 Yes, I see hands rising already, so please we'll take a few questions and then you can respond right Please is there yes, there's a microphone coming up as well Thank you. My name is Mansoob Moshe Then I work at the Institute of Social Studies which is part of the Erasmus University in Rotterdam And I have two questions one for Miguel and that is did you find that? There is a literature of a separate literature which tells us that The more the less democratic you are The more you dislike direct taxation in other words democracies are more likely to prefer direct taxation So when you use the polity indices unless the country is eight nine ten on the polity scale Which means it's close to a perfect democracy. There is going to be a dislike for you know direct taxation on income and profits and To use In your concluding statements you mentioned the its salience of fiscal institutions. Did you simply mean all fiscal? Capacity did you simply mean fiscal capacity or fiscal institutions in other words? Is it only about the design of taxation, but is it also about? You know garnering taxation in other words making it acceptable to the to the Citizenship if you like there are more questions at this point or should you yes? Just grab it My name is Tullio Kravva. I'm a research fellow at UNU wider and My question is for both of you, but mainly for Miguel Santiago talked a lot about the trap in which recipients of CCTs for instance can be in in terms of incentive into going to the formal sector in the thinking about the case of Africa in which you have many pilots going on now Do we think it's an opportunity to think about a third generation of? of Gonna use the social protection in an overall sense That there is an opportunity to come up with new institutions as these countries are building institutions To provide a more integrated system in which Person that is a recipient for CCT for instance Migrates into a formal sector which is a huge Challenge there given the levels of informality and low level of human capital in these countries. Thank you Yes Hi, my name is Deepthi Goyal from the Delhi School of Economics and my question is for the first presenter So in lick countries you said some of the programs would lead to Creation of new institutions, but these are precisely the countries where institutional building Infrastructure is weak. So could you speak a little more on what new institutions and how you think they're going to evolve? Or even be created Thank you. I think we're Give the floor to you now and then you can think about more questions. Meanwhile, Miguel, maybe start Well, thanks. Thank you very much for very interesting questions on Manso's questions on Less competitive political regimes vis-a-vis more democratic ones Yes, I think also in the context of of Africa in particular There are a number of factors. Not only the democratic transitions that are in a way preventing regimes to improve their Ability to raise taxes in particular directing from taxes. No one is the race in middle class, no Africa is booming having a booming middle class Which are known or is not necessarily very happy with the idea of being taxed. No, so they are all You know, they are incentives for Politicians and incumbents to be very cautious about raising taxes in particular when you face competition You face competition. You have a middle class who is more demanding and they are more Also less willing often when you have these functional institutions that provide very poor quality services So there is a kind of trap in there No, the other thing is also they are the natural resources, which is you know You have a lot of natural resources that you can use and therefore you incentives to actually mobilize Revenants from direct accession is very low because you have all these Funds coming from natural resources. So there are a lot of factors that in my view are In a way hampering the opportunity to change Over-reform fiscal institutions in the region, but then certainly there are important factors as well related to democratic transitions In in relation to the new institutions, which I think Julia's questions is related to your question about What we observe in in countries, which we cluster very simplistically in this leak model and we we see Very unclear patterns because in particular the the middle income countries in the region Social security is very limited. So the coverage is less than 10% of the working population. So so it's still very unclear to us how these social security issues will evolve Especially because they haven't done it even after so many years now that were introduced So there are a number of factors in there that haven't been sufficiently important in fostering these institutions But what I mean that we are likely to see new institutions in low-income countries It's because because of the absence of social security specifically, no So we don't have such a security as such then What it seems to us We are seeing is an emergence of social assistance What we refer to social assistance which are very poverty focused in a way trying to deal with poverty and deprivation and vulnerability But then it is very unclear to us specifically because of the massive level of unemployment in the region whether there will be a connection between the graduates let's say of those efforts and the labor market in a way what Santiago was referring to so We see the emerging the emergence of new institutions, but we are not clear in which direction these institutions are leading to so Also in relation to my question I would say both So there's one issue associated with how we think about fiscal policy and what is the right balance? between consumption taxes income taxes and labor taxes and I think partly what I'm saying here is that Many of the literature associated with optimal tax design really has in mind countries whose labor markets and Who social insurance mechanisms are very distinct at least from what is the Latin American reality? And that therefore that requires a rethinking of the design of The right mix between consumption taxes income taxes and labor taxes. They are all going to distort No such thing as an undistorting tax. They're all going to distort But what really matters here is which one will distort less and which dimensions are more important than others So so one issue is yes the design of tax policy and fiscal policy but you also mentioned a second watch matters a lot which is the degree to which people