Claudio L. S. Haddad Joaquim Levy Marcos Lisboa Naercio Aquino Menezes Filho. Rinaldo Artes

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1 Center for Public Policies - CPP Annual Report 2011

2 Advisory Board Claudio L. S. Haddad Joaquim Levy Marcos Lisboa Naercio Aquino Menezes Filho Ricardo Paes de Barros Rinaldo Artes Board of Directors President - Claudio L. S. Haddad Director - Naercio Aquino Menezes Filho Research Associates Camila Campos Carlos Alberto Furtado de Melo Eduardo de Carvalho Andrade Marcelo Santos Regina Carla Madalozzo Rodrigo Menon Simões Moita Tatiana Farina

3 Summary 1) Seminars 2) CPP Debates 3) Insper Forum on Public Policies 4) CPP Lectures 5) Partnership with Harvard 6) Research Funding 7) Original research 8) Clipping

4 Eurozone Debt Crises SEMINARS The European scenario of economic instability, which was triggered by the Greek crisis, has been one the main topics of the global macroeconomic debate. In order to promote a discussion on the main points of European economic crisis, the CPP held the seminar Eurozone Debt Crises. The event took place in April 2011 and was presented by Professor Michael Waidel. Michael Waibel is a British Academy Postdoctoral Fellow at the University of Cambridge and the Lauterpacht Centre for International Law, and currently a visiting professor at the University of St. Gallen. He worked for the European Central Bank, the International Monetary Fund and the World Bank Victimization in São Paulo In June 15th, CPP promoted the seminar "Victimization in São Paulo", which presented the research results of the winning projects of the contest "Determinants of victimization in Sao Paulo over time". The authors used the victimization data collected by the CPP in 2003 and 2008 to carry out original research on crime policies and their outcomes. Professor João Manoel Pinho de Mello (PUC-RJ) opened the seminar, with a presentation on the evolution of crime in Latin America. Marcelo Santos (ESALQ/USP) presented the study entitled Determinantes da Vitimização e do Sub-Registro de Crimes na Cidade de São Paulo. He was followed by Fabio Gomes (FUCAPE-ES), who presented the paper A Vitimização por roubo e furto em São Paulo: Qual é a importância da dimensão espacial?. To close the seminar, Betânia Peixoto (Fundação João Pinheiro) presented the study Vitimização e Políticas de Segurança em São Paulo: Uma análise sistêmica, also carried out using the results of the CPP victimization surveys. All studies are available at the CPP website.

5 CPP Debates CPP hosts debates throughout the year about important topics of public interest, in which experts prepare small presentations and answer questions from the audience. In 2011, the debates focused on the following topics: "Challenges in public administration from the perspective of the private manager", with Felipe Góes (Instituto Pereira Passos) e Sergio Lazzarini (Insper). "Olympics in Brazil: Challenges and Opportunities", with Carlos Roberto Osório (Rio 2016 Bid Committee) e Felipe Góes (Instituto Pereira Passos). "Rio de Janeiro and the UPPs: the challenges of social integration and the provision of services in the communities in peace", with Carlos Roberto Osório (Municipal Secretary for Conservation and Public Services of Rio de Janeiro) and Pedro Henrique de Cristo (UN Consultant). Carlos Roberto Osório Olympics in Brazil: Challenges and Opportunities.

6 1st Insper Forum on Public Policies Dozens of guests, including researchers, public and private teachers, students, economists and journalists, attended the 1st Insper Forum on Public Policies on September 5th. The President of Insper, Claudio Haddad opened the forum, pointing out the need to broaden the debate on public policies in Brazil. Haddad also commented on the importance of formulating and implementing policies based on facts, knowledge and science. "We need amplify the debate, which is now restricted, so that policies are developed on top of real evidence and scientific knowledge." Professor Regina Madalozzo opened the first panel, inviting Ernesto Schargrodsky, a leading expert on crime in Latin America and rector of the Universidad Torcuato di Tella, Buenos Aires, to present the results of his latest studies. Throughout the presentation, Ernesto also explained the impact of crime on various sectors of the economy, as tourism and business and focused on the effectiveness of electronic monitoring of sentenced to reduce crime. The panel was closed with a round table composed by the researcher Leandro Piquet Carneiro (USP) and Denis Mizne (Lemann Foundation). Regina Madalozzo, Leandro Piquet Carneiro, Denis Mizne e Ernesto Schargrodsky. The second Panel was mediated by professor Naercio Menezes Filho, coordinator of CPP. The Panel was about education and highlighted the approach developed by Flavio Cunha, from the

