Jorge Alonso‐Ortiz

Tax and transfer programs are analyzed in the context of a model with idiosyncratic productivity shocks and incomplete markets. The effects are contrasted with those obtained in a stand-in household model featuring no idiosyncratic shocks and complete markets. The main finding is that the impact on hours remains very large, but the welfare consequences are very different. The analysis also suggests that tax and transfer policies have large effects on average labor productivity via selection effects on employment.

Incomplete markets

Economic model

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Citations (20)

Bounding the productivity default shock : Evidence from the The European Sovereign Debt Crisis

MPRA Paper (2014)

Jorge Alonso‐Ortiz Esteban Colla De Robertis José María Da Rocha

Interest rate spreads on sovereign debt were negatively correlated with the evolution of stock prices during The European Sovereign Debt Crisis. In particular, for a sample of 9 european countries there was a year (between 2009 and 2012) in which the correlation between stock prices and spreads was almost -1. We use this fact to estimate the upper bound of productivity default shocks using a continuous time structural model of default. At every instant the government maximizes expected tax revenues, where the only source of uncertainty is TFP, which follows a regime switching brownian motion. By estimating TFP regimes, to match interest rate spreads on sovereign debt and stock prices, we compute the ratio of the productivity if there was a default relative to the no default benchmark. This is a measure on how much productivity could countries loose at default. We found a robust negative relation between the costs of default and the probability of default. That is, financial markets incorporate into prices the risk of default immediately.

Default

Sovereign default

Stock (firearms)

European debt crisis

Debt crisis

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Citations (0)

The Elasticity of Informality to Taxes and Transfers

RePEc: Research Papers in Economics (2013)

Jorge Alonso‐Ortiz Julio Leal Ordóñez

In this work we study the impact on the size of the informal sector of a tax levied on formal workers, and transfers that may be distributed to both formal and informal workers alike. We build a search model that features an informal sector and we calibrate it to data from Mex- ico. We investigate whether changes in size and distribution of transfers between formal and informal workers have a significant impact on the size of the informal sector. We find that changes in the distribution, for a given size, create a range of variation of 19.35pp. Analogously, changes in size create a range of variation of 5.7pp, resulting in a total range of variation of 51.2pp. This implies that it is possible to substantially increase formalization by rising extra tax resources as long as they accrue to formal workers. We illustrate the validity of our approach simulating the introduction of Seguro Popular.

Informal sector

Variation (astronomy)

Elasticity

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Citations (3)

The productivity cost of sovereign default: evidence from the European debt crisis

Economic Theory (2015)

Jorge Alonso‐Ortiz Esteban Colla De Robertis José María Da Rocha

Sovereign default

Default

European debt crisis

Sample (material)

Government Debt

Debt crisis

10.1007/s00199-015-0939-y

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Citations (8)

The Elasticity of Informality to Taxes and Transfers

MPRA Paper (2013)

Jorge Alonso‐Ortiz Julio Leal Ordóñez

In this work we study the impact on the size of the informal sector of a tax levied on formal workers, and transfers that may be distributed to both formal and informal workers alike. We build a search model that features an informal sector and we calibrate it to data from Mex- ico. We investigate whether changes in size and distribution of transfers between formal and informal workers have a significant impact on the size of the informal sector. We find that changes in the distribution, for a given size, create a range of variation of 19.35pp. Analogously, changes in size create a range of variation of 5.7pp, resulting in a total range of variation of 51.2pp. This implies that it is possible to substantially increase formalization by rising extra tax resources as long as they accrue to formal workers. We illustrate the validity of our approach simulating the introduction of Seguro Popular.

