nep-lam New Economics Papers
on Central and South America
Issue of 2017‒03‒12
four papers chosen by

  1. Economic Shocks and Crime: Evidence from the Brazilian Trade Liberalization By Dix-Carneiro, Rafael; Soares, Rodrigo R.; Ulysse, Gabriel
  2. Occupational Choice and Matching in the Labor Market By Mak, Eric; Siow, Aloysius
  3. City Size, Distance and Formal Employment By Eduardo Lora; Neave O'Clery
  4. Institutions vs. Social Interactions in Driving Economic Convergence: Evidence from Colombia By Michele Coscia; Timothy Cheston

  1. By: Dix-Carneiro, Rafael; Soares, Rodrigo R.; Ulysse, Gabriel
    Abstract: This paper studies the effect of changes in economic conditions on crime. We exploit the 1990s trade liberalization in Brazil as a natural experiment generating exogenous shocks to local economies. We document that regions exposed to larger tariff reductions experienced a temporary increase in crime following liberalization. Next, we investigate through what channels the trade-induced economic shocks may have affected crime. We show that the shocks had significant effects on potential determinants of crime, such as labor market conditions, public goods provision, and income inequality. We propose a novel framework exploiting the distinct dynamic responses of these variables to obtain bounds on the effect of labor market conditions on crime. Our results indicate that this channel accounts for 75 to 93 percent of the effect of the trade-induced shocks on crime.
    JEL: J6 K42 F16
    Date: 2017
  2. By: Mak, Eric (Shanghai University of Finance and Economics); Siow, Aloysius (University of Toronto)
    Abstract: Integrating Roy with Becker, this paper studies occupational choice and matching in the labor market. Our model generates occupation earnings distributions which are right skewed, have firm fixed effects, and large changes in aggregate earnings inequality without significant changes in within firm inequality. The estimated model fits the earnings distribution both across and within firms in Brazil in 1999. It shows that the recent decrease in aggregate Brazilian earnings inequality is largely due to the increase in her educational attainment over the same years. A simulation of skilled biased technical change in the model also qualitatively fits the recent changes in earnings inequality in the United States.
    Keywords: occupational choice, matching, earnings distribution, inequality
    JEL: J31
    Date: 2017–02
  3. By: Eduardo Lora (Center for International Development at Harvard University); Neave O'Clery (Center for International Development at Harvard University)
    Abstract: Cities thrive through the diversity of their occupants because the availability of complementary skills enables firms in the formal sector to grow, delivering increasingly sophisticated products and services. The appearance of new industries is path dependent in that new economic activities build on existing strengths, leading cities to both diversify and specialize in distinct areas. Hence, the location of necessary capabilities, and in particular the distance between firms and people with the skills they need, is key to the success of urban agglomerations. Using data for Colombia, this paper assesses the extent to which cities benefit from skills and capabilities available in their surrounding catchment areas. Without assuming a prioria a definition for cities, we sequentially agglomerate the 96 urban municipalities larger than 50,000 people based on commuting time. We show that a level of agglomeration equivalent to between 45 and 75 minutes of commuting time, corresponding to between 62 and 43 cities, maximizes the impact that the availability of skills has on the ability of agglomerations to generate formal employment. Smaller urban municipalities stand to gain more in the process of agglomeration. A range of policy implications are discussed.
    Date: 2016–10
  4. By: Michele Coscia (Center for International Development at Harvard University); Timothy Cheston (Center for International Development at Harvard University)
    Abstract: Are regions poor because they have bad institutions or are they poor because they are disconnected from the social channels through which technology diffuses? This paper tests institutional and technological theories of economic convergence by looking at income convergence across Colombian municipalities. We use formal employment and wage data to estimate growth of income per capita at the municipal level. In Colombia, municipalities are organized into 32 departamentos or states. We use cellphone metadata to cluster municipalities into 32 communication clusters, defined as a set of municipalities that are densely connected through phone calls. We show that these two forms of grouping municipalities are very different. We study the effect on municipal income growth of the characteristics of both the state and the communication cluster to which the municipality belongs. We find that belonging to a richer communication cluster accelerates convergence, while belonging to a richer state does not. This result is robust to controlling for state fixed effects when studying the impact of communication clusters and vice versa. The results point to the importance of social interactions rather than formal institutions in the growth process.
    Date: 2017–02

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