nep-lam New Economics Papers
on Central and South America
Issue of 2017‒12‒18
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Active labour market programmes in Latin America and the Caribbean evidence from a meta analysis By Escudero, Verónica.; Kluve, Jochen.; López Moureloc, Elva.; Pignatti, Elva.
  2. The Labor Market Effects of an Educational Expansion. A Theoretical Model with Applications to Brazil By David Jose Jaume
  3. To the Victor Belongs the Spoils? Party Membership and Public Sector Employment in Brazil By Brollo, Fernanda; Forquesato, Pedro; Gozzi, Juan Carlos
  4. Bad Investments and Missed Opportunities? Postwar Capital Flows to Asia and Latin America By Paulina Restrepo-Echavarria; Mark Wright; Lee Ohanian

  1. By: Escudero, Verónica.; Kluve, Jochen.; López Moureloc, Elva.; Pignatti, Elva.
    Abstract: We present a systematic collection and assessment of impact evaluations of active labour market programmes (ALMP) in Latin America and the Caribbean (LAC). The paper delineates the strategy to compile a novel meta database and provides a narrative review of 51 studies. Based on these studies,the quantitative analysis extracts a sample of 296 impact estimates, and uses meta regression models to analyse systematic patterns in the data. In addition to analysing earnings and employment outcomes as in previous meta analyses, we also code and investigate measures of job quality, such as the effects on hours worked and formality. We find that ALMPs in LAC are particularly effective in increasing the probability of having a formal job, compared to other outcomes. Our results also show that training programmes are slightly more effective than other types of interventions. Moreover, when looking at the sample of training programmes alone, we observe that formal employment is also the outcome category that is most likely to be impacted positively by these programmes. In terms of targeting, we find that ALMPs in the region work better for women than for men, and for youth compared to prime age workers. Finally, medium-run estimates are not more likely to be positive than short-run estimates,while programmes of short duration (4 months or less) are significantly less likely to produce positive effects compared to longer interventions.
    Keywords: descriptor 1, descriptor 2, descriptor 3, descriptor 4
    Date: 2017
  2. By: David Jose Jaume
    Abstract: Most countries are rapidly increasing the educational attainment of their workforce. This paper develops a novel framework to study, theoretically and empirically, the effects of an educational expansion on the occupational structure of employment and distinct aspects of the wage distributionâwage levels, wage gaps, and poverty and inequality indicatorsâwith an application to Brazil. I proceed in three steps. First, I provide some stylized facts of the Brazilian economy between 1995 and 2014: A large educational expansion took place; the occupational structure of employment remained surprisingly fixed; workers of all educational groupsâprimary or less, secondary, and universityâwere increasingly employed in occupations of lower ranking as measured by average wages over the period; and wages of primary educated workers increased while wages of more educated workers declined, bringing forth reductions in poverty and inequality. Second, I build a model that traces these heterogeneous patterns of occupations and wages to the educational expansion. The model assigns workers with three levels of education to a continuum of occupations that vary in complexity and are combined to produce a final good. I investigate three different policy experiments: An increase in university level, an increase in secondary level, and a simultaneous increase in both. The predicted effects depend on the policy analyzed. Considering the educational expansion that took place in Brazil (simultaneous increases in university and secondary levels), the model predicts qualitatively all the observed labor market changes in the occupational structure of employment and the wage distribution. Finally, I calibrate the model with the data from 1995 and show that, through its lens, the observed educational expansion in Brazil explains 66 percent of the occupational downgrading and around 80 percent of the changes in wage levels, inequality, and poverty during the period of 1995-2014.
    JEL: I25 J24 O15
    Date: 2017–11–21
  3. By: Brollo, Fernanda (University of Warwick, CAGE and CEPR); Forquesato, Pedro (PUC-Rio); Gozzi, Juan Carlos (University of Warwick)
    Abstract: We analyze how political discretion affects the selection of government workers, using individual-level data on political party membership and matched employer-employee data on the universe of formal workers in Brazil. Exploiting close mayoral races, we find that winning an election leads to an increase of over 40% in the number of members of the winning party working in the municipal bureaucracy. Employment of members of the ruling party increases relatively more in senior positions, but also expands in lower-ranked jobs, suggesting that discretionary appointments are used both to influence policymaking and to reward supporters. We find that party members hired after their party is elected tend be of similar or even higher quality than members of the runner-up party, contrary to common perceptions that political appointees are less qualified. Moreover, the increased public employment of members of the ruling party is long-lasting, extending beyond the end of the mayoral term.
    Keywords: bureaucracy, patronage, political parties, public sector employment JEL Classification: D72, D73, H70, J45
    Date: 2017
  4. By: Paulina Restrepo-Echavarria (Federal Reserve Bank of St Louis); Mark Wright (Federal Reserve Bank of Chicago); Lee Ohanian (University of California Los Angeles)
    Abstract: Since 1950, the economies of East Asia grew rapidly but received little international capital, while Latin America received considerable international capital even as their economies stagnated. The literature typically explains the failure of capital to flow to high growth regions as resulting from international capital market imperfections. This paper proposes a broader thesis that country-specific distortions, such as domestic labor and capital market distortions, also impact capital flows. We develop a DSGE model of Asia, Latin America, and the Rest of the World that features an open-economy business cycle accounting framework to measure these domestic and international distortions, and to quantify their contributions to international capital flows. We find that domestic distortions have been the predominant drivers of international capital flows, and that the general equilibrium effects of these distortions are very large. International capital market distortions also matter, but less so.
    Date: 2017

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