New Economics Papers
on Central and South America
Issue of 2013‒03‒16
seven papers chosen by

  1. The Distribution of Income in Central America By Gindling, T. H.; Trejos, Juan Diego
  2. Fifteen years of inequality in Latin America : how have labor markets helped ? By Azevedo, Joao Pedro; Davalos, Maria Eugenia; Diaz-Bonilla, Carolina; Atuesta, Bernardo; Castaneda, Raul Andres
  3. Innovation and productivity: evidence for 4 Latin American countries manufacturing industry By M. Constanza Demmel; Juan A. Máñez; María E. Rochina-Barrachina; Juan A. Sanchis-Llopis
  4. Social Determinants of Child Health in Colombia: Can Community Education Moderate the Effect of Family Characteristics? By Ana Maria Osorio; Catalina Bolancé; Nyovane Madise; Katharina Rathmann
  5. Heterogeneous Economic Returns to Postsecondary Degrees: Evidence from Chile By Loreto Reyes; Jorge Rodríguez; Sergio S. Urzúa
  6. Micro-Entrepreneurship Training and Asset Transfers: Short Term Impacts on the Poor By Claudia Martínez A.; Esteban Puentes; Jaime Ruiz-Tagle
  7. Conditional Cash Transfers, Payment Dates and Labor Supply: Evidence from Peru By Fernando Fernandez; Victor Saldarriaga

