nep-lam New Economics Papers
on Central and South America
Issue of 2016‒02‒29
eight papers chosen by

  1. Do the Rich Save More in Latin America? By Néstor Gandelman
  2. On the Implications of Taxation for Investment, Savings and Growth: Evidence from Brazil, Chile and Mexico By Emilio Espino; Martin González-Rozada
  3. Global Demographic Trends, Capital Mobility, Saving and Consumption in Latin America and the Caribbean (LAC) By Orazio P. Attanasio; Andrea Bonfatti; Sagiri Kitao; Guglielmo Weber
  4. Fiscal Policy, Inequality, and the Ethnic Divide in Guatemala - Working Paper 397 By Maynor Cabrera, Nora Lustig, and Hilcías E. Morán
  5. Household Saving and Labor Informality: The Case of Chile By Alfredo Schclarek; Mauricio Caggia
  6. Religion as an Unemployment Insurance and the Basis of Support for Public Safety Nets: The Case of Latin America and the Caribbean By Camilo Pecha; Inder J. Ruprah
  7. School dropout in Central America : an overview of trends, causes, consequences, and promising interventions By Adelman,Melissa Ann; Szekely,Miguel
  8. Barriers and opportunities for climate adaptation: The water crisis in Greater São Paulo By Cavalcante, Ana Helena A. P.

