I am preparing my presentation on a recent IDB study for the 18th annual meeting of the Latin American and Caribbean Economic Association (LACEA) conference in Mexico DF. LACEA is an international association of economists with research interest in Latin American issues. It was launched in 1992 to facilitate the exchange of ideas between economists and policy-makers. From its inception, LACEA became an organization with an average of 1, 000 active members; and it is the second biggest Economics association, after the American Economic Association (AEA)
As I prepare the power point, I keep on thinking how comes that our region is still the most unequal in the world, and not only that, the inequality starts as early as when children are 5 year-old. Using unique longitudinal data from Young Lives project, my study documents disparities in cognitive development— as measured by a receptive vocabulary test—between children from households with high and low socioeconomic status (SES) in four developing countries: Peru, Ethiopia, India, and Vietnam. That is, intercontinental evidence on the timing, shape, pattern, and persistence of these disparities is provided. What if I tell you that Peru is not only the country with the largest cross-section disparity between rich and poor (of around 1.30–1.40 standard deviations), but also as the country with the highest persistence in cognitive development?
This finding is worrisome on its own as it suggests fewer opportunities for convergence in cognitive development between rich and poor over time in this Latin American country. In other words, there does not seem to be any convergence between countries, with Peru always been the most unequal and with the magnitude of the gap between countries not changing much over time. However, a somehow new finding in relation to the existing literature in gradients; and on a more positive note, is that the analysis suggests that even if disparities found at age 5 persist into the early school years across all four countries, the magnitude of these within-country SES disparities seem to fall over time. This implies that there is convergence between rich and poor even if Peru is still the most unequal of the four countries. The latter is an interesting descriptive statement, but some would like to know what is behind these gradients? What seems to explains them?
The study discusses some channels behind these trends via regression analysis, but overall, the gradient persists even when controlling for a large number of important mediators, such as preschool, early nutrition, and schooling. Interestingly, the performance on the Peabody Picture Vocabulary Test at age 5 is the most important mediator of the SES gradient at age 8. My humble conclusion of this simple study is that if the region wants to invest in children and tackle the high inequality of our region, there is a need to start thinking about interventions that start before children are 5 years old. You might think of a 5 year-old as a young little person full of potential, but unfortunately the scientific literature (and this study) show that it might be already TOO late.
PPVT z-scores at Age 5 and 8 by Country and Quintile of Expenditure