  1. By: Gindling, T. H. (University of Maryland, Baltimore County); Trejos, Juan Diego (University of Costa Rica)
    Abstract: We document changes in income and earnings inequality in the five Central American countries from the early 1990s to 2009. In the 1990s Costa Rica had the most equal distribution of income in Central America, and one of the most equal distributions of income in Latin America. At the other extreme, Guatemala, Honduras and Nicaragua were among the most unequal countries in Latin America. Inequality in El Salvador was between these extremes. Then, in the first decade of the 21st century inequality in El Salvador and Nicaragua decreased while inequality in Costa Rica, Guatemala and Honduras increased. By 2009 levels of inequality in El Salvador and Nicaragua were similar to those in Costa Rica. In this paper, we examine why income and earning inequality differs between the five Central American countries, and why inequality decreased in El Salvador and Nicaragua but increased in Costa Rica, Guatemala and Honduras.
    Keywords: income inequality, Central America, labour income
    JEL: O15 J31 O54
    Date: 2013–02
  2. By: Azevedo, Joao Pedro; Davalos, Maria Eugenia; Diaz-Bonilla, Carolina; Atuesta, Bernardo; Castaneda, Raul Andres
    Abstract: Household income inequality has declined in Latin America in the past decades, contributing significantly to poverty reduction in the region. Although available evidence shows that changes in the labor income are among the main factors behind these inequality trends, few studies have analyzed more closely the labor market dynamics that have led to a decline in total income inequality in some countries, but also to an increase in others. Using household survey data for a sample of 15 countries in Latin America from 1995 to 2010, this paper uses an extension of the Juhn-Murphy-Pierce methodology to decompose changes in labor income inequality (hourly wages) into a quantity effect (capturing changes in the distribution of workers'skills), price effect (reflecting returns to skills), and unobservables effect (other components, within skill groups, affecting labor income). The results show that falling returns to skills for both education and experience is, on average, driving the decline in labor income inequality in Latin America. The quantity effect, in turn, has contributed little to inequality reduction, mostly attributable to a larger dispersion in years of experience, possibly linked to the region's demographic transition and to significant increases in female labor force participation. Additional findings show that wage inequality, still high in the region, is coupled with inequality in terms of hours worked. The paper complements the existing literature by presenting separate results for males and females, as well as formal and informal sector workers as an attempt to control for secular shifts in these characteristics.
    Keywords: Poverty Impact Evaluation,Inequality,Services&Transfers to Poor,Labor Policies,Labor Markets
    Date: 2013–03–01
  3. By: M. Constanza Demmel (Universitat de València and ERI-CES); Juan A. Máñez (Universitat de València and ERI-CES); María E. Rochina-Barrachina (Universitat de València and ERI-CES); Juan A. Sanchis-Llopis (Universitat de València and ERI-CES)
    Abstract: The literature on firm level productivity in developed countries recognizes the important role played by firm innovation activities on the evolution of firm productivity. However, the literature on this topic for developing and emerging economies is scarcer and far from conclusive. The aim of this paper is to study the innovation-productivity link at the firm level for four Latin American countries (Argentina, Mexico, Colombia and Peru) for the manufacturing sector. The paper distinguishes between different innovations types such as process and product innovations. The data used have been drawn from the World Bank panel Enterprise Surveys, which provides data for these countries for the years 2006 and 2010. Our estimation strategy follows two-steps: first, we estimate TFP measures following De Loecker (2010) approach and Wooldridge (2009) estimation procedure (this allows us to compare results both considering an exogenous or endogenous Markov process for the dynamics of productivity); and, second, we use the estimated TFPs as dependent variables in several models with innovation activities as covariates, in order to disentangle the effects of those variables on the TFP. From our results we confirm that the most productive firms self-select into innovation activities under the endogenous Markov, driven by product innovations, only for Argentina and Mexico. Further, we obtain that there are returns to innovation in terms of productivity for all innovation types, under an exogenous or endogenous Markov process but, again, only for Argentina and Mexico.
    Keywords: innovation types, Total Factor Productivity (TFP), GMM, endogenous Markov
    Date: 2013–03
  4. By: Ana Maria Osorio (Department of Econometrics, University of Barcelona, Barcelona, Spain. Department of Economics, Pontificia Universidad Javeriana, Cali, Colombi); Catalina Bolancé (Department of Econometrics, University of Barcelona, Barcelona, Spain.); Nyovane Madise (Division of Social Statistics and Centre for Global Health, Population, Poverty, and Policy, University of Southampton, Southampton, United Kingdom.); Katharina Rathmann (Berlin Graduate School of Social Sciences (BGSS), Humboldt Universität zu Berlin, Berlin, Germany.)
    Abstract: Contextual effects on child health have been investigated extensively in previous research. However, few studies have considered the interplay between community characteristics and individual-level variables. This study examines the influence of community education and family socioeconomic characteristics on child health (as measured by height and weight-for-age Z-scores), as well as their interactions. We adapted the Commission on Social Determinants of Health (CSDH) framework to the context of child health. Using data from the 2010 Colombian Demographic and Health Survey (DHS), weighted multilevel models are fitted since the data are not self-weighting. The results show a positive impact of the level of education of other women in the community on child health, even after controlling for individual and family socioeconomic characteristics. Different pathways through which community education can substitute for the effect of family characteristics on child nutrition are found. The interaction terms highlight the importance of community education as a moderator of the impact of the mother’s own education and autonomy, on child health. In addition, the results reveal differences between height and weight-for-age indicators in their responsiveness to individual and contextual factors. Our findings suggest that community intervention programmes may have differential effects on child health. Therefore, their identification can contribute to a better targeting of child care policies.
    Keywords: Child health, community education, maternal education, cross-level interactions, Colombia
    Date: 2013–03
  5. By: Loreto Reyes; Jorge Rodríguez; Sergio S. Urzúa
    Abstract: We analyze the economic returns to different postsecondary degrees in Chile. We posit a schooling decision model with unobserved ability, observed test scores and labor market outcomes. We benefit from administrative records to carry out our empirical strategy. Our results show positive average returns to postsecondary degrees, especially for five-year degrees. However, we also uncover a large fraction of individuals with realized negative net returns. Although psychic benefits of postsecondary education could rationalize this result, we argue this might also suggest that individuals lack information at the time schooling decisions are made. Finally, our findings illustrate the importance of allowing for heterogeneous treatment effects when making policy recommendations.
    JEL: C25 C38 I21 I24 J24
    Date: 2013–02
  6. By: Claudia Martínez A.; Esteban Puentes; Jaime Ruiz-Tagle
    Abstract: Using a randomized controlled trial of a large-scale publicly run micro-entrepreneurship program in Chile, we assess the effectiveness of business training and asset transfers on individuals’ employment and income. About half of the participants had not yet started their businesses at intervention, allowing us to study the program effects by baseline economic activity. To analyze the shape of the production function, two levels of asset transfers are allocated. We find that the program does significantly increase individuals’ employment and income by 18% and 32% respectively after one year and significantly improves the business practices of its beneficiaries. The program seems more effective for individuals who are unemployed at the beginning of the program, followed by the selfemployed at the baseline. The effect on wage earners is positive only for low-income individuals. This is consistent with the presence of fixed costs. The additional transfer of assets has a positive and significant effect on employment and self-employment. However, the additional transfer does not have a statistically significant effect on labor and household income, consistent with rapidly decreasing returns in the production function.
    Date: 2013–03
  7. By: Fernando Fernandez (Barcelona GSE and Universidad de Piura.); Victor Saldarriaga (Peruvian Ministry of Social Development and Inclusion)
    Abstract: We assess the effects of a Conditional Cash Transfer program on adult labor supply in Peru. The program, named Juntos, lacks an experimental design so we rely on a sort of “natural experiment”. Instead of comparing treated and non-treated households, our strategy exploits within-municipality variation in the distance between payment dates of Juntos and interview dates of the Peruvian National Household Survey. We find that having received the cash transfer two weeks before the interview causes a reduction of 6 hours of work of recipients during the week prior to the survey. These effects are larger for married women and for mothers with children aged 5 or less. In addition, results are robust to different specifications and changes in the sample.
    JEL: H52 I28
    Date: 2013–01

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