nep-lam New Economics Papers
on Central and South America
Issue of 2012‒09‒30
ten papers chosen by
Maximo Rossi
University of the Republic

  1. Unions, Wage Gaps, and Wage Dispersion: New Evidence from the Americas By Rios-Avila, Fernando; Hirsch, Barry T.
  2. Evolution of Teachers' Salaries in Latin America at the Turn of the 20th Century: How Much Are They (Under or Over) Paid? By Mizala, Alejandra; Nopo, Hugo
  3. What is behind the decline in poverty since 2000 ? evidence from Bangladesh, Peru and Thailand By Inchauste, Gabriela; Olivieri, Sergio; Saavedra, Jaime; Winkler, Hernan
  4. Water Scarcity and Birth Outcomes in the Brazilian Semiarid By Rocha, Rudi; Soares, Rodrigo R.
  5. Business Groups, Innovation and Institutional Voids in Latin America By Fulvio , Castellacci
  6. Testing the law of one price in retail banking: An analysis for Colombia using a pair-wise approach By Ana María Iregui; Jesús Otero
  7. Negotiating free trade agreements with Latin America and Asia is an increasingly important priority for the EU. By Garcia, Maria
  8. El impacto del BDH en el gasto de bienes no deseados: Un análisis de regresión discontinua By Nabernegg, Markus
  9. Trade Liberalization and Female Labor Force Participation: Evidence from Brazil By Gaddis, Isis; Pieters, Janneke
  10. Globalization and the changing institution for sustainability: The case of the Salmon farming industry in Chile By Iizuka, Michiko; Katz, Jorge

