New Economics Papers
on Central and South America
Issue of 2014‒04‒18
nine papers chosen by

  1. Sustainability and Outreach: A Comparative Study of MFIs in South Asia and Latin America & the Caribbean By Sefa Kwami Awaworyi; Ana Marr
  2. Can Latin America tap the globalization upside ? By de la Torre, Augusto; Didier, Tatiana; Pinat, Magali
  3. Varieties of Sovereign Crises: Latin America 1820-1931 By Graciela Laura Kaminsky; Pablo Vega-García
  4. Peruvian Miracle: Good Luck or Good Policies? By Waldo Mendoza
  5. Pathways to the middle class in Turkey : how have reducing poverty and boosting shared prosperity helped ? By Azevedo, Joao Pedro; Atamanov, Aziz
  6. Labor Informality: Choice or Sign of Segmentation? A Quantile Regression Approach at the Regional Level for Colombia By Garcia Cruz, Gustavo Adolfo
  7. Economic Growth and Wage Stagnation in Perú: 1998-2012 By Peter Paz; Carlos Urrutia
  8. The Effects of Remittances on Poverty at the Household Level in Bolivia: A Propensity Score Matching Approach By López-Videla, Bruno; Machuca, Carlos Emilio
  9. Equality under threat by the talented:evidence from worker-managed firms By Gabriel Burdin

