nep-lam New Economics Papers
on Central and South America
Issue of 2019‒02‒04
ten papers chosen by
Maximo Rossi
Universidad de la República

  1. Evidencia sobre la movilidad intergeneracional de los ingresos laborales para un país en desarrollo: el caso de Uruguay By Federico Araya
  2. The unprotecting effects of employment protection: the impact of the 2001 labor reform in Peru By Jaramillo, Miguel
  3. University supply expansion and Inequality of Opportunity of Access. The case of Uruguay By Luciana Méndez-Errico
  4. Immigrants’ over-education and wage penalty. Evidence from Uruguay By Luciana Méndez-Errico
  5. Do Dictatorships Affect People's Long Term Beliefs and Preferences? : An Empirical Assessment of the Latin American Case By Matías Brum
  6. Income cash transfers and intrahousehold decision making By Cecilia Parada
  7. The behavior of social transfers over the business cycle: empirical evidence of Uruguay By Ronald Miranda; Leonel Muinelo-Gallo
  8. Countries in the hamster’s wheel?: Nurkse-Duesenberry demonstration effects and the determinants of savings By Andrés Rius; Carolina Román
  9. The Return to Private Education: Evidence from School-to-Work Transitions By Dante Contreras; Jorge Rodríguez; Sergio Urzúa
  10. What Drives Female Labor Force Participation? Comparable Micro-Level Evidence from Eight Developing and Emerging Economies By Klasen, Stephan; Pieters, Janneke; Santos Silva, Manuel; Ngoc Tu, Le Thi

