New Economics Papers
on Central and South America
Issue of 2013‒06‒16
fourteen papers chosen by

  1. Modelling the Sovereign Linkages of Key Latin American Economies By Kannan Thuraisamy; Gerard Gannon
  2. The Interdependence between Credit and Real Business Cycles in Latin American Economies By José Eduardo Gómez; Jair Ojeda Joya; Fernando Tenjo Galarza; Héctor Manuel Zárate Solano
  3. Base de datos histórica sobre gasto público social y revisión de sus principales tendencias (1950-2008) By Paola Azar; Sebastián Fleitas
  4. What Lessons Can Asia Draw from Capital Controls in Brazil during 2008–2012? By Jinjarak, Yothin; Noy, Ilan; Zheng, Huanhuan
  5. Trabajo por cuenta propia y monotributo en Uruguay. By Verónica Amarante; Ivone Perazzo
  6. How, Why and in What Sectors Employment Informality Decreased in Argentina from 2003 to 2012 By Bertranou, Fabio; Casanova, Luis; Saravia, Marianela
  7. Income polarization in Brazil, 2001-2011: A distributional analysis using PNAD data By Clementi, F.; Schettino, F.
  8. El crédito bancario y el fomento industrial: una mirada sobre el crédito destinado a los industriales por el Banco República entre 1943 y 1958 By Cecilia Moreira Goyetche
  9. Distributive patterns in settler economies: agrarian income inequality during the first globalization (1870-1913) By Henry Willebald
  10. Contract enforcement, investment and growth in Uruguay since 1870 By Sebastián Fleitas; Andrés Rius; Carolina Román; Henry Willebald
  11. Dinámica de crecimiento económico y demográfico regional en Colombia, 1985-2011 By Luis Armando Galvis
  12. Foreign direct investment, productivity, demand for skilled labour and wage inequality: an analysis for Uruguay By Adriana Peluffo
  13. Diferencias salariales por género y su vinculación con la segregación ocupacional y los desajustes por calificación. By Alma Espino
  14. The Changing Roles of Education and Ability in Wage Determination. By Gonzalo Castex; Evgenia Dechter

  1. By: Kannan Thuraisamy (Deakin University); Gerard Gannon (Deakin University)
    Abstract: This paper models the cross-market dynamics in an emerging market regional setting using a homogenous set of international sovereign bonds issued by key Latin American economies. We employ Johansen’s and a modified three-step procedure, which generates portfolio adjustment weights while accounting for common volatility effects across markets. The bonds are grouped based upon maturities across different markets in the Latin American region. This paper provides insights into the nature of sovereign linkages of key Latin American markets generally, and sovereign international bonds with varying maturities more specifically. The empirical results also highlight the manner in which sovereign linkages evolve in Latin America and the required portfolio adjustments following a credit event in the region.
    Keywords: Common long-run components, Sovereign linkages, Latin America, Sovereign international bonds, Portfolio adjustment weight.
    JEL: G15 G12
    Date: 2012–12–26
  2. By: José Eduardo Gómez; Jair Ojeda Joya; Fernando Tenjo Galarza; Héctor Manuel Zárate Solano
    Abstract: In this document we estimate credit and GDP cycles for three Latin-American economies and study their relation in the time and frequency domains. Cycles are estimated in order to analyze their medium and short-term frequencies. We find that short-term cycles are usually more volatile than medium-term cycles for credit and GDP in Chile, Colombia and Peru. We also find that credit-cycle peaks in the middle 1990s and middle 2000s precede notable GDP recessions 2 or 3 years later in these countries. Additionally, credit cycles in Latin-American economies tend to cause later movements in economic activity. This effect can be decomposed into two components: first, a negative effect in the case of business-cycle frequencies, and a positive effect in the case of medium-term GDP fluctuations.
    Date: 2013–06–03
  3. By: Paola Azar (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Sebastián Fleitas (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This paper describes the compilation of an annual database on public expenditure on education, health and social security and other fiscal variables. It covers 32 upper and upper-middle income countries, between 1950 and 2008. The total includes 8 Latin American countries. The database was constructed by bringing together other datasets and information from original sources. A first approach to the trends described by the data shows that the rise in social public expenditure has been especially dynamic after the Second World War and, though GDP per capita plays a key role, it cannot totally explain its level. It also suggests that the relations between social expenditure and other fiscal variables are different depending on the countries' income and that in the Latin American case there are special features in terms of public debt interests, public debt and fiscal balances.
    Keywords: Database, Public social expenditure, Economic history
    JEL: N4 H1 H2 I00
    Date: 2012–12
  4. By: Jinjarak, Yothin (Asian Development Bank Institute); Noy, Ilan (Asian Development Bank Institute); Zheng, Huanhuan (Asian Development Bank Institute)
    Abstract: Driven by waves of foreign capital inflows and outflows, Indonesia, the Republic of Korea, and Thailand—among several other emerging markets—have resorted to capital control policy since 2006. Are capital controls effective? Controls on capital inflows have been experiencing a renaissance since 2008, with several prominent Asian and Latin American countries implementing them. This paper focuses on Brazil, which instituted five changes in its capital account regime over 2008–2011. It concludes that the effectiveness of capital controls should be viewed on a case-by-case basis, together with the political economy considerations, and other policy tools, i.e., foreign exchange intervention.
