nep-lam New Economics Papers
on Central and South America
Issue of 2018‒04‒23
three papers chosen by
Maximo Rossi
Universidad de la República

  1. The impact of mining patents on public education: evidence for mining municipalities in Chile By Mauricio Alejandro Oyarzo Aguilar; Dusan Paredes Araya
  2. Earnings Inequality and the Minimum Wage: Evidence from Brazil By Engbom, Niklas; Moser, Christian
  3. Blessing a Curse? Institutional Reform and Resource Booms in Colombia By Jorge Gallego; Stanislao Maldonado; Lorena Trujillo

  1. By: Mauricio Alejandro Oyarzo Aguilar (Departamento de Economía, Universidad Católica del Norte, Chile); Dusan Paredes Araya (Departamento de Economía, Universidad Católica del Norte, Chile)
    Abstract: Chilean mining municipalities collect a mineral tax to compensate the negative externalities associated with resource extraction. This collection implies a positive marginal impact on local finance to improve the quality of life in the mining communities. However, there is not enough empirical evidence to support this causal mechanism. This article contributes to cover this knowledge gap with a unique experimental framework proposed by the Chilean tax system. Mining law indicates that municipalities above an exogenous threshold are able to keep this extra income. We use this Regression Discontinuity Design to identify the causal effect in public education indicators of the mining communities. Our results show that the mining municipalities these have a worse educational performance. In addition, the levels of spending in public education are not significant, which accounts for the disadvantaged position in relation to the high dependence on extractive activities.
    Keywords: Public education, Mining patents, Local governments.
    JEL: H20 H40 H70 H32 I25
    Date: 2017–08
  2. By: Engbom, Niklas (Princeton University); Moser, Christian (Federal Reserve Bank of Minneapolis)
    Abstract: We show that an increase in the minimum wage can have large effects throughout the earnings distribution, using a combination of theory and evidence. To this end, we develop an equilibrium search model featuring empirically relevant worker and firm heterogeneity. The minimum wage induces firms to adjust their equilibrium wage and vacancy policies, leading to spillovers on higher wages. We use the estimated model to evaluate the effects of a 119 percent increase in the real minimum wage in Brazil from 1996 to 2012. The policy change explains a large decline in earnings inequality, with spillovers reaching up to the 80th percentile of the earnings distribution. At the same time, employment and output fall only modestly as workers relocate to more productive firms. Using administrative linked employer-employee data and two household surveys, we find reduced-form evidence in support of the model predictions.
    Keywords: Worker and firm heterogeneity; Equilibrium search model; Minimum wage; Spillovers
    JEL: E23 E25 E61 E64 J31
    Date: 2018–03–12
  3. By: Jorge Gallego (Universidad del Rosario); Stanislao Maldonado (Universidad del Rosario); Lorena Trujillo (Departamento Nacional de Planeación)
    Abstract: Is it possible to revert the resource curse through institutional reform? Evidence suggests that there is a negative relationship between abundance of natural resources and economic growth, political stability, democracy, and peace. However, evidence illustrating how institutional reform can revert this situation is scarce. In this paper, we exploit an institutional reform that took place in Colombia in 2011. We evaluate the effects of the reform to the royalties system, that modified the allocation rule of these rents but also introduced important changes in terms of control and accountability, on the living standards of Colombian households. We instrument municipality-level allocations of royalties using international variations in the price of oil, and we find that the reform had important effects on several household welfare indicators. We find positive impacts on important dimensions, such as poverty, income, employment, housing conditions, health, and education, among others. Results are mixed or null in other areas, such as formality or employment in the service sector. We test for different channels explaining these effects, which include theories of state capacity, competition for resources, and increased control and accountability. Our evidence supports the state capacity mechanism.
    Date: 2018–04

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