The 2010 Cuentapropista Ledger: Reform Without Growth?
In a Havana municipality in 2010, a research team surveys 120 self-employed workers: 68 run paladares, 32 provide private transport, and 20 do repair work. Average reported monthly income is 1,200 CUP, while the average state wage in the same area is 400 CUP. Forty-five percent say they paid an informal fee to obtain or renew a license. Households report blackouts averaging six hours a day. A 2016 follow-up finds 210 licensed self-employed workers, but only 12 percent contribute to social security. The team must write a 300-word policy brief for a local council. Constraints: the brief cannot simply recommend 'more market' or 'less market'; it must use at least two concepts from the Special Period (for example, período especial, dual currency, remittances, or informal economy); and it must distinguish correlation from causation. The council wants one feasible reform and one risk.
1. Interpret the 2010 income gap. What are two plausible explanations, and what evidence would distinguish them?
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Explanation 1: scarcity premium. Self-employment met unmet demand, so earnings rose. Explanation 2: barriers and costs. Forty-five percent paid informal fees, so gross income may hide costs, risk, and informal payments. A third is remittance capital: households with dollars can invest in paladares or transport.
To distinguish these, collect start-up capital, license costs, remittance receipts, and hours worked. The 1,200 CUP vs. 400 CUP gap is self-reported and may not be net; it may also reflect selection-people with capital enter self-employment. Correlation between licensing and higher income does not prove the reform caused higher welfare. The brief should present the gap as a pattern requiring explanation, not as proof of policy success.
2. The 2016 follow-up shows more licenses but low social-security contributions. Does this show reform failed? Argue with correlation and causation.
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No, low contributions do not by themselves show failure. The 2016 count of 210 licenses shows expansion; the 12 percent contribution rate shows a design or compliance problem. Both could result from the same policy: easy licensing without linking registration to social security. To infer failure, compare with a counterfactual-what would contributions have been without the reform?-and check whether workers were eligible, whether contributions were affordable, and whether dual-currency rules made formal registration unattractive.
The data support 'expansion with weak social protection,' not 'reform failed.' A stronger brief would separate three outcomes: number of licenses, income, and social-security coverage. Each has a different causal pathway and different evidence needs.
3. Propose one reform and one risk, using at least two Special Period concepts.
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Reform: create a single-window license renewal that automatically enrolls self-employed workers in a graduated social-security schedule, with fees scaled to reported income and paid in the same currency as the license. Use the Special Period concepts of the informal economy and dual currency: informal fees and currency asymmetry currently push activity outside formal channels.
Risk: tying social security to licensing may raise costs for the poorest cuentapropistas and push them further into informality. Remittance-rich households could comply more easily, widening inequality. A pilot with an exemption threshold and a published fee schedule would test the reform. The brief should present this as a hypothesis with indicators-registration, contribution rates, and informal fees-not as a certainty.