nep-lam New Economics Papers
on Central and South America
Issue of 2006‒09‒23
six papers chosen by
Maximo Rossi
Universidad de la Republica

  1. Land and Power: Theory and Evidence from Chile By Jean-Marie Baland; James A. Robinson;
  2. Angel or Devil? China's Trade Impact on Latin American Emerging Markets By Jorge Blázquez-Lidoy; Javier Rodríguez
  3. Seguridad social y género en Uruguay: un análisis de las diferencias de acceso a la jubilación By Marisa Bucheli; Alvaro Forteza; Ianina Rossi
  4. Individual’s religiosity enhances trust: Latin American evidence for the puzzle By Pablo Brañas-Garza; Máximo Rossi; Dayna Zaclicever
  5. The contribution of government transfer programs to inequality.A net-benefit approach. By Alvaro Forteza; Ianina Rossi
  6. Financial Development and Inequality: Brazil 1985-99 By Meyer Bittencourt, Manoel F. Meyer

  1. By: Jean-Marie Baland; James A. Robinson;
    Abstract: We study the connection between employment and political control. Many employment relationships concede rents to workers. For example, when worker effort is crucial for production, but only imperfectly observed. We show that, depending on the political institutions, the presence of such rents allows employers to use the threat of withdrawing them to control their workers' political behavior. We thus demonstrate that employment does not simply generate income, it also gives power to control the behavior of others. The analysis focuses on the salient example of political control, where landlords coerce the votes of their workers in the absence of a secret ballot. The model we develop generates predictions about electoral outcomes which can be tested by investigating the impact of the introduction of an effective secret ballot. Such an institutional reform reduces landlords' control, and in consequence, we should observe changes in voting behavior, since workers whose votes were previously controlled and sold can now vote freely. We test the predictions of the model by examining in detail the effects of the introduction of the secret ballot in Chile in 1958. We show that, consistent with our theory, the political reforms led to large changes in voting behavior. Before the reforms, localities with more pervasive patron-client relationships tend to exhibit a much stronger support for the right-wing parties, traditionally associated with the landed oligarchy. After the reform however, this difference across localities completely disappeared.
    JEL: D72 O54 Q15
    Date: 2006–09
    URL: http://d.repec.org/n?u=RePEc:nbr:nberwo:12517&r=lam
  2. By: Jorge Blázquez-Lidoy; Javier Rodríguez
    Abstract: China’s economy has expanded by leaps and bounds, with dazzling progress since it first opened to foreign investment and reform in 1978. Over the last 25 years and after a long period of economic autarky, the country has emerged as a major player in world trade. Its accession to the World Trade Organisation (WTO) in 2001 was a milestone. China presents both a threat and an opportunity for Latin American emerging markets. On average and despite some exceptions, Latin America is a clear trade winner from Chinese global integration. This contribution studies China’s exporting and importing structure, using a database of 620 different goods. It builds two indices of trade competition to compare Chinese impacts over 1998-2004 on 34 economies, of which 15 are Latin American. The results generally confirm that there is no relevant trade competition between China and Latin America. Not surprisingly, countries that export mainly commodities face lower competition, because China is a net importer of raw materials. But the emergence of China is also a wake-up call for Latin American countries. More reforms are needed, especially in infrastructures if the region wishes to maintain its comparative advantages. Latin America will have also to deal with the Chinese bonanza. The dark side of this windfall is the risk of being stuck out of the global value chain in a raw material corner. <BR>L’économie de la Chine s’est développée à pas de géants, en progressant de manière spectaculaire depuis qu’elle a commencé à s’ouvrir aux investissements étrangers et s’est réformée en 1978. Tout au long des 25 dernières années et suite à une longue période d’autarcie économique, le pays s’est imposé en tant qu’acteur majeur du commerce mondial. Son adhésion à l’Organisation Mondiale du Commerce (OMC) en 2001 a été un événement de taille. Ainsi, la Chine représente à la fois une menace et une opportunité pour les marchés émergents d’Amérique latine. En moyenne et en dépit de certaines exceptions, l’Amérique latine fait partie des gagnants de l’intégration globale de la Chine. Ce document étudie les structures d’importation et d’exportation de la Chine, en s’appuyant sur une base de données composée de 620 biens. Deux indices de compétitivité commerciale ont été élaborés afin de comparer les impacts de la Chine sur 34 économies tout au long de la période 1998-2004, 15 d’entre elles étant des économies latino-américaines. De manière générale, les résultats confirment qu’il n’y a pas de concurrence importante entre la Chine et l’Amérique latine. Mais l’émergence de la Chine appelle aussi les pays latino-américains à se réveiller. Si la région souhaite maintenir ses avantages comparatifs, d’autres réformes sont nécessaires, en particulier au niveau des infrastructures.