  1. By: Sefa Kwami Awaworyi; Ana Marr
    Abstract: Previous studies indicate that microfinance institutions (MFIs) in Latin America and the Caribbean (LAC) have different operational strategies to MFIs in South Asia (SA). Given the recent emphasis placed on the feasibility of MFIs to achieve the dual goals of outreach and sustainability concurrently, we examine and compare the relationship between sustainability and outreach of MFIs in LAC with MFIs in SA. Our results indicate that trade-offs exist between outreach and sustainability in both regions. However, the severity of trade-off is dependent on which goal MFIs decide to focus on in each region.
    Keywords: Microfinance, Sustainability, Outreach, Financial Performance, South Asia, Latin America
    Date: 2014–04
  2. By: de la Torre, Augusto; Didier, Tatiana; Pinat, Magali
    Abstract: This paper discusses the theoretical arguments in favor of and against economic globalization and, with a view to ascertaining whether Latin America may be able to capture the globalization upside, examines the trends and salient features of Latin America's globalization as compared with that of Southeast Asia. The paper focuses on trade and financial integration as well as the aggregate demand structures (domestic demand-driven versus external demand-driven) that underpin the globalization process. It finds that Latin America is mitigating some bad side effects of financial globalization by moving toward a safer form of international financial integration and improving its macro-financial policy frameworks. Nonetheless, Latin America's progress in raising the quality of its international trade integration has been scant. The region's commodity-heavy trade structures and relatively poor quality of trade connectivity can hinder growth potential to the extent that they are less conducive to technology and learning spillovers. Moreover, Latin America's domestic demand-driven growth pattern (a reflection of relatively low domestic savings) may become an additional drag to growth by accentuating the risk of a low savings-low external competitiveness trap.
    Keywords: Emerging Markets,Currencies and Exchange Rates,Economic Theory&Research,Debt Markets,Banks&Banking Reform
    Date: 2014–04–01
  3. By: Graciela Laura Kaminsky; Pablo Vega-García
    Abstract: The literature on sovereign defaults has focused on adverse shocks to debtors’ economies, suggesting that defaults are of an idiosyncratic nature. Still, many of the sovereign crises are of a systemic nature, clustered around panics in the financial centers. Crises in the financial centers are rare events and their effects on the periphery can only be captured by examining long episodes. This paper examines sovereign defaults in Latin America from 1820 to 1931. We find that systemic crises are different. The international collapse of liquidity is at their core. Default spells and recovery rates are also affected by liquidity crashes.
    JEL: F3 F34
    Date: 2014–04
  4. By: Waldo Mendoza (Departamento de Economía de la PUC del Perú)
    Abstract: The Peruvian economy has had an extraordinary performance in the last 10 years. The 2012 per capita GDP is 66 percent over 2002 and more than double its 1992 level. In a long term perspective, the cumulative growth of GDP per capita recorded in the last 10 years has been the strongest since 1900. This is the "Peruvian miracle". This paper aims to find the determinants of Peruvian miracle. In theory, countries' macroeconomic performance can be determined by two factors: i) the “good (bad) luck effect” that is related to the international context, which can be favorable or unfavorable, and ii) the “good (bad) policies effects", associated with short-term macroeconomic policies or structural reforms, which are policies that alter the current development model. The hypothesis of this work is that the Peruvian miracle of the last 10 years has much to do with good luck and, in part, with good short-term macroeconomic policies. JEL Classification-JEL: F36, F41, F42 and F43
    Keywords: Macroeconomic performance, international context, Latin America and Peru.
    Date: 2013
  5. By: Azevedo, Joao Pedro; Atamanov, Aziz
    Abstract: Turkey's poverty reduction performance in the 2000s has been remarkably consistent. Extreme and moderate poverty have fallen considerably since 2003. Between 2002 and 2011, extreme poverty fell from 13 percent to 5 percent, while moderate poverty halved from 44 percent to 22 percent (respectively, defined using the World Bank's Europe and Central Asia regional poverty lines of 2.5 and 5 USD/PPP). Most of this poverty reduction (89 percent) has been driven by growth, a performance consistent with most countries in Europe and Central Asia. This is substantially different form the recent performance of other regions, such as Latin America, where redistribution contributed to poverty reduction almost four times more than in Turkey. Turkey has also achieved sustained consumption growth of the bottom 40 percent of the population, even during the years of the world recession. Turkey's performance in poverty reduction and increased shared prosperity has been complemented by the systematic expansion of the middle class by 20 percentage points. This paper analyzes the main drivers of poverty reduction, shared prosperity, and changes in inequality in Turkey from 2002 to 2011. The analysis shows that labor markets, demographics, pensions, and social assistance have played a critical role in this process. It further explores some of the mechanisms that have facilitated these changes.
    Keywords: Rural Poverty Reduction,Regional Economic Development,Inequality,Achieving Shared Growth
    Date: 2014–04–01
  6. By: Garcia Cruz, Gustavo Adolfo
    Abstract: The labor market in developing countries is remarkably heterogeneous with a small productive formal sector, enjoying high wages and attractive employment conditions and another large informal sector with low productivity and volatile wages. The informal sector is particularly diverse. In this paper we examine the heterogeneity of the informal sector at regional level in Colombia. In general, our findings suggest that, both voluntary and involuntary informal employment co-exist by choice and as a result of labor market segmentation. We also find that there are striking differences in labor market characteristics between cities, in particular in the traditional informal segment.
    Keywords: Informality, local labor markets, quantile regression, selection bias, formal/informal wage gap decomposition
    JEL: C21 J31 J42 O17
    Date: 2014–04–01
  7. By: Peter Paz (Centro de Investigación Económica, ITAM.); Carlos Urrutia (Centro de Investigación Económica, ITAM.)
    Abstract: In the last two decades, the Peruvian economy exhibited rapid growth. Moreover, the composition of the labor force improved in terms of education and experience, two variables which are typically associated to higher human capital. The average worker in 2012 had a higher level of education and was one and a half years older than in 1998, reflecting the impact of the demographic transition. However, the average real wage was roughly constant. We show that a decline in the wage premium for education, and to a minor extent for experience, is responsible for the lack of growth in the average real wage. Had these two premia remained constant throughout the period of analysis, average labor earnings would have increased by about 2.6 percent per year, of which 0.7 percentage points are accounted for the changes in the composition of the labor force in terms of age and education. We explore the role of the relative supply of workers with different levels of human capital as an explanation for the decline in the wage premium for education. Finally, we analyze the implications of these findings for some macroeconomic variables, as earnings and wage inequality, the labor share and total factor productivity. JEL Classification-JEL: I24, J21, J24, J31, O47
    Keywords: education, economic growth, human capital, labor productivity, wages
    Date: 2014
  8. By: López-Videla, Bruno; Machuca, Carlos Emilio
    Abstract: In the last few years, Bolivia has experienced a growing migration phenomenon. Many household members migrate from their homes in order to look for better opportunities and to improve their household income. In this paper, we aim to explore the effects of remittances on Bolivian household poverty levels. We use micro data from the 2008 Household Survey, conducted by the National Institute of Statistics (INE). We calculate propensity score matching estimators in order to address the potential bias due to heterogeneous factors in the sample. Then, we estimate the average treatment effect on the treated to compare the poverty level between households which receive and do not receive remittances. Results show that remittances have a positive effect on reducing urban households’ poverty level, whereas there is no effect on rural households’ poverty.
    Keywords: Remittances, poverty, propensity score matching, Bolivia.
    JEL: E0
    Date: 2014–02–27
  9. By: Gabriel Burdin
    Abstract: Are high-ability individuals more likely to quit egalitarian regimes? Does the threat of exit by talented individuals restrict the redistributive capacity of democratic organizations? This paper revisits that long-standing debate by analyzing the interplay between compensation structure and quit behavior in the distinct yet underexplored institutional setting of workermanaged firms. The study exploits two novel administrative data sources: a panel of Uruguayan workers employed in both worker-managed and conventional firms; and a linked employer–employee panel data set covering the population of Uruguayan workermanaged firms and their workers from January 1997 to April 2010. A key advantage of the data is that it enables one to exploit within-firm variation on wages to construct an ordinal measure of the worker ability type. The paper's four main findings are that (1) workermanaged firms redistribute in favor of low-wage workers; (2) in worker-managed firms, high-ability members are more likely than other members to exit; (3) the hazard ratio of high-ability members is lower for founding members and for those employed by workermanaged firms in which there is less pay compression; and (4) high-ability members are less likely to quit when labor market conditions in the capitalist sector are less attractive. This paper contributes to the study of the interplay between equality and incentives that permeates many debates in public finance, comparative economic systems, personnel and organizational economics
    Keywords: Labor managed firms, redistribution, compensation structure, job mobility
    JEL: H00 J54 J62 M52 P0
    Date: 2013–12

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