The design of the Colombian pension system exacerbates income inequality and poverty after retirement age. High informality rates (over 60% of total employment, according to OECD) imply that many workers in Colombia have a low probability of qualifying to get a contributory pension. Despite the targeted support provided to the vulnerable population through pension assistance programs, this support  tends to be low compared to other countries in Latin America and the Caribbean.

The relationship between informality and inequality after retirement plays a central role in the discussion of policies affecting the labour market. One dimension that has not been explored in the public policy debate is how policies aimed to mitigate climate change (and more specifically the creation of green jobs) can affect the distribution of workers between the formal and informal sectors, and how it can have an impact income inequality after retirement.

Find out more about the Extension in Colombia

This project seeks to contribute to the public policy debate by analysing the effects that scenarios of a green economic transformation may have on income inequality after retirement, via the reallocation of workers between the formal and informal labour markets. 

The project will aim to answer following questions, in the Colombian context:

• What are the environmental properties of jobs?
• How can economic transformation towards a more sustainable economy change the composition and transitions between the formal and informal sector?
• What is the impact on inequality and fiscal viability of implementing those policy scenarios?

In addition, the project will evaluate prospective scenarios during the discussion of the pension reform in the  Colombian Congress and will develop a simulation model for the use of the Ministry of Finance and Public  Credit.

The project will be implemented in three stages:

• The research team will first characterize the environmental properties of jobs in Colombia.
• In the second stage, the team will calibrate the transition matrices between employment states and wages to introduce to the microsimulation model. In this stage, the team will propose the economic transition scenarios to simulate.
• In the final stage of the project, the team will prepare a final report with the simulation results and policy discussion.

You will find below the different research papers related to this project:

• Quantifying Green Job Potential in Colombia: A Task-Based Approach (November 2024)
• Greening Colombia’s Energy: The Future of Jobs and Pensions (August 2025)

While there is mounting evidence that the Covid-19 pandemic has increased socioeconomic inequality, there is still a need to understand the exact channels of impact and what role the policy response has played in different contexts. It is also necessary for governments to be clear about the efficiency of the type of policies they have implemented throughout this period, in terms of the redistributive and/or regressive effect both from an inequality and poverty perspective. Indeed, we know that the amount of additional social spending (excluding health) implemented during the pandemic reached almost 3% of GDP in Colombia and only 0,2% in Mexico. However, research has not yet demonstrated whether the redistributive policies introduced by the Mexican and Colombian governments in response to the Covid-19 crisis have had any positive effect on the distribution of economic and social resources in these two countries.

This project is part of the call for research proposals “Advancing the inequality agenda through collaborative research: identifying the priorities for a global Team Europe approach on inequalities”, launched by the Strategic Committee of the Research Facility on Inequalities. It is coordinated by AFD and co-financed by the European Commission, AECID and ENABEL. 

The project will seek to understand what has been the redistributive impact of social and fiscal policy in Mexico and Colombia, in the context of the policies implemented during the Covid-19 pandemic.

This research project will be conducted as follows: 

1. Using the framework of the Commitment to Equity (CEQ) methodology, an analysis aiming to differentiate what has been the progressivity or regressivity of the policies implemented during the Covid-19 pandemic will be conducted. This analysis will take into account the main beneficiary groups of these policies and will include a comparison between the budget amount and the efficiency of the policies identified in terms of inequality and poverty reduction.  
2. A desktop analysis of the decision-making will also be carried out to understand how the redistributive effects of the policies implemented were envisaged by the governments. 

You will find below the different research papers related to this project:

• Promoting a More Progressive Approach - Evaluating the Impact of Social and Fiscal Policies in Mexico and Colombia amidst the Covid-19 Pandemic

Many of the measures on quantifying progress by countries towards reducing income inequality have focused on indices that measure trends in inequality over time (Gini coefficient for example) and compare countries without considering the differences between their socioeconomic structures.