Informal sector

Variation (astronomy)

Elasticity

Source

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Citations (1)

Cross-subsidies, and the elasticity of informality to social expenditures

MPRA Paper (2014)

Jorge Alonso‐Ortiz Julio Leal Ordóñez

In the quest to alleviate the lack of protection of an important group in the population, social programs directed to informal workers are being introduced in developing countries. How is the size of the informal sector affected when the distribution across formal and informal workers and/or the generosity of social transfers change? The nature of many tax and transfer systems imply a cross subsidy from high-income to low-income workers. Thus, depending on the wage of the worker, the transfers tied to formal jobs could be bigger, equal, or smaller than the taxes paid. The effects of changes in taxes and transfers greatly depend on which of the three situations above is the one prevailing for the marginal worker. In this paper, we use a search frictions model with an informal sector, heterogeneous workers, and conditional taxes and transfers to address this question. In the model formal sector jobs are tied to larger benefits, and are less risky, but harder to get. We calibrate the model to the Mexican economy and perform a number of counter-factuals. We find that the size of the informal sector is quite inelastic to marginal changes in the generosity of transfers due to the presence of two opposing forces on the marginal worker: more taxes vs. more transfers. In comparison, the informal sector is more elastic to changes in the distribution of transfers because only one force is present in this case. Our results are consistent with the novel empirical evidence found in Almeida and Carneiro (2012) for Brazil, and with the evidence found in Azuara and Marinescu (2013) on the effects of Seguro Popular in Mexico.

Generosity

Informal sector

Redistribution

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Citations (0)

Taxes, Transfers and the Macroeconomy

RePEc: Research Papers in Economics (2013)

Jorge Alonso‐Ortiz

Taxes and transfers are widespread institutions among middle income and high income countries. In this chapter I survey main aggregate features of such institutions and features of the labor market. To study the relation between taxes and transfers and labor market outcomes I survey some important results in the literature. The main selection criteria for this survey is the use of general equilibrium models.

Survey data collection

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Citations (0)

Bounding the productivity default shock : Evidence from the The European Sovereign Debt Crisis

RePEc: Research Papers in Economics (2014)

Jorge Alonso‐Ortiz Esteban Colla De Robertis José María Da Rocha

Interest rate spreads on sovereign debt were negatively correlated with the evolution of stock prices during The European Sovereign Debt Crisis. In particular, for a sample of 9 european countries there was a year (between 2009 and 2012) in which the correlation between stock prices and spreads was almost -1. We use this fact to estimate the upper bound of productivity default shocks using a continuous time structural model of default. At every instant the government maximizes expected tax revenues, where the only source of uncertainty is TFP, which follows a regime switching brownian motion. By estimating TFP regimes, to match interest rate spreads on sovereign debt and stock prices, we compute the ratio of the productivity if there was a default relative to the no default benchmark. This is a measure on how much productivity could countries loose at default. We found a robust negative relation between the costs of default and the probability of default. That is, financial markets incorporate into prices the risk of default immediately.

Default

Sovereign default

European debt crisis

Stock (firearms)

Debt crisis

Source

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Citations (2)

Cross‐Subsidies, and the Elasticity of Informality to Social Expenditures: The Case of Mexico's Seguro Popular

Review of Income and Wealth (2017)

Jorge Alonso‐Ortiz Julio Zetter Leal

Abstract How is the size of the informal sector affected when the distribution of social expenditures across formal and informal workers changes? How is it affected when the tax rate changes along with the generosity of these transfers? In our search model, taxes are levied on formal‐sector workers as a proportion of their wage. Transfers, in contrast, are lump‐sum and are received by both formal and informal workers. This implies that high‐wage formal workers subsidize low‐wage formal workers as well as informal workers. We calibrate the model to Mexico and perform counterfactuals. We find that the size of the informal sector is quite inelastic to changes in taxes and transfers. This is due to the presence of search frictions and to the cross‐subsidy in our model: for low‐wage formal jobs, a tax increase is roughly offset by an increase in benefits, leaving the unemployed approximately indifferent. Our results are consistent with the empirical evidence on the recent introduction of the “Seguro Popular” healthcare program.

Informal sector

Generosity

Minimum Wage

10.1111/roiw.12284

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Citations (9)

Taxes, Transfers and the Macroeconomy

MPRA Paper (2013)

Jorge Alonso‐Ortiz

Taxes and transfers are widespread institutions among middle income and high income countries. In this chapter I survey main aggregate features of such institutions and features of the labor market. To study the relation between taxes and transfers and labor market outcomes I survey some important results in the literature. The main selection criteria for this survey is the use of general equilibrium models.

Survey data collection

Source

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Citations (0)

Jorge Alonso‐Ortiz

Papers

Citation

H-Index

i-10 index

Papers

Citation

H-Index

i-10 index