New Economics Papers
on Central and South America
Issue of 2011‒01‒16
three papers chosen by

  1. China’s effect on Latin America’s international trade By Claudio E. Montenegro; Mariana Pereira; Isidro Soloaga
  2. Macroeconomic and policy implications of population aging in Brazil By Jorgensen, Ole Hagen
  3. Youth employment transitions in Latin America By Cunningham, Wendy; Salvagno, Javier Bustos

  1. By: Claudio E. Montenegro (World Bank); Mariana Pereira (El Colegio de México); Isidro Soloaga (El Colegio de México)
    Abstract: This article presents, through gravity models and a correct definition of what is understood by lost opportunities, an analysis of aggregate trade flows aimed at identifying China’s effects on Latin America’s trade. The results obtained indicate that it is not possible to talk about lost opportunities for Latin America in the Chinese market, since all the groups included in the region present demand elasticities from China that are not lower versus the rest of the regions or country groups.
    Keywords: bilateral trade, gravity model, Poisson regression, China, Latin America
    JEL: F10 F12 F15
    Date: 2010–12
  2. By: Jorgensen, Ole Hagen
    Abstract: This paper analyzes the macroeconomic implications of population aging in Brazil. Three alternative yet complementary methodologies are adopted, and depending on policy responses to the fiscal implications of aging, there are two main findings: First, saving rates could increase and not necessarily fall as a consequence of aging in Brazil -- thus contradicting conventional views. Second, lifetime wealth across generations could increase -- as capital deepening generates a second demographic dividend. Two policy responses to aging are emphasized: First, a structural policy response of linking mandatory retirement (or entitlement) ages to increasing life expectancy would boost labor supply and reduce the fiscal costs of aging. Second, in terms of preferable parametric policy responses, the second demographic dividend will be promoted to the highest extent by keeping taxes and debt unchanged while allowing public pensions to adjust downward. Such a policy response would keep pensions from further crowding out private saving -- thus balancing capital accumulation with intergenerational income distribution. In conclusion, Brazil will not necessarily experience a fall in saving and growth, but if government policies are appropriately, adequately, and timely formulated, population aging is likely to lead to substantial capital deepening and increases in lifetime income, wealth, and welfare.
    Keywords: Emerging Markets,Access to Finance,Population Policies,Economic Theory&Research,Debt Markets
    Date: 2011–01–01
  3. By: Cunningham, Wendy; Salvagno, Javier Bustos
    Abstract: Using panel data from labor force surveys in Argentina, Brazil, and Mexico, the paper maps out young people's paths from the classroom to the work place during the 1980s through the early 2000s. By decomposing transition matrices into propensity to move and rate of separation and estimating duration matrices, the authors follow young people's movements between school and work and between employment sectors to better understand the dynamics of youth employment, including where youth go upon leaving school, how long they spend in each state, and where they go upon leaving various employment states. The main conclusion of the study is that young people across all three countries follow a similar trend over their life cycle: they leave school to spend a short time in the informal sector, move to a formal position for longer spells, and finally become self-employed. The authors find evidence of decreasing segmentation between formal and informal sectors as workers age, a lower propensity for formal sector employees to return to school than workers in the same age cohort who are not in the formal sector, and that entry to self-employment is not subject to income constraints.
    Keywords: Labor Markets,Youth and Governance,Adolescent Health,Tertiary Education,Labor Policies
    Date: 2011–01–01

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