work dynamic.

Shortened version at The Economics Observatory.

Abstract: Throughout the pandemic, different surveys and measures have sought to trace changes in employer and employee behaviour in relation to working from home, in the office or in other workplaces. While Covid-19 has certainly precipitated or accelerated changes in working habits in the UK, where working from home was mandated or encouraged at different stages of the pandemic, there are differences between industries, occupations and workers that mean these have affected different parts of the country in different ways. In the ONS surveys analysed, London had the highest proportion of home-based workers during the pandemic, and a similar pattern can be seen in the Centre for Cities and Google Mobility indices, which both showed persistently lower footfall in London than in other cities/city centres. While the changes in lockdown restrictions and employment support measures introduced by the government during the pandemic have undoubtedly played an important role in shaping behaviour, the disproportionate uptake of working from home in the capital has also been driven by the characteristics of its main industries and occupations, and by the greater time and cost of commuting for London workers.

Abstract: El presente estudio tiene por objetivo construir una Matriz de Contabilidad Social (SAM) para la Región de Antofagasta, que represente la totalidad de las transacciones de la región. En la literatura, la SAM es considerada una extensión de la Matriz Insumo Producto (MIP), corrigiendo las limitaciones que esta última posee al relacionar producción, demanda e ingreso. Utilizando la MIP regional de 1996 y distintos supuestos, nuestra SAM para la región de Antofagasta evidencia que, si bien la minería del cobre representa un 49% de la producción de la región, ésta sólo contribuye en un 14% del consumo intermedio de dicha economía.

Abstract: In this paper, we analyze the internal rate of returns (IRRA) that people receive from life insurance companies (LIC) in the Chilean annuity market. We use robust OLS regressions on the sample period May 2007 - July 2020. We find that the IRRA on annuities was negatively correlated with the advice given by intermediaries, especially for sales agents hired by LIC, showing a conflicting advice issue. We also found that retirees are demanding to be paid a higher IRRA for bids from LIC with a lower firm reputation. These results are useful for policymakers and insurers who are seeking to improve the annuity market.