However, these indices do not paint the complete picture about how countries are performing, especially when compared to one other in achieving Sustainable Development Goals and what policies and investments may be needed to support them. This research project will provide an alternative measurement of income inequality by taking into account the developing countries’ structural or predetermined conditions (mineral assets, type of institutions etc.) in assessing their progress towards reducing inequality and the impacts of climate change. 

The project focuses on the following objectives: 

1. Firstly, it will compare each country with its potential to reduce income inequalities by measuring the scope for improvement for each country at every year. This will allow a better understanding of the key factors that hinder a country’s effort and performance in reducing inequalities and of the policy and investments that are needed to tackle inequalities more efficiently.
2. Secondly, it will investigate how climate – temperature, precipitation and extreme weather events– influence the efficiency of countries in combining inputs to reduce inequality.
3. Thirdly, it will look at adaptation or intensification effects across regions, particularly in LDCs and SIDS and will identify the needed scale of investments.

Building on a panel database on 145 countries, including countries from Least Developed Countries (LDCs) and Small Island Developing States (SIDS) from 2000-2020, the project will use a stochastic frontier approach, an economic modelling technique, to estimate feasible frontiers for income inequality for each country and year.

You will find below the different research papers related to this project:

• Reducing Inequalities Despite Climate change? Rethinking Progress Towards Reducing Income Inequalities and the Impact of Climate Change in Developing Countries

South Africa’s Economic Reconstruction and Recovery Plan was launched in October 2020 by the Presidency in response to the economic impacts of the Covid-19 pandemic. Besides the Presidential Employment Stimulus program, it included emergency social protection measures, among which the introduction of a special Covid-19 Social Relief of Distress grant (SRD), providing ZAR350 per month for unemployed people not covered by any other form of support. The South African government now seeks to develop options for the future of SRD grant.

Find out more about the Extension in South Africa

The objective of this research project is to produce motivated recommendations on how the SRD should be designed going forward into the longer term, in order to maximize the impact of the grant on employment outcomes and to ensure it effectively reduces poverty, while maintaining its cost to an acceptable level:

1. To maximise the impact of the grant on employment, the project needs to understand how to design and label the grant to encourage its use for job search.
2. To ensure the grant effectively reduces poverty, the project must figure out the most cost-effective way to target and assess the eligibility of recipients. Moreover, poverty reductions can be scaled up by determining measures that could encourage take up among the most disadvantaged. 

Once these goals have been achieved, and in order to inform public decision-making, these findings must be communicated to a number of stakeholders in government and civil society.

This project is part of a wider research program conducted with several South African research centres and in close collaboration with the South African Presidency. Four other research projects analysing the externalities of the Covid-19 stimulus policy are currently being developed as part of the first pillar of the Extension's activities in South Africa.

This research project uses the model generated to conduct the 2014/2015 fiscal incidence assessment and introduces updated data for 2019-2021. It simulates five scenarios around eligibility criteria, targeting mechanisms, value, disbursement model and conditionalities and computes the potential impact on poverty and employment outcomes.

You will find below the research paper related to this project: 

• Proposal for the extension, redesign and repurposing of the SRD for the goal of poverty reduction

It is worth noting that another paper has been published on the implications of the SRD grant, funded by AFD outside the Research Facility on Inequalities: Systemic exclusion from a South African social assistance transfer (February 2024)

Despite several efforts to promote pro-poor growth, South Africa remains one of the most unequal countries in the world. While the country's colonial history and apartheid are known to have contributed to this inequality level, the nature and dynamics of its impact on society are yet to be fully understood.

Literature suggests that better institutions and lower level of inequality improve subjective wellbeing. However, evidence that examine how the interaction between these two variables explain variation in wellbeing is relatively scarce. This study will thus contribute to a deeper understanding of inequalities in South Africa. 