7 University of Pennsylvania, about the importance of effective policies directed to education in the early childhood (0 to 3 years). Mentioning United States programs, such as the Head Start and Perry Preschool Program, the researcher, who has studied with James Heckman (Nobel Prize in economics-2000), stated that the quality of schools could be improved if based on an equation that adds: curriculum, pedagogy and constant interaction between teachers/students with a high level of attention paid by the teachers to each child. Cunha also stated that the design of policies in this area should recognize that skills that are not related to knowledge itself, such as commitment, motivation or sense of responsibility, are essential components in the development of human capital. The presentation ended with the participation of Francisco Soares (UFMG) and Fernando Veloso (IBRE-FGV), who commented Flavio Cunha s results. During the afternoon, the focus of the Forum shifted to international macroeconomics. Marcelo Moura, professor of Insper, opened the last Panel and invited Eric Leeper, of Indiana University, to talk about fiscal policy, monetary policy and inflation in developed countries, with a comparison to emerging economies. The scholar stated that the ageing population, a phenomenon already consolidated in Japan, is a problem that will threaten American economy in the near future, more than the current level of public debt in the country. "Korea and the United Kingdom have aging populations as well. At least in a short term, Brazil will not suffer from this kind of `tax stress`, but a serious problem can be foreseen around 2082, when the population dependent of Social Welfare will grow and be the majority ", said Lepper. The Forum was ended with a rich debate carried out by Samuel Person (Tendências Consultoria ) and Marcos Lisboa (Itaú-Unibanco). At the end of each one of the panels, the audience could participate with questions that added new thoughts to central themes. The presentations are available at the CPP website.

8 CPP Lectures CPP invites every year distinguished specialists to give short courses on topics of relevance to public policies to students and teachers inside and outside Insper. 1) Macro-Finance On 20 and 21 of June, CPP held a short course on the Macroeconomics and Finance with Professor Hans Dewachter, from the University of Leuven and Researcher of the National Bank of Belgium. The objective of the course was to provide the analytical tools needed to analyze and solve macro-finance models, show to what extent the existing models explain the empirical evidence, point out unresolved issues and suggest new ideas for researches in this area. Hans Dewachter is Professor of Economics at the University of Leuven and Experienced Researcher at the National Bank of Belgium, where he takes part of the Euro Area Business Cycle and MaRs Networks. After obtaining his PhD at the University of Leuven, he worked at various places, including CEMFI, University of Maastricht, and Rotterdam School of Management. 2) Models and Methods in Political Economy On August 15-17, CPP offered a short course about models in political economy. The classes were taught by Professor Philip R. Campante, Assistant Professor of Public Policy of Havard Kennedy School. The course included the following topics: Electoral competition and office-seeking politicians; Rent-seeking politicians; Politicians without political parties; Filipe R. Campante is Assistant Professor of Public Policy of Havard Kennedy School since He has interests in political economy, economic development and macroeconomics, with particular emphasis on understanding economic determinants and implications of different forms of political participation. Campante obtained his PhD at Harvard University and has a master's degree from the Catholic University of Rio de Janeiro.

