New Economics Papers
on Central and South America
Issue of 2010‒07‒17
three papers chosen by

  1. Examining the dynamic relationship between spot and future prices of agricultural commodities By Hernandez, Manuel; Torero, Maximo
  2. The effects of lengthening the school day on female labor supply: Evidence from a quasi-experiment in Chile By Dante Contreras; Paulina Sepúlveda C.; Soledad Cabrera
  3. Economic Freedom, Human Rights, and the Returns to Human Capital: An Evaluation of the Schultz Hypothesis By Elizabeth M. King; Claudio E. Montenegro; Peter F. Orazem

  1. By: Hernandez, Manuel; Torero, Maximo
    Abstract: This study examines the dynamic relationship between spot and futures prices of agricultural commodities. We first briefly discuss what the non-arbitrage and asset pricing theory has to say about the relationship between spot and futures markets. Next, using recent price data for corn, wheat, and soybeans, we perform Granger causality tests to empirically uncover the direction of information flows between spot and futures prices. Linear as well as nonlinear (nonparametric) causality tests are conducted on both spot and futures returns and their volatility. The results indicate that spot prices are generally discovered in futures markets. In particular, we find that changes in futures prices lead changes in spot prices more often than the reverse. These findings also contribute to the debate on alternative instruments to address excessive volatility in grain markets. Our results support, for example, the viability of implementing a global virtual reserve, recently proposed by von Braun and Torero (2008, 2009), to prevent disproportionate spikes in grain spot prices through signals and, if necessary, market assessment in the exchange of futures.
    Keywords: agricultural commodity markets, futures prices, granger causality, spot prices,
    Date: 2010
  2. By: Dante Contreras; Paulina Sepúlveda C.; Soledad Cabrera
    Abstract: In 1996, the Chilean government approved the extension of the school day, increasing the amount of time that students spend at school by 30%. Using data from the Chilean socio- economic household survey and administrative data from the Ministry of Education for 1990- 2006, we exploit the quasi-experimental nature of the reform’s implementation by time and region in order to identify the causal impact of the program on labor participation, employment and hours worked for women between 20 and 65 years old. The identification strategy relies on a fixed effect model of repeated cross-section. The results show a positive and significant effect on labor participation and female employment in all age groups and a negative and statistically significant effect on the number of hours worked. The main conclusion of this study is that the implicit childcare subsidy induced by the program had a positive and significant impact on the labor supply of women in Chile.
    Keywords: Female labor supply; childcare; fertility; labor supply; Chile.
    JEL: J22 J13 O12 H42
    Date: 2010–07
  3. By: Elizabeth M. King; Claudio E. Montenegro; Peter F. Orazem
    Abstract: T.W. Schultz (1975) proposed that returns to human capital were highest in economic environments where technology, price or production shocks were common and managerial skills to adapt resource allocations to those shocks were most in need. We hypothesize that variation in returns to human capital across developing countries can be explained in part by government institutions that blunt the magnitude of those shocks or that limit individual abilities to respond to those shocks. Using estimated returns to schooling and experience from 122 household surveys from 86 developing countries, we demonstrate a strong positive correlation between economic freedom and returns to human capital. The positive effect is observed at all quantiles of the wage distribution. Economic freedom benefits the most skilled who get higher returns to schooling; but it also benefits the least skilled who get higher returns from experience.
    Keywords: Returns to Education; Returns to Experience; Economic Freedom, Inequality; Quantiles.
    JEL: J31 O15 P10
    Date: 2010–07

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