This research project has two main objectives:

1. Explore how variations in governance (such as audit outcomes) across South Africa's district municipalities explain the variation in the well-being of individuals.
2. Investigate how the interaction between the variation in governance across local government municipalities and inequality among individuals explains variation in subjective well-being.

To investigate the interactions between the quality of institutions and of the governance, the level of spatial inequality and the subjective wellbeing, researchers will use the National Income Dynamics Study (NIDS), a nationally representative survey of individuals across South Africa, which is repeated over five waves between 2008 and 2017. They will also use audit outcomes of local municipalities to proxy for the quality of governance.

You will find below the research paper related to this project:

• Spatial Inequality, Sub-regional governance and Subjective Well-being - The case of South Africa

Prior to the pandemic caused by COVID - 19, Colombia had shown positive results with respect to the reduction of poverty and inequality. For example, total poverty was reduced by 6.1 percentage points between 2012 and 2018 from 40.8% to 34.7% as was extreme poverty, which went from 11.7% to 8.2%, according to official statistics. Likewise, although Colombia is among the most unequal countries in the region, it reduced its Gini index by about 0.03 units from 0.539 in 2012 to 0.508 in 2017, according to data from the National Administrative Department of Statistics (Departamento Administrativo Nacional de Estadísticas, 2021). 

However, with the public health contingency, many people lost their jobs or had their incomes reduced due to pandemic containment measures that affected both aggregate supply and aggregate demand. Naturally, according to official statistics, poverty levels increased significantly and inequality rebounded to the levels of five years ago. In fact, by 2020, the country was, according to the latest ECLAC Social Panorama, the most unequal in Latin America (Economic Commission for Latin America and the Caribbean, 2021).

In this sense, the country's tax structure plays a fundamental role to the extent that direct, indirect and in-kind transfers are transformed into support for the most vulnerable households so that they can meet their basic needs and balance these inequalities to some extent. In addition, taking into account that progressivity is one of the principles of the tax system, those with higher incomes should pay higher taxes to finance social spending. In this sense, the tax reform that began to take effect in 2018 and now the Fiscal Reform adopted at the end of 2022 made some major modifications to the corresponding statute with the objective of increasing revenues.

Find out more about the Extension in Colombia

The methodology developed by the Commitment to Equity institute (CEQ) has been used to carry out this study. The CEQ methodology allows to do a fiscal incidence analysis, that is, to analyze the redistributive impact of public policy instruments, on the tax side, as well as on the social spending side, on poverty and inequalities. In this sense, based on household surveys, it is possible to assess the redistributive capacity of taxes and transfers (whether direct or indirect) to guide public policy in this area.

The aim of the study was to identify which policies, either from the tax side or from the expense side, allow a greater impact (negative or positive) on inequalities. This then gives us, and the government, a clearer picture of the effects of the fiscal structure.

In addition, the project sought to build a tool that parameterizes the tax structure and social spending and allows making microsimulations that are useful for policy discussions. In this sense, this project sought to accompany the teams of the Ministry of Economy, providing them with a tool that allows them to carry out the necessary simulations to evaluate the impacts of different policies. The recently adopted tax reform was also analyzed through the lens of this tool.

You will find below the research paper related to this project:

• Fiscal incidence and public spending: Public policy scenarios for Colombia (also available in Spanish)

MPAs are often associated with high poverty, being by design targeted at relatively untouched areas with low economic potential. Establishing an MPA can thus create a financial and social burden on resource-dependent communities, even if the benefits of doing so would bring higher yields or revenue in the future. Some stakeholders may benefit greatly from commercial activities (e.g., tourism, sale of higher-value products), while at the same time others are left out of the management processes, sometimes even those having most at stake. 

Because MPAs will most likely affect user groups disproportionately, inequality issues among stakeholders can easily arise.  Some aspects of MPA design, implementation, and management may contribute to positive ecological and well-being outcomes, while others will require tradeoffs. This coexistence of both co-benefits and trade-offs among stakeholder groups leads to tricky questions of equity, justice, and power in the design, implementation, and management of MPAs. There is a general lack of knowledge regarding how inequalities influence MPA outcomes. 