9 Partnership with the Harvard Centre for the Developing Child Insper, through the Center of Public Policies (CPP), formed a partnership with the Foundation Maria Cecilia Souto Vidigal (FMCSV), the School of Medicine at the University of São Paulo (FMUSP) and the Child Development Center at Harvard University (Cambridge, USA), with the intent of cooperating with the generation and dissemination of knowledge related to early childhood (0-6 years). The institutions also intend to work to ensure that this knowledge will be effectively applied in the public policymaking throughout the country. The four institutions organized an international forum of researchers in early childhood with academics working in the areas of neuroscience, education, psychology, medicine and economics. The partnership is one of the first Harvard initiatives outside the United States. Brazil was chosen due to the prominent place that it has occupied in recent years on the world scenario. Considered the most important part of human education, early childhood has been the subject of much scientific research, especially in the field of neuroscience. Experts of this area state that more attention and careful interaction with the child is needed at that stage, since it is believed to be the stage when the brain is more susceptible to register external stimuli. According to Harvard data, risk and prolonged stress situations at the beginning of the child's life can affect his/her future development, as it may alter its genetic structure, causing chemical and physical changes in the brain that may endure for the rest of his/her life. Research findings show that such negative experiences could be related to nutritional problems, family environment and could even damage the effectiveness of educational policies directed to later periods of life.

10 RESEARCH FUNDING São Paulo 2022 Thinking the metropolis in the bicentennial of its independence Between March and April of 2011, following its policy of supporting research projects, CPP released an announcement for the contest "São Paulo 2022: Thinking the metropolis in the bicentennial of its independence". The goal was to discover innovative policies for urban mobility concerning the city of São Paulo. The following project was selected and will be funded: "Mobility in São Paulo in the Bicentennial: Effective Measures for a Comprehensive Strategy" German Freiberg (Instituto Superior Tecnico de Lisboa) and Weber Sutti (Faculdad ede Arquitetura e Urbanismo da USP). The project will be executed between July 1st 2011 and June 30, In the end, the participants will present their results in Insper.

11 ORIGINAL RESEARCH CPP carries out original rigorous research on topics relevant to public policies, using data produced by the Brazilian Census Bureau (IBGE) and econometric techniques. Education and the Fall of Income Inequality in Brazil As an example of research produced at the CPP, this study quantifies the role of education in the recent fall of inequality in Brazil. We first examine the behavior of the different components that make up the per capita family income between 1992 and 2009, for selected deciles of income distribution. We then use simulations to assess the contribution of labor income and of other income, including transfers, to the fall in income inequality. Finally, we estimate the contribution of education by discounting its impact from the observed growth in labor income. We find that education explains about 25% of the fall in the Gini coefficient between 2001 and The Figure below describes income growth at different deciles of income distribution in Brazil. It seems clear that growth was much stronger in the lower deciles, which contributed to the fall in inequality. Moreover, education explains about 20 to 28% of the income growth in the bottom three deciles.

12 CLIPPING CPP Research carried out by CPP also gains wide repercussion in the media. This is important to disseminate the results to the public at large. On March 20, based on data produced by CPP, Folha de Sao Paulo (main Brazilian newspaper) published a piece concerning the increase of educational attainment among the unemployed population. In the same page, an analysis written by Naercio Menezes Filho, CPP Director, was published. In the text, Menezes-Filho emphasizes the need for young Brazilian to either seek a higher education or accept working in unskilled jobs The article had great impact, having been the subject of an editorial of the same newspaper on March 24.

13 In April 11, Folha de Sao Paulo published the story "Country surpasses rich in terms of education expenditures". The results come from a study produced in CPP that shows that private spending of Brazilian families is bigger than the average spending in OECD countries..

14 Again on May 09, Folha de Sao Paulo released data produced by the CPP highlighting the fact that the share of young Brazilians joining the labor market early on their life cycle is decreasing. The data showed that this is happening because they are spending more time in schools.

15 Época Negócios Magazine published a 6-page special report, on July 21, highlighting the importance of education to the wage expectations of young people and the relationship between the increase of schooling and the decline of inequality in the Brazilian labor market. The report was based on data produced by CPP.