  1. By: Federico Araya (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This paper aims to provide original evidence about intergenerational mobility on earnings in a developing country like Uruguay. The intergenerational elasticity on earnings (IGE) and the intergenerational rank association (IRA) are estimated through Two Sample Two Step Least Square (2S2SLS), estimator usually used in those countries that do not have longitudinal information. In addition, through the application of transition matrices and quantile regression approach, nonlinearities in intergenerational mobility are studied. The findings would locate Uruguay within the group of Latin American countries with high intergenerational earnings mobility together with Argentina and Chile. However, the mobility of Uruguay seems to be low in comparison to European countries. In addition, the lowest levels of intergenerational mobility are found in the tail of the distribution, which would suggest the presence of status tramps. In other words, people who are born in low-income households have greater difficulties in achieving upward mobility; on the other hand, people who are born in high-income households have a low probability of suffering downward mobility.
    Keywords: Intergenerational earnings mobility, Uruguay
    JEL: D31 J62
    Date: 2018–08
  2. By: Jaramillo, Miguel
    Abstract: According to the National Household Survey (ENAHO), approximately three out of four employment relationships within the formal sector of the Peruvian economy are based on temporary contracts. This percentage is larger than that of any OECD country and also considerably larger to that of any other country of the Latin American region. This study aims to elucidate the role that the 2001 labor reform played on these results and the effect this has had on variables associated to Peruvian workers’ well-being. To this end, we exploit the information on contract type and start date (identified by the employment duration), which are reported on the household surveys, to analyze the decision between using fixed-term contracts or indefinite-term contracts. The average impact obtained from a differences-in-differences estimation with matching, having workers with contract but with no health insurance as a control group, is a reduction of 41 percent in the probability of having contracts of indefinite duration in the short term (up to five years after the reform), whereas the long-term impact has been a drop by 70 percent. These results are consistent, and similarly large, as those found in a model of simple differences controlling for workers’ characteristics, firms and economic context. The results are robust to placebo tests and estimations by activity sectors and firm size. These results mean that, due to the reform, by 2015 over 900,000 jobs that could have been of indefinite-term were fixed-term contracts instead. Estimates based on Mincer equations suggest that this meant a loss of around 1.5 billion dollars in workers' labor income in 2015. Also, 36,000 workers would have affiliated to a union, had such reform not been implemented. These figures suggest than, instead of increasing workers’ protection, the reform implemented by the Constitutional Court left a large portion of them unprotected.
    Keywords: employment protection,labor reform,impact evaluation
    JEL: K31 J63 C52
    Date: 2019
  3. By: Luciana Méndez-Errico (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This paper examines whether opportunity of access to public university has improved over the period 2008 to 2013 in Uruguay; in which an important territorial expansion of the public university supply, historically located in Montevideo (the capital of Uruguay), to other regions of the country (named Interior) took place. For this purpose, an opportunity index for access to university is elaborated; which combines in a single measure coverage to a certain opportunity (access to university), and the distribution of access between different groups of population conditional on their circumstances (a measure of inequality of opportunity). Results suggest that opportunities of access to University improved over the period; driven by an increase in the average coverage rate. However, inequality of opportunity of access worsens over the period, especially for the Interior, as new entries to university are relatively more from better-off socioeconomic family backgrounds than those from worse-off family backgrounds.
    Keywords: Inequality of opportunity, University, Shapley decomposition
    JEL: I23 I24
    Date: 2018–12
  4. By: Luciana Méndez-Errico (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This paper examines to what extent recently arrived immigrants in Uruguay experience occupation?over-education in the host labor market, and whether those over-educated workers are penalized in the destination country. Results of this study show that the more immigrants are educated, the more chances they have for being over-educated. Also, immigrants embedded in larger immigrants' social networks are less prone to be over-educated. Findings also stress that for women, over-education is reduced the longer the length of residence in Uruguay and the more years of continuous employment experience they have. Finally, it is found that over-educated immigrants are penalized in the labor market; while only for women, the more they live and continuously work in Uruguay, the larger their labor earnings.
    Keywords: Immigration, over-education, wage penalty
    JEL: J15 J24 J30 J62
    Date: 2018–12
  5. By: Matías Brum (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: Does the political regime experienced during youth have long lasting effects on political beliefs and preferences? I exploit time and country variation in political regimes in Latin America using data from the 1995 to 2010 Latinobarometer and find that exposure to non-democratic regimes during youth reduces subsequent preference for democracy, satisfaction with democracy and confidence in institutions. These results suggest exposure to dictatorships during formative years permanently eroded democratic values. Exposure to non-democratic regimes also aspects self-location in an ideology scale, reducing identification with the Right and increasing identification with the Left; which suggests dictatorships also shaped the political orientation of voters.
    Keywords: Dictatorships, preference formation, Latin America
    JEL: D72 P16 Z13
    Date: 2018–12
  6. By: Cecilia Parada (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: Changes in the individual income affect many dimensions within the households mainly through the variation of the bargaining power. In this paper, we estimate the impact of an income cash transfer to low-income households in Uruguay (PANES) on the probability of couples separation, changes in the families´structure, distribution of domestic tasks and the likelihood women be household head. Exploiting the discontinuity in the eligibility indicator to the program and the fact that only one of the household members receive the cash transfer, our results suggest that PANES rise the probability of being in the same marital status as in the baseline and introduce stability in the number of family members. These results show, also persistence in the short term once they stop perceiving the benefit. There are no changes in the performance in households task among the members that receive the cash transfer, but there heterogenous effects if we consider the receiptor's sex. Finally, although there are near 80% of female receivers, we do not find any change in the probability of being the household head.
    Keywords: intrahousehold decisions making, cash transfers
    JEL: D13 J12
    Date: 2018–12
  7. By: Ronald Miranda (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Leonel Muinelo-Gallo (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This paper analyzes the cycle fluctuations of the social transfers in Uruguay over the period 1988.Q1 to 2016.Q3. The unobservable cyclical components are extracted from the observable time series following different empirical strategies. The results show that social transfers behave procyclical and lag the macroeconomics fluctuations. In this way, social transfers instead of contributing to stabilize the Uruguayan economy have aggravated the business cycle, and through various items of expenditure, expose the vulnerable groups of society to more adverse economic conditions.
    Keywords: social transfers; business cycle; detrending; Uruguay
    JEL: C10 E32 H50 H55
    Date: 2018–12
  8. By: Andrés Rius (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Carolina Román (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: Throughout the world, stable regional patterns of private savings are hard to come by. For example, Latin America’s saving rates have been, for a long time, below those of countries with similar levels of development. Those same savings rates have been growing lately, in almost as intriguing manner. These stylized facts remain intellectual puzzles and development policy challenges. In addition, while it may be true that savings often seem to follow rather than lead the growth process, it has been shown that in the long run, it is not possible to grow sustainably with domestic savings persistently below investments. For these and other scientific considerations, understanding the determinants of savings is an important research objective that has previously escaped analysts that tried to make sense of results from varied, distinct models. This article explores one set of variables much aligned with the rise of behavioral economics, which could add to the literature on the macroeconomics of savings. Specifically, the article revisits the hypothesis that, as there is evidence of emulation patterns between consumers, there might be international (macroeconomic) “emulation”. The interdependence would arise from consumers basing their consumption decisions on relative rather absolute income, their choices incorporating increasing amounts of information about consumption standards in rich countries, and this pushing up propensities to consume and down savings ratios. We test demonstration effect theories exploiting recent international data on savings, incomes, and means of exposure of global consumers to the evolution of savings patterns. With the resulting country panels, we find some evidence in favour of demonstration effect for the period when television was spreading around the world and much consistent with the same effect for the more recent times when the Internet was rapidly becoming a preferred means of discovering foreign consumption standards. We speculate about the conjectural mechanisms that could make sense of the results.
    Keywords: private saving rates, demonstration effect, behavioral economics
    JEL: E21 O16
    Date: 2018–09
  9. By: Dante Contreras; Jorge Rodríguez; Sergio Urzúa
    Abstract: This paper investigates the labor market returns to high school types. We exploit comprehensive administrative data describing the school-to-work transition for the universe of Chilean students attending tenth grade in 2001. We discuss the role of self-selection into school types, pre-labor market abilities, firm characteristics, and present bounds for the parameters of interest. Attending private high schools has long-lasting e ects on earnings. Moreover, the long-term returns to school-level valueadded measures and monetary investments in education are larger among private-school students. Our findings provide new insights into the association of school choice and the inertia of income inequality.
    Date: 2019–01
  10. By: Klasen, Stephan (University of Göttingen); Pieters, Janneke (Wageningen University); Santos Silva, Manuel (University of Göttingen); Ngoc Tu, Le Thi (University of Göttingen)
    Abstract: We investigate the micro-level determinants of labor force participation of urban married women in eight low- and middle-income economies: Bolivia, Brazil, India, Indonesia, Jordan, South Africa, Tanzania, and Vietnam. In order to understand what drives changes and differences in participation rates since the early 2000s, we build a unified empirical framework that allows for comparative analyses across time and space. We find that the coefficients of women's characteristics differ substantially across countries, and this explains most of the between-country differences in participation rates. In particular, the relationship between a woman's education and her participation in the labor force varies from being positive and linear (Brazil and South Africa) to being U- or J-shaped (India, Jordan, and Indonesia), or a mixture of both (Bolivia, Vietnam, and Tanzania). Overall, the economic, social, and institutional constraints that shape women's labor force participation remain largely country-specific. Nonetheless, rising education levels and declining fertility consistently increased participation rates, while rising household incomes contributed negatively in relatively poorer countries, suggesting that a substantial share of women work out of economic necessity.
    Keywords: female labor force participation, gender, labor markets, development
    JEL: J20 J16 I25 O15
    Date: 2019–01

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