nep-lam New Economics Papers
on Central and South America
Issue of 2019‒05‒06
four papers chosen by
Maximo Rossi
Universidad de la República

  1. Intergenerational Mobility: An Assessment for Latin American Countries By Yavuz, Hasan Bilgehan; Pastore, Francesco; Doruk, Ömer Tuğsal
  2. La financiación de las grandes ciudades: revisión de la literatura, comparación internacional y experiencias exitosas By Natalia Salazar; Diego Gutíerrez; Fedesarrollo
  3. Renegotiations and corruption in infrastructure: The Odebrecht case By Nicolas Campos; Eduardo Engel; Ronald D. Fischer; Alexander Galetovic
  4. Tax Bunching at the Kink in the Presence of Low Capacity of Enforcement: Evidence from Uruguay By Bergolo, Marcelo; Burdín, Gabriel; De Rosa, Mauricio; Giaccobasso, Matias; Leites, Martin

  1. By: Yavuz, Hasan Bilgehan (Adana Alpaslan Türkeş Science and Technology University); Pastore, Francesco (Università della Campania Luigi Vanvitelli); Doruk, Ömer Tuğsal
    Abstract: This paper aims to study the process of intergenerational income mobility in some Latin American economies (Panama and Brazil), which have been much neglected in the existing literature. Like other countries in the area, also Brazil and Panama have a stagnant economy coupled with high income inequality. Our rich and detailed dataset, the IPUMS survey data bank allows us to provide the most reliable and robust estimates of intergenerational transfer, after controlling for a number of additional control variables which were unavailable in previous studies, such as family size, literacy level of fathers, and location in rural versus urban areas. We provide estimates broken down for different genders, age, location, education of fathers in each country. Our results are robust to different specifications and suggest that previous studies significantly overrated the extent of the intergenerational transfer in the countries considered. However, our figures are still compatible with an extremely low degree of social mobility.
    Keywords: latin american economies, occupational mobility, intergenerational mobility
    JEL: J62 J60 D3 D6
    Date: 2019–04
  2. By: Natalia Salazar; Diego Gutíerrez; Fedesarrollo
    Abstract: Este capítulo se enfoca en revisar las alternativas de financiación para las grandes ciudades. Este objetivo se busca a través de diferentes aproximaciones para extraer algunas recomendaciones interesantes para el caso de Bogotá, que ya es de gran tamaño dado el número de habitantes y que será considerada como una de las 41 megaciudades del mundo en el año 2030. Este capítulo consta de cinco secciones incluyendo esta introducción. En primer lugar, después de esta introducción, en la sección II se describen las actuales proyecciones de población en las ciudades para el año 2030 que realizan las Naciones Unidas. La sección III presenta una revisión de la literatura sobre las fuentes de financiamiento de las ciudades, las cuales no se limitan a los impuestos y las transferencias, sino que incluyen otros tipos de financiación como son los cargos al usuario, el endeudamiento, las asociaciones público-privadas, y de manera importante, la captura de plusvalía. También se analizan el tamaño y composición de los ingresos de diez grandes ciudades: Madrid, Barcelona, Berlín, Londres, Nueva York, Santiago de Chile, Ciudad de México, Lima, Buenos Aires y Sao Paulo. Estas comparaciones se hacen a nivel muy agregado debido a las dificultades metodológicas pero está basado en la construcción de una base de datos elaborada a partir de los presupuestos publicados por los gobiernos de estas ciudades.
    Keywords: Estructura Tributaria, Finanzas Locales, Finanzas Públicas, Impuestos, Impuestos Locales, Ingresos Fiscales, Tributación, Bogotá, Distrito Capital
    JEL: E62 H20 H21 H70
    Date: 2018–11–30
  3. By: Nicolas Campos (Espacio Público); Eduardo Engel (Department of Economics, University of Chile); Ronald D. Fischer (Department of Industrial Engineering, University of Chile); Alexander Galetovic (Universidad de los Andes (Santiago) and Hoover Institution and Research Associate, CRIEP)
    Abstract: In 2016, Brazilian construction firm Odebrecht was fined $2.6 billion by the US Department of Justice (DOJ). According to the plea agreement, between 2001 and 2016 Odebrecht paid $788 million in bribes in 10 Latin American and two African countries in more than 100 large projects. The DOJ estimated that bribe payments increased Odebrecht’s profits by $2.4 billion. Judicial documents and press reports on the Odebrecht case reveal detailed information on the workings of corruption in the infrastructure sector. Based on these sources we establish five facts. First, for projects where Odebrecht paid bribes, renegotiations amounted to 71.3 percent of initial investment estimates, compared with 6.5 percent for projects where Odebrecht paid no bribes. Second, Odebrecht’s bribes were of the order of one percent of a project’s final investment. Third, the profits Odebrecht obtained from bribes as well as its overall profits were small, somewhere between 1 and 4 percent of its sales. Fourth, the creation of the Division of Structured Operations (DSO) by Odebrecht in 2006 led to major reductions in the firm’s costs of paying bribes and recipients’ costs of hiding the illegal proceeds. Fifth, following the creation of the DSO, Odebrecht’s sales increased more than three-fold while its profits remained small. We build a model where firms compete for a project, anticipating a bilateral renegotiation at which their bargaining power is larger if they pay a bribe. Conditional on paying a bribe and cost dispersion among firms being small, firms’ profits are small in equilibrium. When one firm unilaterally innovates by reducing the cost of paying bribes, its market share increases substantially while profits, which are proportional both to the cost advantage and to the magnitude of bribes, remain small. A parametrization with the DOJ’s data suggests that Odebrecht enjoyed a substantial cost advantage in bribing, of the order of 70 percent.
    Keywords: Corruption, infrastructure, bribes, auctions, renegotiations, lowballing, fundamental transformation
    JEL: H54 H57 K42
    Date: 2019–04
  4. By: Bergolo, Marcelo (IECON, Universidad de la República); Burdín, Gabriel (Leeds University Business School); De Rosa, Mauricio (Universidad de la República, Uruguay); Giaccobasso, Matias (University of California, Los Angeles); Leites, Martin (Universidad de la República, Uruguay)
    Abstract: By using a bunching design on rich administrative tax records from Uruguay's tax agency we explore how individual taxpayers respond to personal income taxation in a context with high sheltering opportunities. We estimate a moderated elasticity of taxable income in the first kink point (0.16) driven by a combination of gross labor income and deductions responses. Taxpayers use personal deductions more intensively close to the kink point and undereport income unilaterally or through employer-employee collusion. Our results suggest that policy efforts should be directed at broadening the tax base and improving the enforcement capacities rather than eroding tax progressivity.
    Keywords: deductions behavior, elasticity of labor income, tax bunching, personal income taxation, misreporting, developing economies
    JEL: H21 H24 H30 J22
    Date: 2019–04

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