  1. By: Néstor Gandelman
    Abstract: This paper follows two strategies to address whether the rich save more. First, the paper implements a two-stage procedure in which the household's lifetime income is instrumented with the education level of the household head and the education level of his/her partner. Second, using information on home assets, the paper constructs a wealth index. There is evidence that the richest households save more in Argentina, Bolivia, Brazil, Costa Rica, Ecuador, Honduras, Mexico, Panama, Paraguay and Peru. On the other hand, no differences are found in saving rates by lifetime income or wealth in Bahamas, Chile, Colombia and Uruguay.
    Keywords: Income, Consumption & Saving, Saving rates, Two-stage procedures, Median regressions, Latin America
    Date: 2015–04
  2. By: Emilio Espino; Martin González-Rozada
    Abstract: This paper explores the qualitative and quantitative implications of taxation for growth and savings in three Latin American countries: Brazil, Chile and Mexico, studying a small open economy in the context of an endogenous growth model where the domestic interest rate depends on the level of domestic debt. The model's parameters are calibrated to the Brazilian, Chilean and Mexican economies. The findings suggest that, in order to implement the optimal tax regime, Brazil must tax capital at a considerably lower rate than at present. Consumption should be heavily taxed in Brazil and Mexico and optimal labor taxes should be lower than actual taxes in Brazil and Chile. However, while sub-optimal taxes seem to imply lower long-run growth in these three countries, low saving rates do not seem to be a direct consequence of sub-optimal taxation.
    Keywords: Taxation, Investment, Economic Development & Growth, Fiscal Policy, Optimal fiscal policy, Endogenous economic growth, Savings
    Date: 2015–04
  3. By: Orazio P. Attanasio; Andrea Bonfatti; Sagiri Kitao; Guglielmo Weber
    Abstract: This paper studies the effect of demographic transitions on the economy of Latin America and the Caribbean (LAC). The paper builds a model of multi-regions of the world and derives the path of macroeconomic variables including aggregate output, capital, labor and the saving rate as economies face a rapid shift in demographics. The timing and the extent of the demographic transition differ across regions. The model is simulated under both closed economy and open economy assumptions to quantify the roles played by factor mobility across regions in shaping capital accumulation and equilibrium factor prices.
    Keywords: Economic Development & Growth, Income, Consumption & Saving, Interest rates, Wages, Social Security, Capital flows, Capital flows, Demographic trends, Latin America and the Caribbean (LAC)
    Date: 2015–05
  4. By: Maynor Cabrera, Nora Lustig, and Hilcías E. Morán
    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 to be 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
    Date: 2015–03
  5. By: Alfredo Schclarek; Mauricio Caggia
    Abstract: This paper compares the saving behavior of formal and informal workers and additionally provides a socioeconomic and financial characterization of informal workers in Chile. The paper uses the Financial Household Survey conducted by the Central Bank of Chile in 2007, 2008, 2009 and 2010, which covers between 1,740 and 2,533 urban households, performing both OLS and probit regressions. The cross-section regression results indicate that, in general, informal households save less than formal households. Further, descriptive data indicate that informal workers have less access to financial services and possess less financial assets and liabilities. In terms of policy implications, combating informality may not only improve the well-being of workers, but may also have positive consequences on the aggregate saving rate. In addition, for Chile, it is evident that there is ample room to improve access to financial services not only for informal but also for formal workers.
    Keywords: Workforce & Employment, Income, Consumption & Saving, Financial Services, Saving, Precautionary Saving, Labor Informality, Financial Household Survey, Life Cycle Theory, Chile, Latin America
    Date: 2015–05
  6. By: Camilo Pecha; Inder J. Ruprah
    Abstract: This paper explores the role of religion in mitigating the degree to which unemployment reduces subjective well-being and it examines its support of social programs. The paper goes beyond existing literature in three ways: It extends existing literature to Latin America and Caribbean countries; it explicitly includes analysis of two confounders (social capital and personal traits) ignored in existing literature; and it moves beyond correlation by using the propensity score method to tease out a causal relation between religion and well-being. We find that religion acts as a buffer: Unemployed religious people are relatively happier than are nonreligious unemployed people. However, in contrast with the existing literature, we find that religious people are relatively more supportive of public social policy.
    Keywords: Social Policy & Protection, Workforce & Employment, life satisfaction, religion, unemployment, insurance
    Date: 2015–06
  7. By: Adelman,Melissa Ann; Szekely,Miguel
    Abstract: School dropout is a growing concern in Central America, and in Latin America as a whole, because of its consequences for economic productivity, the inclusiveness of growth, social cohesion, and increasing youth risks. This paper utilizes more than two decades of household survey data to construct a systematic overview of school dropout at the primary and secondary levels in Central America, including recent trends, causes and consequences, and evidence on what works to reduce dropout. Within each country, poverty, rurality, and indigenous group membership are the strongest correlates of dropout, reflecting several underlying factors that affect the marginal benefits and costs of staying in school. Global and regional evidence increasingly points to common policy priorities for reducing dropout across Central America, including addressing remaining gaps in access at the pre-primary and secondary levels, improving the quality of education at all levels, and strengthening the coverage, targeting, and coherence of existing programs aimed at improving education outcomes. However, additional rigorous evaluations, including cost data, are needed to identify the most effective specific approaches in each country.
    Keywords: Education For All,Effective Schools and Teachers,Population Policies,Tertiary Education,Primary Education
    Date: 2016–02–09
  8. By: Cavalcante, Ana Helena A. P.
    Abstract: This paper analyzes the current water crisis in Greater São Paulo. It is based on a diagnosis of the main barriers that impeded government and other stakeholders at different governance scales to take action to guarantee a secure water provision. The objective was to discuss why there was a lack of preparation of this region to the occurring of a prolonged drought and which adaptation measures could have been taken to avoid or diminish its effects on water supply. The analysis is the result of an in-depth explanatory case study and field research, which had as its primary evidence a set of twelve semi-structured interviews made in the studied region in March and April 20151. Further evidence was extracted from newspaper articles, government reports and scientific publications. The key reference of this lecture is the literature on barriers to adaptation to climate change. Ostrom's (2009) Social-Ecological Systems (SES) framework provided the analytical framework used to analyze the collected data and to understand the interactions among core subsystems that affect each other and are linked to social, economic, and political settings and related ecosystems. The results comprehend ten barriers that were encountered in the interactions that contributed to the water crisis. We conclude that the misrepresentation of the interests of the population in having a secure water provision and the risky behavior of water managers influenced the crisis. Further we argue that the lack of governance mechanisms and the political power concentration, which characterizes the actual governance system, are central in the explanation of the ongoing crisis.
    Keywords: resource access/control,water security,climate adaptation,Brazil,urban development
    Date: 2015

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.