nep-lam New Economics Papers
on Central and South America
Issue of 2018‒01‒22
three papers chosen by

  1. Of Cities and Slums By luciene pereira; Pedro Cavalcanti Ferreira; Alexander Monge-Naranjo
  2. Transferencias como Canal de Ventaja Electoral: El Caso de Chile By Cazor Katz, Andre; Acuña, Hector; Carrasco, Diego; Carrasco, Martín
  3. Economic mobility along the business cycle. The case of Peru By Diego Winkelried; Javier Torres

  1. By: luciene pereira (Fundação Getulio Vargas); Pedro Cavalcanti Ferreira (Fundação Getulio Vargas); Alexander Monge-Naranjo (Federal Reserve Bank of St. Louis)
    Abstract: The emergence of slums is a common feature in a country's path towards urbanization, structural transformation and development. Based on salient micro and macro evidence of Brazilian labor, housing and education markets, we construct a simple model to examine the conditions for slums to emerge. We then use the model to examine whether slums are barriers or stepping stones for lower skilled households and for the development of the country as a whole. We calibrate our model to explore the dynamic interaction between skill formation, income inequality and structural transformation with the rise (and potential fall) of slums in Brazil. We then conduct policy counterfactuals. For instance, we find that cracking down on slums could slow down the acquisition of human capital, the growth of cities (outside slums) and non-agricultural employment. The impact of reducing housing barriers to entry into cities and of different forms of school integration between the city and the slums is also explored.
    Date: 2017
  2. By: Cazor Katz, Andre; Acuña, Hector; Carrasco, Diego; Carrasco, Martín
    Abstract: Discretionary transfers from the Chilean central government have grown significantly as a percentage of Chilean municipalities’ total financing. This paper investigates whether discretionary transfers act as a channel that gives electoral advantage to the incumbent political coalition that runs a municipality. We develop a simple theoretical model which predicts that the central government transfers more resources to the communes managed by mayors of its own political coalition, particularly in which the mayor won by a narrow margin. Then, in order to test the main results of the theoretical model, a Discontinuous Regression Design is applied using data from the 2004, 2008 and 2012 election periods. The results show that for the subset of communes with narrow voting margins, the central government transfers about an additional 250 million Chilean pesos to the communes that are administered by mayors of its own political coalition. Moreover, observing only the communes with the largest number of inhabitants there is a difference of 730 million Chilean pesos. Disaggregating by type of transfers we show that political discretion would be given only in some types of transfers. This is an important result because allows identifying the channels to be researched in the future and open questions about the influence of institutional and/ or strategic factors. Finally, disaggregating by election period, the results are always consistent with 2008 and 2012 election periods, supporting the fact that this discretionary mechanism has become important over time.
    Keywords: Political economy; electoral advantage; incumbent advantage; discretionary transfer; discontinuous regression
    JEL: H41 H5 H51 H52
    Date: 2017–07–07
  3. By: Diego Winkelried (Universidad del Pacífico (Lima, Perú)); Javier Torres (Universidad del Pacífico (Lima, Perú))
    Abstract: The performance of Latin American countries in reducing poverty and expanding the middle class has been remarkable. By taking a close look at the Peruvian experience, we explore how this aggregate behavior relates to business cycle conditions and if it is shared by population groups with different characteristics. We find social mobility to be cyclical, with recessions followed by a rise in downward mobility and strong economic growth driving boosts in upward mobility. Furthermore, the reduction in poverty appears to be the result of a sustained increase in the poverty exit rate, shared similarly among heterogeneous groups, together with a prolonged decrease in the poverty entry rate, especially for households regarded as initially disadvantaged.
    Keywords: Poverty dynamics, pro-poor growth, pseudopanel data, Latin America
    JEL: C23 C53 I32 O15 O54
    Date: 2017–12

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