The impact of privatization and deregulation on income distribution and poverty is a poorly developed area in both academic and policy-oriented research. The main objective of this project ? cosponsored with the LACEA/IDB/WB Network of Inequality and Poverty ? is to analyze rigorously such impact, as well as to propose compensatory policies (such as subsidy schemes through non-linear pricing). One important contribution of this research endeavor will be to establish a coherent and unified framework for analyzing different cases using micro-data from household surveys. In addition, the framework will be applied to four or five countries in the region to indicate the effects that took place in economies with different structural conditions. The research questions include: What is the impact of specific deregulation/privatization policies on consumer prices? Is it possible to identify the impact on the wage structure? How have these impacts affected the consumption patterns throughout the income distribution? Can we identify "winners" and "losers"? If so, is there an efficient and feasible way to compensate the losers? Are there any proposals to introduce compensating schemes in the design of these policies on an ex-ante basis?

The coordinator of the project is Luis F. López Calva from El Colegio de México. The participants include Dilip Mookherjee (Boston University) and David Mckenzie (Yale University) for the methodology development, and for the case studies as follows: Argentina: Huberto Ennis (FED Richmond-Universidad Nacional de La Plata) and Santiago Pinto (University of Illinois at Urbana-Champaign); Bolivia: Miguel Urquiola (Cornell University); Mexico: Luis F. López Calva (El Colegio de Mexico) and Juan Rosellon (CIDE); Nicaragua: Luis Rivas (Central Bank of Nicaragua); Brazil (to be confirmed): Andre Portela (Cornell-Universidade Federal do Bahia)

The initial meeting for the project took place at IDB headquarters on April 20 and 21, 2001. A second meeting will be held in August 17, 2001, also at IDB. Preliminary results will be presented in the Network of Inequality and Poverty meeting in LACEA (Uruguay). Final results are expected by February-March 2002.