    Keywords: capital control; brazil; global financial crisis; mutual fund flows; exchange rate
    JEL: E60 F32 G23
    Date: 2013–05–28
  5. By: Verónica Amarante (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Ivone Perazzo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: The incorporation of self employed workers into social protection systems constitutes a relevant challenge for Uruguay, as well as for other countries in the region. Among the strategies to this end, some countries have designed specific systems for this group of workers. In that context, Uruguay has recently made a relevant regulatory change, with the flexibilization of the rules of monotax. A relevant part of self employed workers can now incorporate to this regime, and so the study of their labor situation and changes since this regulatory modification are useful for policy design. This document presents a detailed analysis of the characteristics and labor conditions of self employed workers in Uruguay in 2000-2010, and explores changes in social security contributions associated with changes in the regime.
    Keywords: labor market, Uruguay, self employment, monotax
    JEL: J21 J31 J42
    Date: 2013–02
  6. By: Bertranou, Fabio; Casanova, Luis; Saravia, Marianela
    Abstract: In a brief period of time after the 2001-2002 crisis, there was a dramatic fall in informal salaried employment in Argentina. Informal employment—also called “non-registered employment”—refers to employment for which no social security contribution is made. This indicator dropped by fifteen percentage points, from 49% to 34% from 2003 to 2012. This paper analyzes the recent evolution of informal employment and the main policies designed to reduce its scope and to encourage the creation of quality employment. It has been observed that the decline in informal employment, measured as non-registered salaried employment, is primarily due to net creation of formal employment and, to a lesser extent, to net destruction of non-registered employment. The rate of informal employment declined in all sectors of the economy and in establishments of all sizes. Extensive mobility between non-registered salaried employment and inactivity (mainly among low-skilled women workers) has been observed as well and, albeit to a lesser extent, between non-registered salaried employment and formal employment. Since most informal workers are unskilled and perform their jobs in work units that are difficult for public policies to identify, a comprehensive policy approach is necessary, one that considers economic, social and employment issues.
    Keywords: Informal employment, informal economy, labor market, labor policies, Argentina
    JEL: J21 J80 O17
    Date: 2013–06
  7. By: Clementi, F.; Schettino, F.
    Abstract: This paper applies a non-parametric tool, the “relative distribution”, to identify patterns of changes in Brazil’s household income distribution over the period 2001-2011. Despite the sharp decline in income inequality recently experienced by the country, we are able to document an increased income polarization, which has particularly affected households below the median. The results call directly into question the future sustainability and equity of existing social programs dealing with the unequal distribution of resources.
    Keywords: Brazil, income distribution, relative distribution, polarization, International Development, Political Economy, C14, D31, D63,
    Date: 2013–06
  8. By: Cecilia Moreira Goyetche (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This paper attempts to follow in consonance with the recent economic historiography that has started to pay more attention to the history of credit, the banking sector and, in particular, development banks in Latin America. The paper examines the credit directed towards industry by the Banco de la República between 1943 and 1958. The objective is to learn the incidence of bank credit on the financing and encouragement of industrial activities during a period in which the government sphere, through state direction, put into practice industrialization policies. This research shows that the official bank was the only institution that was able to explicitly extend development credit to the productive sectors, adapting it to their needs. At the same time, in light of the interest in promoting industry, the creation of a development bank was proposed. However, this project did not come to fruition, and ultimately ratified the responsibility of the República in this area. The bank advanced with the specialization of credit and deepened financial support for industry. However, because it continued to operate under traditional banking criteria and lacked resources specifically dedicated to meeting the credit needs of industry, its ability to play the role of a development bank was limited.
    Keywords: Development bank, Credit, State led industrialization
    JEL: G21 N26
    Date: 2012–12
  9. By: Henry Willebald (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: The aim of this paper is to identify different distributive patterns in the settler economies (Argentina, Australia, Canada, Chile, New Zealand and Uruguay) during the First Globalization (1870-1913). I present the methodological decisions, discuss my results and propose some conjectures about the long-run evolution of inequality. As agriculture was the most important productive activity in the settler economies and one of the main sectors in leading the land frontier expansion, a study of the generation of income and the evolution of the distribution in this sector is of main interest. First, I estimate the income (or product) per worker in the agriculture and concern for relative performance within the club focusing on (total and sectoral) growth and convergence. After that, I present the notion of functional income distribution and discuss the existence of two distributive patterns. In one of these, the territories that were British colonies and where the capitalist relationships predominated, and in the other, in former colonies of Spain, economic relationships were based on agrarian rental incomes. During the period, income distribution worsened in the Australasian economies and Canada, but it worsened even more in the South American Southern Cone countries. These differences among settler economies are consistent with dissimilar dynamics of expansion onto new land and the conformation of institutional arrangements that promoted unlike patterns of distribution.
