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A better understanding of how immigrants shape the economy of Costa Rica can help policy makers formulate policies to boost positive effects and mitigate negative effects of immigration. This report finds that immigration has a limited, but varying, economic impact in Costa Rica. Immigration tends to reduce the employment rate of the native-born population, but does not affect labour income. The estimated share of value added generated by immigrants is above their share of the population. In 2013, immigrants’ contribution to the government budget was below that of the native-born population, while expenditures for both groups were similar. Policies aimed at immigrant integration, by increasing de facto access to public services and to the labour market, could enhance immigrants’ economic contribution.  How Immigrants Contribute to Costa Rica's Economy is the result of a project carried out by the OECD Development Centre and the International Labour Organization, with support from the European Union. The project aimed to analyse several economic impacts – on the labour market, economic growth, and public finance – of immigration in ten partner countries: Argentina, Costa Rica, Côte d'Ivoire, the Dominican Republic, Ghana, Kyrgyzstan, Nepal, Rwanda, South Africa and Thailand. The empirical evidence stems from a combination of quantitative and qualitative analyses of secondary and in some cases primary data sources.

This volume collects four studies that were prepared as background research to the 2018 OECD Economic Survey of Costa Rica. Using firm-level, trade and sectorial data, these studies seek to provide insights into the trends in productivity and its determinants in Costa Rica. This volume represents a collaborative effort by a team of researchers from the OECD Secretariat and official agencies of Costa Rica.  

Costa Rica has achieved strong levels of well-being. However, many institutional obstacles are hampering more robust growth and the spreading of its gains more widely. Setting in motion a 'virtuous cycle' of inclusive growth will require reforms across several policy areas that present win-win opportunities in terms of equity and productivity improvements. Rebalancing spending towards early childhood and secondary education would improve outcomes and equity and also help increasing the low level of participation of women in the labour market. Costa Rica should move from the current emphasis on education spending towards outcome policy targets, supported by performance indicators. Policies to reduce labour market informality should continue, including greater enforcement of obligations to pay social security contributions and a gradual move to a smaller number of minimum wages. Eliminating unjustified exemptions from competition would boost productivity growth. Fiscal imbalances remain the major threat to growth and living standards in the medium term. A comprehensive fiscal reform package is needed to bring to a halt the fast rising debt-to-GDP ratio, including measures to increase tax revenues and curb spending, strengthen the budgetary framework with a new, operational fiscal rule and restrict earmarking. SPECIAL FEATURES: FISCAL POLICY; PRODUCTIVITY; INCLUSIVE GROWTH

This report puts forward policy recommendations for strengthening the performance and sustainability of the health care system in Costa Rica. There is much to praise in Costa Rica’s health care system: institutional stability; a closely integrated but well-differentiated provider arm, with strong primary care; a degree of inter-sectoral co-ordination that serves as a model of good practice; detailed and effective dialogue between users and health service managers; and, innovation around professional roles and the use of ICT that other health systems could learn from. All this leads to health outcomes on a par with several OECD economies. Nevertheless, serious strains are evident: spending is rising steeply, fuelled by salaries, fees and facility payments based on last year’s outlay. These spending increases are not always associated with improvement in services: waiting lists are excessively long and growing. The system is perhaps too stable: institutional rigidity and vested interests have stalled vital reforms, meaning that Costa Rica still lacks systematic application of DRGs and health technology assessment, despite attempts to bring them in.

Costa Rica has recorded many social and economic achievements and currently enjoys one of the highest levels of well-being in the OECD. But progress has come to a standstill in most recent years and challenges have emerged along several social and labour market dimensions. Existing policies are outdated and no longer effective in today’s dynamic, export oriented economy which requires greater flexibility and more high skilled workers. How can Costa Rica better respond to the challenges of technological change and globalisation whilst minimising the transition costs it endures as it moves to a higher and a more sustainable path to inclusive growth? This report provides comprehensive analysis of Costa Rica’s policies and practices compared with best practice in the field of labour, social and migration from across the OECD and other countries in the Latin American region.  It contains several recommendations to tackle key challenges facing Costa Rica, including low labour utilisation, increasing inequality, high poverty and high-risk of economic exclusion especially of the low skilled and migrants.  This report will be of interest in Costa Rica as well as other countries looking to promote a more dynamic and an inclusive economy.

As Costa Rica’s economy has developed in recent decades, the education system that helped propel the country to upper middle-income status now needs reform to respond to rising expectations and changing demands for skills. New challenges are emerging: economic growth has recently slowed, inequality is widening and productivity growth is weak. How can Costa Rica improve both the quality and equity of its education system while also addressing efficiency challenges? This report assesses Costa Rica’s policies and practices against best practice in education from across the OECD and other reference countries in the Latin American region. It analyses its education system’s major strengths and the challenges it faces, from early childhood education and care to tertiary education. It offers recommendations on how Costa Rica can improve quality and equity to ensure strong, sustainable and inclusive growth. This report will be of interest in Costa Rica as well as other countries looking to raise the quality, equity and efficiency of their education systems.

This report is part of a new series of publications entitled OECD Tax Policy Reviews. These country reviewsare intended to provide independent, comprehensive and comparative assessments of OECD member and non-member countries’ tax systems from a tax policy perspective as well as concrete recommendations for tax policy reform. By benchmarking countries’ tax systems and identifying tailored tax policy reform options, the ultimate objective of the reviews is to enhance the design of existing tax policies and to support the adoption and implementation of tax policy reforms. This first edition provides a comprehensive tax policy assessment of Costa Rica’s current tax system as well as tax policy reform recommendations. The report is divided into five chapters, starting with a general chapter providing an overview of key macroeconomic and tax revenue trends (Chapter 1), followed by an assessment of the main types of taxes of the Costa Rican tax system, including corporate income taxes (Chapter 2), personal income taxes and social security contributions (Chapter 3), the general sales tax (Chapter 4) and environmentally-related taxes (Chapter 5)