perceive this as pure taxes or They perceive the association between the taxation effort and the social services that you receive as a result of the incentives to evade Will be very differently if you're taxed a hundred and you get back 19 services Whereas if you were taxed a hundred and you get back 15 services and The incentives to evade matter a lot because I didn't speak about this here firms and workers will respond to how all this is Enforced and that will create further distortions Firms will might be it small to avoid getting big and being taxed So that the other side not only is a question of fiscal design But it's also a question of the quality in the provision of services and how citizens provide make the connection between the taxation effort and the social effort and in these two dimensions Land America is not in very good shape. Of course, I'm generalizing because it varies from country to country And I think it might be a relevant experience from other regions of the world in which you probably might want to Delink as much as possible the financing of social insurance From labor status and think about other sources of taxation like income taxes consumption taxes mineral resource taxes Did you talk about the third generation of institutions? You Address that. Yeah, sure. Okay, let's go on Thank you very much for this nice presentations. My name is Olu Adyakai I'm of the African Center for Shared Development in Nigeria first to Santiago I didn't get the Motivation for moving from all these plethora of all kinds of social protection instruments Into consolidated CCTV. I'm sorry, CCTV What what what was the who are the drivers? Is it is it driven by the NGOs by government concern and all that number two? I like this your scheme to explain how people move from formal to informal because I mean Is it because of CCTV or I'm CCTV or because There's a failure in the formal which then release people to go into the informal Is it CCTV that motivates people to leave formal to informal and then movement from a to b You know arising from CCTV. How does it work and then finally? If we succeed the way I'm seeing your framework if we succeed The need for CCTV will be turned towards zero now What has to happen for that to be the case and in the case of Latin America? Do we have studies already showing that that trend is already evolving so that we can then learn lessons from there on the African side. Thank you. Thank you, Felipe Barrera from Harbour and now visiting a scholar of wider Santiago Part of the discussion that happened in my country Colombia in the beginning of the 2000s was precisely how can we move from a payroll tax social protection system towards a general taxation that has a bigger coverage However, the political economy to move from one already in place system to the other it was impossible. So my question to you is How can we a country that has these institutions that are already in place with all these bars with all these Problems to move from that system to another what what triggers Those changes and if you can give us some lights on on that transition process Thank you. Thank you from the Graduate Center at the City University of New York I am you you mentioned some of the Food aid to some of the African countries many of which I'm working on and then how they switch to these income Schemes now have you seen in how has that impacted food security for instance? Because that that has been one of the main issues like countries like Liberia that you had in your sample, you know Importing rice and things like that. Do you have any? Good data on that and have you done any work on that specific impact of the switch? Thank you Thank you. I think would take a fourth question down there before we take it back to you Thank you very much. This is for Santiago. Well, the first question is related to the last one about Colombia Is that in Colombia? We have done a lot of laws that have reformed the wage For the formal sector, so they are aimed to enhance formal jobs, but it has been Quite few years to know if that's true But the figures said very bad news about this because lowering them the wage Contributions for formal workers has not in case formal jobs So maybe the answer is not that but maybe it's a problem of productivity So if if it's a productivity problem, then nothing that can be done about Being a formal or an informal job worker will will help So it's more about comparative advantage type of framework rather than a segmented labor market So, I don't know which is your view about these Thank you Thank you. And now I give it back to you Santiago. Would you like to start? So, so thank you for the questions so on your questions Or maybe I went a little bit too fast In my view and some of the empirical evidence that we have from Latin America What is causing the shifting of workers between the formal and the informal sector is not so much the CCT itself It is The other programs the social insurance program not so much the income transfer programs But the social insurance programs and it varies from country to country in some countries The contributory social programs the social insurance don't work really very well So workers perceive them as a tax and first perceive them as a tax and therefore The the informality that you observe is an endogenous response to the fact that here in the formal sector Taxes are very high. It's not not so much the CCT That said Ideally what you would like to see is a labor market that is fully integrated So that in that diagram there the columns instead of being two columns There's only one column an integrated labor market Then you would have the problem of still the poor and the non-poor Ideally the CCTs or some scheme similar to that Would invest in the human capital of the poor and would allow them then in an integrated labor market to move up and eventually have higher incomes And so that the CCTs you're quite correct eventually should converge to zero ideally I mean you will always need something because they're temporary shocks and you know, but as a large-scale program the Success of these programs would be too fade Has that ever happened in an American country and the answer is not not yet and My explanation there might be others is that the problem is not so much in the CCT itself The problem is in the columns The problem is in the columns and governments are trying to fix it Focusing on the rose So they ain't gonna fix it right it actually gonna make it