    Keywords: agriculture, functional income distribution, settler economies
    JEL: N36 N37 N56 N57 O47
    Date: 2013–05
  10. By: Sebastián Fleitas (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Andrés Rius (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Carolina Román (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Henry Willebald (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: Institutions and their quality are central concepts in the recent development and institutional economics literatures. Our hypothesis is that inadequate contract enforcement has hindered investment and, in consequence, indirectly has had a negative effect on Uruguay’s long-term growth performance. We first review the main concepts and the approaches to define and measure the quality of contract enforcement. We then introduce one measure that has the advantages of being measurable into the past and not depending on subjective judgments; namely, the “contract intensive money” (CIM)indicator proposed by Clague et al. (1999). Using our long series for the CIM indicator, and extending key macroeconomic variables backwards to 1870, we are able to estimate a structural model to explore the plausibility of our hypothesis. In the estimation, based on the seemingly unrelated regressions (SUR) method, we find support for the thesis that the quality of contract enforcement influences growth through its impact on investment. Put differently, our results suggest that poor contract enforcement played a significant role at the root of Uruguay’s underperformance, and in its experience of (relative) long-run decline.
    Keywords: Contract Enforcement, Contract intensive money, investment, Uruguay
    JEL: N16 N26 N46 O43
    Date: 2013–01
  11. By: Luis Armando Galvis
    Abstract: Economic and demographic growth in Colombia has been dominated by the largest cities. This has resulted in the common believe that Colombia is mainly an urban country. The aim of this paper is to show how economic and demographic growth has evolved, especially, the population density, since the mid-eighties. Using Markov transition chains and their spatial counterpart, we show that since the mid-eighties municipalities have experienced a highly persistent pattern in which the main cities have maintained their position as the most densely populated. In contrast, municipalities that exhibited low levels of population density have remained relatively sparse. RESUMEN: El crecimiento económico y demográfico regional en Colombia ha estado dominado por las grandes urbes a tal punto que actualmente, en términos demográficos, Colombia es un país netamente urbano. El objetivo del presente documento es mostrar cómo ha evolucionado la dinámica de crecimiento económico y, especialmente, la dinámica poblacional en Colombia desde mediados de los ochentas. Empleando matrices de transición de Markov tradicionales, así como su versión espacial, se muestra que los municipios han presentado índices de persistencia en su comportamiento demográfico. Las principales ciudades han mantenido su jerarquía en tanto que siguen siendo las más densamente pobladas desde mediados de los ochenta. Asimismo, los municipios que exhibían bajos niveles de densidad se han mantenido relativamente estancados en términos demográficos.
    Date: 2013–05–29
  12. By: Adriana Peluffo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This work analyses the impact of foreign direct investment (FDI) on productivity, the demand for skilled labour and wage inequality of the Uruguayan Manufacturing firms for the period 1997-2005. Firstly, we estimate the effects of FDI on productivity, relative wages and relative employment of skilled workers, through conventional pooled OLS. Then, we estimate quantile regressions, which reveal that consistently with firm heterogeneity, the response to foreign ownership is not homogenous, but varies over the conditional distribution of each dependent variable. Nevertheless, since we cannot attribute causality from the previous correlations we use discrete treatment effect techniques for analyzing causality. Our preliminary results seem to indicate that FDI is associated with higher productivity and an increased demand for skilled labour. Furthermore, though average wages are higher in foreign owned firms, the wage gap between skilled and unskilled workers is higher in foreign owned firms than in domestic ones. Then, it follows that promoting foreign investment enhances productivity. On the other hand, due to the higher demand for skilled workers policies such as training of workers would be conductive to further productivity improvements, while other social policies could help to mitigate wage inequality effects.
    Keywords: Fdi, Productivity, Labour markets
    JEL: F23 J23 J24 J31 O39
    Date: 2013–02
  13. By: Alma Espino (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This paper analyzes the gender wage gap considering the effect of gender occupational segregation and its impact on those differences and imbalances in labor skills. It also investigates to what extent these mismatches are in turn an impact that collaborates in maintaining gender wage gaps. Occupational segregation is measured and then included as an explanatory variable together with others like those related to job skills mismatches to estimate the gender wage gaps. The results show that segregation is essential to understand the persistence of gender wage gaps (though a substantial portion of it remains explained by sex) and over qualification among women. These results have implications for public policy, stressing the importance of creating mechanisms breaking gender stereotypes that lead to a pronounced economic discrimination.
    Keywords: Segregation, wage gap, overqualification, underqualification
    JEL: J24 J71
    Date: 2012–12
  14. By: Gonzalo Castex (Central Bank of Chile); Evgenia Dechter (University of New South Wales)
    Abstract: This study examines changes in returns to formal education and cognitive skills over the last 20 years using the 1979 and 1997 waves of the National Longitudinal Survey of Youth. We show that cognitive skills had a 30%-50% larger effect on wages in the 1980s than in the 2000s. Returns to education were higher in the 2000s. These developments are not explained by changing distributions of workers’ observable characteristics or by changing labor market structure. We show that the decline in returns to ability can be attributed to differences in the growth rate of technology between the 1980s and 2000s.
    Keywords: n/a
    Date: 2012–10

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