nep-lam New Economics Papers
on Central and South America
Issue of 2018‒08‒27
three papers chosen by

  1. Saving Rates in Latin America: A Neoclassical Perspective By Andres Fernandez; Ayse Imrohoroglu; Cesar Tamayo
  2. The Returns from Training in Colombia: Evidence from a Longitudinal Survey By Luz Adriana Florez; Lina Cardona-Sosa; Leonardo Fabio Morales; Julian Londoño
  3. Dispersion in Financing Costs and Development By Tiago Cavalcanti; Bruno Martins; Cezar Santos; Joseph Kaboski

  1. By: Andres Fernandez (Inter American Development Bank); Ayse Imrohoroglu (USC); Cesar Tamayo (Inter-American Development bank)
    Abstract: Latin American countries have long exhibited low levels of saving rates when compared to other countries in relatively similar stages of economic development (e.g., Asian economies). Motivated by this fact, this paper examines the time path of the saving rates between 1970 and 2010 in three Latin American countries –Chile, Colombia, and Mexico– through the lens of the neoclassical growth model. The findings indicate that two factors, the TFP growth rate and fiscal policy (via tax rates and government expenditure), are capable of accounting for some of the major fluctuations in saving rates observed in these years. For instance, the impressive increase in Chile’s saving rate following the early 1980s debt crisis is likely to have resulted from a combination of high TFP growth and a tax reform that substantially reduced capital taxation. Our counterfactual experiments reveal that average saving rates in Latin America could have been almost five percentage points higher, had the region experienced TFP growth rates similar to that of the Asian countries. This increase, however, is insufficient to bridge the observed gap between saving rates in the two regions.
    Date: 2018
  2. By: Luz Adriana Florez (Banco de la República de Colombia); Lina Cardona-Sosa (Banco de la República de Colombia); Leonardo Fabio Morales (Banco de la República de Colombia); Julian Londoño (Banco de la República de Colombia)
    Abstract: In this paper we explore the wage returns from training in Colombia, using data from the “The Social Longitudinal Survey” between 2009 and 2010. Using the longitudinal component of the data, we control for time invariant individuals’ unobserved heterogeneity and, following Wooldridge (1995), we correct for sample selection in panel data. Our results suggest that there is a positive return from training. The magnitude of the estimates suggests an increase in wages between 7% and 9%. We find that OLS overestimate the effects of receiving training. This suggests that individuals who receive training are the ones with high unobserved skills. We also find that trainees increase their probability of being continuously employed, suggesting an improvement in individuals’ working conditions. **** RESUMEN: Este documento explora los retornos de la capacitación para el trabajo en Colombia usando los datos de la Encuesta Longitudinal de Fedesarrollo entre 2009 y 2010. Los datos panel nos permite controlar por la heterogeneidad no observada de los individuos, que no cambia en el tiempo. Para controlar por el sesgo de selección, utilizamos la metodología de corrección propuesta en Wooldridge (1995). Los resultados sugieren que los retornos a la capacitación para el trabajo son positivos y significativos, entre el 7% y 9%. Adicionalmente, los resultados indican que la mayor capacitación incrementa la probabilidad de continuar empleado, sugiriendo una mejora en las condiciones laborales de los individuos.
    Keywords: Education, returns from training, unobserved heterogeneity, sample selection bias and panel data, Educación, retornos de la capacitación, heterogeneidad no observada, sesgo de selección, datos panel
    JEL: C23 J31 P36
    Date: 2018–08
  3. By: Tiago Cavalcanti (University of Cambridge); Bruno Martins (Banco Central do Brasil); Cezar Santos (Fundacao Getulio Vargas); Joseph Kaboski (University of Notre Dame)
    Abstract: We study how dispersion in financing costs and financial contract enforcement affect entrepreneurship, firm dynamics and economic development in an economy in which financial contracts are imperfectly enforced. We use employee-employer administrative linked data combined with data on financial transactions of all formal firms in Brazil to show how interest rate spreads vary with firm size, age and loan characteristics, such as loan size and loan maturity. We present a model of economic development based on a modified version of Buera, Kaboski, and Shin (2011) which are consistent with those facts and provide evidence on the effects of financial reforms on economic development. Eliminating dispersion in financing costs leads to more credit and higher output due to cheaper credit for productive agents with low assets. Moreover, abstracting from heterogeneity in interest rate spreads understates the impacts of financial reforms that improve the enforcement of credit contracts.
    Date: 2018

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