Does Giving Money Reduce Poverty? Paul Romer, Nobel Laureate in Economics, has the answer

Direct money transfers by governments do not help to solve the problems of unemployment and poverty in the nations. so direct stimuli and aggressive interventions are required in times of recession, said Paul Romer, 2018 Nobel Laureate in Economics.

Incentive systems require more direct intervention, which could be helpful and more aggressive in getting people back to work during a recession, “he said during the Amafore Encuentro Digital event.

As an example, he mentioned that if a person recently graduated from university wants to take a job, subsidies can be offered where the government pays half of an employee’s salary, this would generate employment and capital.

Instead of making cash transfers to the population, what I would recommend is establishing subsidies for low-income workers ”.

At the beginning these people will have few skills, but over time they will improve and climb, but for that they need an opportunity. “

He explained that it is important to catalog what a job is and encourage it, such as considering that raising a child or caring for an older adult is a job and an income could be given for it.

The point is to encourage work because simply giving transfers is a way of surrendering and assuming that people will not produce anything, “he said.

During his presentation “The future of the economy”, Romer also considered it important and necessary to create incentives so that all technological innovations are accessible to those who want to make use of them.

He argued that it is possible to innovate thanks to new mechanisms that, if available to society in general, will allow opportunities to generate more ideas that promote development for the benefit of all


For the economist, one of the most important ways that governments innovate is through public policies and the decisions they make to promote the ideas and innovations that their people and society propose.

In that sense, he recognized Mexico for the model of investors involved in the pension system, as a fundamental element to accelerate innovation, regardless of the industry to which they direct their capital.

You can learn from the regulation of the pension system in Mexico, which gives a role to the private sector to do a healthy job in the financial sector, that is, countries can learn from each other in terms of innovation, “he commented.

Finally, Romer recommended the implementation of a flat tax on large technology companies such as Google and Facebook, in the countries where they operate, such as Mexico.

The proposal is that they pay 35 percent of their annual income in this tax, about 20 billion dollars; however, they do not do so and concentrate the market more, which prevents the growth of other companies that belong to the technology sector.

By: Lindsay H. Esquivel

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Does Giving Money Reduce Poverty? Paul Romer, Nobel Laureate in Economics, has the answer