    Date: 2006–06–29
    URL: http://d.repec.org/n?u=RePEc:oec:devaaa:252-en&r=lam
  3. By: Marisa Bucheli (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Alvaro Forteza (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Ianina Rossi (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: In Uruguay, the pension programs cover over 90% of the elderly. Men are more likely to be eligible for the contributory pensions, while women are over-represented in the assistential and survivor pension programs. This difference is linked to the fact that women tend to have longer spells out of the labour force than men. In this context, we analyze the difference in contributory pension access between men and women. First, we present the gender labor market and demographic differences. Second, we document the social security reform implemented in 1996. Lastly, we estimate the probability of complying with the requirements to access a contributory pension. Although the punctual estimations have certain limitations, they suggest that there are gender differences in access.
    Keywords: pensions, access conditions, retirement, gender
    JEL: H55 J14 J26
    Date: 2006–08
    URL: http://d.repec.org/n?u=RePEc:ude:wpaper:0406&r=lam
  4. By: Pablo Brañas-Garza (Universidad de Granada); Máximo Rossi (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Dayna Zaclicever (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: This paper explores the effect of religious observance and affiliation to the dominant religion (Catholicism) on trust in institutions, towards others and market attitudes. The analysis is performed using a Latin American database of twenty thousand respondents from 2004 by means of ordered probit models. The most interesting results are: i) Trust toward others is positively correlated with religious observance and with Catholic affiliation. ii) There is a positive correlation between trust in the government, in the police, in the armed forces, in the judiciary and in the banking system and religious practice in general. Identical positive results are obtained for Catholic affiliation. iii) Correlations with attitudes toward the market, in general, are heterogeneous but never negative. In sum, individual’s level of religiosity crucially affects trust in institutions and toward peers. We also found that Catholicism encourages both trust in institutions and towards others. Thus, we found a positive effect of “religiosity” on social capital. In fact, we never found any negative (and significant) effect on the variables considered.
    Keywords: trust in institutions, economic behavior, religious practise, Catholics.
    JEL: Z12 Z13
    Date: 2006–05
    URL: http://d.repec.org/n?u=RePEc:ude:wpaper:0506&r=lam
  5. By: Alvaro Forteza (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Ianina Rossi (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: The contribution of government transfer programs to inequality is often assessed by analyzing to what extent the benefits paid go to lower income families. Several analysts have found that some key government transfers actually go mostly to middle and high income families and thus contribute to greater inequality. We argue in this paper that the impact of these programs on inequality should be evaluated considering the benefits received net of the taxes paid by households to finance the programs, since higher income households receive higher benefits but they also pay higher taxes. We illustrate this approach by estimating the impact of four government programs on inequality in Uruguay and show that the conclusions are different depending on whether we use gross or net benefits in the estimation.
    Keywords: Transfers, inequality, redistribution
    JEL: D31 H55 I38
    Date: 2006–06
    URL: http://d.repec.org/n?u=RePEc:ude:wpaper:0606&r=lam
  6. By: Meyer Bittencourt, Manoel F. Meyer
    Abstract: We examine the impact that financial development had on earnings inequality in Brazil in the 1980’s and 90’s. The empirical evidence, based on panel time series and time series data, shows that more broad access to financial and credit markets had a significant and robust effect in reducing inequality during the period investigated. We suggest that this is not only because the poor can invest the acquired credit in all sorts of productive activities, but also because those with access to financial markets can insulate themselves against recurrent poor macroeconomic performance, which is exemplified by extreme inflation rates. The main implication of the results is that a seemingly non-distortionary policy, such as more credit aimed at the poor, alleviates the high inequality present in Brazil and consequently improves welfare without distorting economic efficiency.
    Keywords: Financial development and markets, credit, inequality and welfare, inflation
    JEL: D31 E44 O11 O54
    Date: 2006
    URL: http://d.repec.org/n?u=RePEc:zbw:gdec06:4728&r=lam

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