Distributional Effects of the Panama Canal Expansion
Maurizio Bussolo (),
Rafael De Hoyos () and
Economía Journal, 2012, vol. Volume 13 Number 1, issue Fall 2012, 79-129
This paper uses a dynamic macro-micro framework to evaluate the potential distributional effects of the expansion of the Panama Canal. The results show that large macroeconomic effects are only likely during the operations phase (2014 and onwards), and income gains are likely to be concentrated at the top of the income distribution. The additional foreign exchange inflows during construction and operations phases result in the loss of competitiveness of non-Canal sectors (Dutch disease) and in higher domestic prices which hurt the poorest consumers. In addition, the construction and operation activities increase demand for more educated non-farm formal workers. Although these changes encourage additional labor movement out of agriculture and from the informal to the formal sector, much of the impact is manifested in growing wage disparities and widening income inequality. Using the additional revenues of the Canal expansion in a targeted cash transfer program such as Red de Oportunidades", the Government of Panama could offset the adverse distributional effects and eradicate extreme poverty. "
Keywords: Dynamic; micro; macro; Panama; canal; foreign; exchange; agriculture; income; inequality (search for similar items in EconPapers)
JEL-codes: E24 H54 J01 J24 J23 J31 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Working Paper: Distributional effects of the Panama Canal expansion (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:col:000425:010030
Access Statistics for this article
More articles in Economía Journal from The Latin American and Caribbean Economic Association - LACEA
Bibliographic data for series maintained by LACEA ().