In brief, MPAs are a driver of inequalities in communities that rely heavily on marine resources, and a powerful tool to help reduce them. While being an important aspect of the well-being of the people involved and of the success of MPAs, inequality assessments and metrics are currently largely absent in the design, implementation and management of MPAs. This research project aimed at a deeper understanding of the inequality dynamics in MPAs in Indonesia, drawing upon existing data and specific case studies. It helped us gain better knowledge of how inequalities influence biological and social outcomes in MPAs, and brought insights on how to integrate inequality assessments and indicators in existing MPA policies in the country, at every level of governance.

Find out more about the Extension in Indonesia

This project first went through a scoping phase which enabled to better understand the role of MPAs and its link to inequalities. It then aimed to develop a framework for analyzing inequalities and their dynamics in MPAs in Indonesia, and a toolbox for mainstreaming inequalities in the design, implementation and management of MPAs. It has also fed into the policy dialogue conducted by the EU and AFD on marine resource management and environmental protection. 

This project therefore resulted in: 

• A working paper summarizing the current knowledge on marine protected areas and inequalities in Indonesia (carried out by LPEM).
• An in-depth research project on the links between inequality reductions and the management of marine protected areas, including cases studies of three MPAs (performed by the SMERU Institute).
• Training and capacity building activities with practitioners and MPA managers on the inclusion of inequalities in MPA management practices.
   

You will find below the different publications related to this project :

• The benefits of Marine Protected Areas in fighting inequality and fostering environmental sustainability in Indonesia
• Balancing conservation and community welfare: Enhancing the management of Marine Protected Areas in Indonesia
• Can social inclusion benefit ecosystems?

Watch the replay of the "Research Conversations" webinar on this topic (July 2023):

In July 2019, Infusion Knowledge Hub conducted a study on opportunities for wholesale in Stock Road in Philippi in the Western Cape Province on behalf of a large South African supermarket chain. The purpose of the study was to understand the trading environment in the informal and small business market to elicit a value-added cash and carry shopping proposition (Vawda, Prinsloo and Prinsloo, 2019). 

In June 2022, as part of a research program launched by the Presidency of South Africa and Agence Française de Développement, funded by the European Union, Infusion Knowledge Hub replicated the study to determine whether there are shifts in purchasing behaviour amongst the informal and small traders that participated in the 2019 research. In doing so, the study aimed to provide granular data on shifts in the informal and small traders’ operating environment around Stock Road in Philippi between July 2019 and June 2022. In addition, the research investigated the spending patterns of 30 Social Relief Distress (SRD) grant recipients and 31 Basic Education Employment Initiative (BEEI) participants.

Find out more about the Extension in South Africa

This new research project aimed to contribute to the body of knowledge on the impact of social protection and employment stimulus measures on the formal and informal economies. 

Two studies analysing the local effects of the South African Presidential Employment Stimulus Initiative (PES) and the national social grants programme were produced: 

1. One study, presented in note form, that builds on Infusion's long-standing relationship with Shoprite to allow SALDRU to use Shoprite's customer data to explore the shopping habits of stimulus beneficiaries. The focus was on unpacking purchasing data related to beneficiaries who receive the Distressed Social Relief Grant and those who are part of the school assistants programme managed by the Department of Basic Education (DBE).
2. A research paper that details through descriptive and inferential statistical analysis the transfer to a mobile application, called NECTA, of a landmark study by Infusion and Shoprite conducted among informal vendors and "Spaza" stores in Philippi. This data provides an overview of what has been happening in these businesses since July 2019 (the date of the initial project), as well as an opportunity to see how the new "post-stimulus" environment is impacting the trade and decision-making of these business entities as well as some of their customers.
    

You will find below the research paper related to this project: 

• Measuring stimulus effects around Stock Road in Philippi on the Western Cape.