worse So on Felipe's question It's really complex if your question is really permanent pertinent, but it's it's really complex so I see first I think there's kind of a Big ideological barrier To think about these issues Because in the Latin American tradition Governments have done a lot of redistribution through the labor market As opposed to doing redistribution through other instruments The thought has been That this is a way to tax capital and Transfer income from capital to labor if you sort of think back in the 19th century when all these ideas were there And then sort of in the early 20th century This was a way of sort of redistributing income from that from capital to labor The studies have shown that the incidents of most of these wage contributions are actually on workers So it's a very ineffective Mechanism to redistribute but people still perceive it in their mind as a way to retrieve a mechanism. So partly this is an ideological issue partly Colombia is a perfect example Colombia is a perfect example of a country that's tried to do a huge amount of redistribution Through the labor market and not only do you do it through these? Contributions, but you also do it and this is partly respond to your question through a very high minimum wage Colombia in fact has probably the highest minimum wage relative to the per capita income of all of Latin America The minimum wage in Colombia is actually at the 50th percentile of the distribution So the minimum wage is actually 40 percent of population has an income less than the minimum wage So they're gonna be in the informal sector By the design of the minimum wage which is so high so it's partly a productivity problem So yes, you can change the contributions But if you don't change the minimum wage, you're not gonna get the sort of response that you'd like to get So the political economy of these reforms are extremely complex and it goes partly to Mansoor's question Because you've got to convince people look I will no longer tax you in the labor market Nor I will attempt to redistribute through the labor market. I Will tax you somewhere else Where is that somewhere else either an income tax or a consumption tax? And then trust me trust me government because I'm really a good government trust me That I will make a very good use of your money and I will return that money to you through really super excellent health insurance and very good pensions That credibility problem is not there. And so we're trapped in a very bad loose loose equilibrium as I see it Because we don't have the institutions and the credibility of the state to be able to shift out of what is currently a very bad equilibrium Thank you. I'm just briefly to respond to Graciela so um, well, I think that too primarily trends as you may know in particular in humanitarian crisis seems like agencies are moving towards cash, you know, but For a number of reasons because shipping food has proved to be very expensive very inefficient and and it's also promoting Agricultural markets in the US and Europe where all these grains come from no, but they are all transitions moving towards more permanent Forms of assistance in particular for example, I can think of Ethiopia and PSNP, you know who moved from the experiments of delivering in kind transfers to households in food distress to more Institutionalized forms of support, you know So the PSNP has different ways of supporting households One is through the the public works scheme and then there is 20 percent around 20 percent focus on households In extreme vulnerability, but with limited capacity to offer Employment, you know in exchange of income. So this is I would say the The typical case how well these schemes have worked. Well, there are number of studies there So the results I think are at least More positive than providing necessarily food, you know Because of the distortions that they generated in the 80s to the local food markets, you know, so But I can think about the Ethiopian as perhaps the best example of these transitions Should we see if we have Any more pertinent questions at this point or I See Yes, I see one hand at the very rear Yeah, thank you everyone for the submissions now I'm troubled when it comes to social protection and what doing about its impact on social cohesion and social capital within say the African setting Thank you. My question is simply that what's the impact of the other Social assistance programs on the cohesion that is supposed to be within an African setting well, I think is It is clear for countries coming from conflict. No, so there are a number of countries We can think about Liberia, Mozambique. So all these countries have experienced a number of Conflicts that in a way come from we were talking about in previous panels on conflict. No, so there are a number of historical Ways of excluding groups So so the extent to which these programs will succeed in containing the socialist content I guess is very much in the way these programs are designed, no So some programs may be more effective in dealing with the sources of conflict But at the set at the same time Very much depends on the scale of this program. So at the moment these problems are primarily pilots So there are a few examples which are more institutionalized examples of Social assistance in particular in southern Africa But in the rest of the country with a very few exceptions in particular Ethiopia the majority of programs Including those who have been Taken out by the government like in Ghana. They are very small in the scale, no so Ghana the the coverage is about 70,000 Households which is really very small. No, so So I guess the extent to which these programs are Capable to deal with the the sources of Conflict socialist content are very much depending on the design also the scale Okay, thank you. I Yes, I see one more hand. I think we have time here since this is a two paper or two presentation session, please so So the change the change from In kind transfer to cash transfer seems to be based on the assumption that markets exist in these in the places where transfers is directed and Those of the markets functioning well Is there evidence that? Markets are actually functioning and they exist Thank you for the question and that was also part of all those question before At least in the Latin American experience as far as I can tell the motivation From changing from in kind transfers to cash transfers Was not so much a discussion between whether