  1. By: Rios-Avila, Fernando (Georgia State University); Hirsch, Barry T. (Georgia State University)
    Abstract: Using a common methodology, the effects of unions on wage levels and wage dispersion are estimated for two neighboring countries, Bolivia and Chile, and for the U.S. The analysis shows that unions have broadly similar effects on the wage distribution within these three economies. The findings suggest that the political economy of unions, coupled with market constraints on labor costs, produce commonality in union wage effects that transcend other economic and institutional differences.
    Keywords: unions, wages, wage dispersion, Latin America
    JEL: J31 J51
    Date: 2012–07
  2. By: Mizala, Alejandra (University of Chile); Nopo, Hugo (Inter-American Development Bank)
    Abstract: How much are teachers paid in comparison to those in other professions in Latin America? How have these differences evolved at the turn of the 20th century? This paper reports the evolution, between circa 1997 and circa 2007, of teachers´ salaries vis-à-vis workers in other professional and technical occupations for thirteen Latin-American countries. After controlling the earnings differentials by observable characteristics linked to productivity it is found that the hourly earnings gap, although substantial, decreased throughout the decade. This has been the case for earnings gaps at the main and secondary jobs, and also for those measured in terms of monthly and yearly earnings. Nonetheless, behind the region averages there is an important cross-country heterogeneity.
    Keywords: wage differentials, professional labor markets, national and international labor standards, Latin America, Caribbean
    JEL: J31 J44 J8 O54
    Date: 2012–08
  3. By: Inchauste, Gabriela; Olivieri, Sergio; Saavedra, Jaime; Winkler, Hernan
    Abstract: This paper quantifies the contributions of different factors to poverty reduction observed in Bangladesh, Peru and Thailand over the last decade. In contrast to methods that focus on aggregate summary statistics, the method adopted here generates entire counterfactual distributions to account for the contributions of demographics and income from labor and non-labor sources in explaining poverty reduction. The authors find that the most important contributor was the growth in labor income, mostly in the form of farm income in Bangladesh and Thailand and non-farm income in the case of Peru. This growth in labor incomes was driven by higher returns to individual and household endowments, pointing to increases in productivity and real wages as the driving force behind poverty declines. Lower dependency ratios also helped to reduce poverty, particularly in Bangladesh. Non-labor income contributed as well, albeit to a smaller extent, in the form of international remittances in the case of Bangladesh and through public and private transfers in Peru and Thailand. Transfers are more important in explaining the reduction in extreme compared with moderate poverty.
    Date: 2012–09–01
  4. By: Rocha, Rudi (Federal University of Rio de Janeiro (IE-UFRJ)); Soares, Rodrigo R. (Pontifical Catholic University of Rio de Janeiro (PUC-Rio))
    Abstract: This paper analyzes the impact of rainfall fluctuations during the gestational period on health at birth. We concentrate on the semiarid region of Northeastern Brazil to highlight the role of water scarcity as a determinant of early life health. We find that negative rainfall shocks are robustly correlated with higher infant mortality, lower birth weight, and shorter gestation periods. Mortality effects are concentrated on intestinal infections and malnutrition, and are greatly minimized when the local public health infrastructure is sufficiently developed (municipality coverage of piped water and sanitation). We also find that effects are stronger during the fetal period (2nd trimester of gestation), for children born during the dry season, and for mortality in the first 6 months of life. The results seem to be driven by water scarcity per se, and not by reduced agricultural production. Our estimates suggest that expansions in public health infrastructure would be a cost-effective way of reducing the response of infant mortality to rainfall shocks in the Brazilian semiarid.
    Keywords: water, rainfall, health, birth, infant mortality, sanitation, semiarid, Brazil
    JEL: I15 I18 H51 Q54
    Date: 2012–07
  5. By: Fulvio , Castellacci
    Abstract: The paper presents an empirical analysis of the innovative activities of business groups in Latin America. It compares the innovativeness of group-affiliated firms (GAFs) and standalone firms (SAFs), and it investigates how country-specific institutional factors – financial, legal, and labor market institutions – affect the group-innovation relationship. The empirical analysis is based on the most recent wave of the World Bank Enterprise Survey (period 2010-2011), and it focuses on a sample of 6500 manufacturing firms across 20 Latin American countries. The econometric results point out two major conclusions. First, GAFs are more innovative than SAFs: we estimate the innovation propensity of GAFs to be 9% higher than that of SAFs. Secondly, across countries, the innovativeness of GAFs is higher for national economies with a better institutional system than for countries with a less efficient institutional set up.
    Keywords: Business groups; innovation; institutional voids; emerging economies; Latin America
    JEL: O1 L2 D2 P5 O54 M2 O3 L1
    Date: 2012–09
  6. By: Ana María Iregui; Jesús Otero
    Abstract: We apply a pair-wise approach to test the law of one price for deposit (lending) rates in Colombia. We find that when banks are of different size deposit rates adjust quickly, suggesting a competitive environment. By contrast, lending rates adjust rapidly when banks are of similar size, supporting market segmentation.
    Keywords: Law of one price; retail interest rates; Colombia. Classification JEL: G21.
    Date: 2012–09
  7. By: Garcia, Maria
    Abstract: The EU has recently completed trade agreements with a number of different countries in Latin America, and is seeking further agreements in Asia. Maria Garcia looks at the EU’s recent history of trade negotiations, arguing that free trade agreements offer an important opportunity to ‘level the playing field’ for EU businesses facing competition from the United States, China, and beyond.
    Date: 2012–07–24
  8. By: Nabernegg, Markus
    Abstract: Conditional Cash Transfer (CCT) programs are gaining more and more weight in Latin America's public policy. Although there exists a wide range of literature about the impact of these programs on school matriculation, the reduction in child labour and the improvements in the health status of recipients, there exist no extensive works on the possible bad use of the benefits. This paper investigates the impact of the Ecuadorian Bono de Desarrollo Humano (BDH) program on household expenditures for cigarettes, alcohol and cell phones. With data from the Condiciones de Vida questionnaire of the year 2006 I built a quasi-experiment thanks to the assignment rule of the BDH (which is the Selben index) and use a regression discontinuity method to estimate the impact of the program on these undesirable goods. The results show that there is no impoact of the BDH on the expenditure for the three goods (measured in expenditure per capita and in the proportion of total expenditure) for households located at the limit between the second and third quintile, and therefore, presumably, also not for poorer households. This confirms the good design of the assignment rule of the program.
    Keywords: Conditional Cash Transfers; Latin America; Regression Discontinuity
    JEL: I38 C31
    Date: 2012–08–06
  9. By: Gaddis, Isis (University of Göttingen); Pieters, Janneke (IZA)
    Abstract: While there is a large literature analyzing the distributional impacts of trade reforms across the income or skill distribution, very little is known about the gender effects of trade reforms. This paper seeks to fill this gap and investigates the impact of Brazil's 1987-1994 trade liberalization on labor force participation of women. To identify the causal effect of trade reforms we exploit exogenous variation in exposure to tariff reductions across states linked to spatial differences in states' initial industry composition. We find that tariff reductions were associated with an increase in female labor force participation and employment after a period of around two years. Our results are robust to a variety of different approaches in dealing with the potential endogeneity of regional exposure to trade liberalization, alternative measures of trade protection and different time periods. Moreover, we find evidence that employment flows across sectors, especially an accelerated shift from agriculture and manufacturing to trade and other services, but also greater labor market insecurity and male unemployment are behind the observed increase in female economic activity. This suggests that both push and pull factors induced women to join the labor force.
    Keywords: female labor force participation, trade liberalization, Brazil
    JEL: F13 F16 J16 J21 O15
    Date: 2012–08
  10. By: Iizuka, Michiko (UNU-MERIT/MGSoG); Katz, Jorge (Universidad de Chile)
    Abstract: The recent expansion of global demand for natural resources has created a production boom in countries endowed with natural resources. Increasing global trade and investment - globalization - offer an important opportunity for developing countries as the global flow of commodities often accompany knowledge and information to increase productivity to facilitate economic development. This positive feature of globalization has some serious drawbacks when the country is not equipped with an institution to ensure environmental sustainability. This paper sought to demonstrate this through the examination of the Chilean salmon farming case. The Chilean salmon farming industry has grown dramatically since the mid 1980s to become the number two exporter of farmed salmon in the world after Norway. The sector, however, suffered a decline in production volume due to the sanitary crisis in 2007. The case also tries to capture the on-going efforts made by the government to strengthen the institution to prevent further occurrences of environmental and sanitary crises.
    Keywords: Globalization, Environmental sustainability, Institution, Innovation, Technological change, Chile
    JEL: Q56 O20 O33 O54
    Date: 2012

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