nep-lam New Economics Papers
on Central and South America
Issue of 2015‒07‒18
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Functional Inequality in Latin America: News from the Twentieth Century By Pablo Astorga
  2. Fiscal Policy, Inequality and the Ethnic Divide in Guatemala By Maynor Cabrera; Nora Lustig; Hilcias Moran
  3. Determinants of the Risk Attitude in Entrepreneurship: Evidence from Latin America By Jean P. Sepulveda; Claudio Bonilla
  4. Germany's social market economy: A blueprint for Latin American countries? By Sauerland, Dirk

  1. By: Pablo Astorga (Institut Barcelona d'Estudis Internacionals (IBEI))
    Abstract: This paper presents a new consistent yearly series of gross income (between-group) inequality Ginis for four occupational categories in Argentina, Brazil, Chile, Colombia, Mexico, and Venezuela over the period 1900-2011 using a newly assembled wage dataset. The approach used differentiates labour by skill level and allows for changing allocation of the labour force over time. Profits and rents are calculated as a residual. Our regional Gini shows a changing secular process with a reclined “S” shape with an inflection point around 1940 and a peak in the 1990s. There are mixed country trends in the early and middle decades, but in most cases inequality was on the rise in the 1960s. There was also a tendency for narrowing wage inequality in the middle decades of the last century – at the time of the Great Levelling in the developed economies – but whose impact was more than off-set by a rising share of the top group. Inequality in the 20th century is a story of increased polarisation - particularly post 1970 – amid significant social mobility.
    Keywords: economic history, economic development, income inequality, Latin America
    JEL: N36 O15 O54
    Date: 2015–04–10
  2. By: Maynor Cabrera (Fedes); Nora Lustig (Department of Economics, Tulane University); Hilcias Moran (Bank of Guatemala, Guatemala)
    Abstract: Guatemala is one of the most unequal countries in Latin America and has the highest incidence of poverty. The indigenous population is more than twice as likely of being poor than the nonindigenous group. Fiscal incidence analysis based on the 2009-2010 National Survey of Family Income and Expenditures shows that taxes and transfers do almost nothing to reduce inequality and poverty overall or along ethnic and rural- urban lines. Persistently low tax revenues are the main limiting factor. Tax revenues are not only low but also regressive. Consumption taxes are regressive enough to offset the benefits of cash transfers: poverty after taxes and cash transfers is higher than market income poverty.
    Keywords: inequality, poverty, ethnic divide, fiscal incidence, taxes, social spending, Guatemala
    JEL: D31 H22 I14
  3. By: Jean P. Sepulveda; Claudio Bonilla (School of Business and Economics, Universidad del Desarrollo)
    Abstract: This paper departs from the traditional analysis of the effects of risk aversion in entrepreneurship to study the determinants of entrepreneurial risk aversion in developing a new venture and becoming an entrepreneur. We took fear of failing as a proxy for risk aversion and applied our analysis to the most important Latin American economies. We observed that being male, having more years of formal education and believing to have the necessary skills to develop a new venture decreased the probability of feeling a fear of failing and, thus, eventually increased the probability of developing a new venture. Age affects risk quadratically (first positively, but after some point, negatively), and if there is a prior experience of having shut down a business, risk aversion increases, that is, the probability of feeling a fear of failing, which reduces the probability of becoming an entrepreneur
    Keywords: Risk Aversion, Entrepreneurship, Fear of Failing
    Date: 2014
  4. By: Sauerland, Dirk
    Abstract: [Introduction ...] This paper tries to answer these questions taking five steps of argumentation. Firstly, the paper briefly sketches the theoretical and empirical background of the modern liberal market economy concept. Secondly, it outlines in more detail the basic ideas of the ordoliberal social market economy concept and some modern amendments to this concept based on institutional economics’ ideas. Thirdly, the paper compares the two concepts and it uses institutional data to describe two prototypes of economies based on those concepts of the United States and Germany. Fourthly, the same databases are used to describe the institutional status quo in five Latin American countries. The fifth and last step of the argumentation discusses the limitations of a simple blueprint idea with regards to economic orders. The paper ends with conclusions on options and limits of taking the liberal or the social market economy concept as a blueprint for Latin American countries.
    Date: 2015

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