markets were there or markets were not there It was a result of realizing that the in kind transfers Were not really solving any problem and they had been there for a long long time Not only were they very costly from the administrative point of view But there was a lot of literature that showed that for many households even poor households If you only deliver food You're not really building on the human capital There was this famous saying by Paul Street and that said that rather than subsidizing the poor What you're doing is subsidizing the warms that live in the stomach of the poor So what you needed to do was to bundle together basic health provision and Investments in education to really be able to break the intergenital transmission The question of markets was discussed at least in Mexico when I was involved in this Because in fact many people did say look if you just transfer income there's no supply of food in these areas and Are they going to be able to translate this income into better nutrition or are they going to translate this income into? smoking and alcohol and whatnot So what we do have now is a lot of empirical evidence Which says it turned out that the supply of food was very elastic and Even in very remote rural communities when you were distributing cash There was a relatively rapid response of food supply by local growers local providers so that local markets actually developed and The issue was no longer access to food in a physical sense the litter of milk the the kilo of tortilla The issue was really access to income because for that the market actually Exposed turned out to work fairly well Should we take one more question here and then? My name is Phyllis machia from the School of Economics University of Nairobi. I was just I'm just struggling to understand your This I think was the second presenter The last four boxes the format he says that you put up there on the transition the columns versus the rows and the target of the CCT Now suppose we give these cash transfers and we move someone from poor to poor from poor in the informal sector To non-poor in the informal sector There seem to have a there's a problem there you said and My question is like almost currently Only less than almost a quarter of the population in like Kenya I employed in the foremost in the in the formal sector majority actually are in the informal sector so My worries see this former sector is already absorbing so little What is the problem with moving someone who was in the informal sector, but very poor then we make this person become non-poor In the formal in the informal sector We are actually because the opportunities in the in the informal in the former very scarce So we are saying that for example he gives some cash transfer to this person We empower them and they're able to get some money and they set up a good business Yes, they're in the informal but they're still doing fine. I don't see a problem with moving up Why you say it's moving up is a problem. It's it's better for them to move across From them there to the formal poor actually That's what I'm struggling to understand given that majority of people in our countries are actually in the informal and some are doing actually well Thank you So so I agree with you The way I think about it is I think about it in a sequential way The the first immediate policy objective is to ensure that poor people Sees to be poor in some sense of access to basic health nutrition And you know food consumption basket we can quibble about the definition But clearly from a policy perspective the most urgent thing is to avoid people from being poor to non-poor and There I think the CCTs can be and have shown to be very effective if that's all that policy can do That's what it should do because it's going to improve the welfare of a lot of people What I'm saying is that that might not be good enough Because you then eventually want people to also have higher incomes and For people to have higher incomes Even if they're no longer non-poor what they really need at the end of the day is higher productivity The second shift from the informal to the formal sector is a way of just thinking about Shifting from low productivity jobs to high productivity jobs And there's a policy agenda which I tend to think of a social agenda in Understanding the reasons that are impeding the formal sector to absorb more people or That are attracting people in informal sector and this might change from country to country depending on the institutions the setup the mechanisms So I don't think it is either or but I kind of think of it as a sequential Land America started with these programs about 20 years ago in most countries of Latin America. You have a program like this Coverage is fairly ample not a hundred percent, but it's fairly ample But now what we're learning is that yes people have higher income levels, but they're not getting more productive jobs And so now the challenge is to move them to the other side with higher productivity jobs And that's where my discussion of social insurance is relevant because again in the Latin American context These incentives might not be helping in that direction I don't know I apologize enough out of Africa to say whether that is a relevant issue there Or some other impediments are what it's been doing, but clearly eventually you want people aside from having higher incomes through transfers You want people to have higher incomes through their own productivity because they're getting more productive jobs Thank you Santiago. I think we should conclude there. I was thinking when you Finished your presentation. I thought of a common denominator for these two Regents and and the presentations also is is the inability of states to mobilize sufficient tax revenue And that that is really at the heart of the matter and then I'd conclude with its state capacity stupid or something that Is the it's the final words, but then then this discussion has also been very good and Show more of all the similarities and differences between Latin America and Africa in terms of social protection And I guess the systems have come very different way In order to deal with these problems So the final conclusion what I bring back away from this session is that you have to think very carefully About the context in which you introduce this kind of social protection programs, whatever way they are designed and that's Very clarifying to that today. Thank you. Thank you for coming