nep-lam New Economics Papers
on Central and South America
Issue of 2019‒09‒09
seven papers chosen by

  1. Sectoral Transitions Between Formal Wage Jobs in Chile By Rosario Aldunate; Gabriela Contreras; Matías Tapia
  2. The Effect of Pretrial Detention on Labor Market Outcomes By Nicolás Grau; Gonzalo Marivil; Jorge Rivera
  3. Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia By Gaurav Khanna; Carlos Medina; Anant Nyshadham,; Jorge Tamayo
  4. Estructura Productiva y Desigualdad Salarial: Evidencia para América Latina By Leonardo Gasparini; Matías Ciaschi; Luciana Galeano
  5. Fooled by the Cycle: Permanent versus Cyclical Improvements in Social Indicators By José Andrée Camarena; Luciana Galeano; Luis Morano; Jorge Puig; Daniel Riera-Crichton; Carlos Vegh; Lucila Venturi; Guillermo Vuletin
  6. Preschool Quality and Child Development By Alison Andrew; Orazio Attanasio; Raquel Bernal; Lina Cardona Sosa; Sonya Krutikova; Marta Rubio-Codina
  7. Redistribution Through Education: The Value of Public Education Spending By Sergio Urzua

  1. By: Rosario Aldunate; Gabriela Contreras; Matías Tapia
    Abstract: We use matched employer-employee data from the Chilean Internal Revenue Service to analyze the frequency of formal employment transitions within and between-sectors, the duration of these spells, and their implied wage changes, distinguishing by exit sector and the gender and age of workers. We find a significant degree of aggregate labor mobility between sectors in the Chilean formal labor market, although this average hides significant heterogeneity between workers who change jobs frequently and those with more stable career paths. In addition, conditional on changing jobs, the probability of moving within the same sector is roughly the same as switching sectors. Transitions between formal jobs are associated with wage gains, which appear to be increasing in the length of the transition process. While on average wage gains are larger for workers who move to a new sector, there is significant heterogeneity across sectors. Furthermore, wage costs vary with the age and gender of workers. Our results reveal that, for a large group of workers, transitions between sectors do not seem to entail a significant cost in terms of wages. While this could suggest that the Chilean economy adjusts well to changes in relative prices, it is also consistent with a low accumulation of sector-specific human capital.
    Date: 2019–08
  2. By: Nicolás Grau; Gonzalo Marivil; Jorge Rivera
    Abstract: Around a third of prisoners worldwide (2.8 million) are incarcerated before trial. This paper combines Chilean individual administrative data for criminal cases and labor market outcomes to estimate, by differences-in-differences and instrumental variable approach, the effect of pretrial detention on labor outcomes. Because those pretrial detentions are the most difficult to justify, we focus our analysis on individuals who were free after their final verdict, either because they were found non-guilty or because their convictions didn’t involve incarceration. The results show a negative impact of pretrial detention of 10% on the probability of having formal employment and an 11% decrease in wages, during the six months following the verdict. The magnitudes of these effects are reduced over time, but they remain relevant even 24 months after the final verdict. The evidence suggests that the fact that pretrial detention forces individuals out of the labor market is more relevant that any extra costs due to incarceration such as social stigma.
    Date: 2019–08
  3. By: Gaurav Khanna (University of California San Diego); Carlos Medina (Banco de la Republica de Colombia); Anant Nyshadham, (Boston College & NBER); Jorge Tamayo (Harvard University. Harvard Business School,)
    Abstract: Canonical models of crime emphasize economic incentives. Yet, causal evidence of sorting into criminal occupations in response to individual-level variation in incentives is limited. We link administrative socioeconomic microdata with the universe of arrests in Medellίn over a decade. We exploit exogenous variation in formal-sector employment around a socioeconomic-score cutoff, below which individuals receive benefits if not formally employed, to test whether a higher cost to formal-sector employment induces crime. Regression discontinuity estimates show this policy generated reductions in formal-sector employment and a corresponding spike in organized crime, but no effects on crimes of impulse or opportunity.
    Keywords: Colombia; organized crime, informality, occupational choice, gangs, Medellίn
    JEL: K42 J24
    Date: 2019–08
  4. By: Leonardo Gasparini (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS), IIE-FCE, Universidad Nacional de La Plata - CONICET); Matías Ciaschi (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS), IIE-FCE, Universidad Nacional de La Plata); Luciana Galeano (Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS), IIE-FCE, Universidad Nacional de La Plata)
    Abstract: This paper studies the evolution of skill premia and its relationship with the productive structure for sixteen countries in Latin America, using microdata from household surveys and information from National Accounts for the period 1991-2015. The evidence suggests that the change in the productive structure is significantly correlated to the dynamics of wage inequality. In particular, when the share in total value added of sectors that are more intensive in high-skilled labor grows, the skill premium increases significantly. Este trabajo estudia la evolución de las brechas salariales por nivel educativo y su relación con la estructura productiva para 16 países de América Latina, utilizando microdatos de encuestas de hogares e información de Cuentas Nacionales en el período 1991-2015. La evidencia sugiere que el cambio en la estructura productiva está estrechamente correlacionado con la dinámica de la desigualdad salarial en la región. En particular, cuando crece la participación en el valor agregado de los sectores más intensivos en trabajo calificado, aumentan significativamente las brechas salariales por educación.
    JEL: D31 J21 J31
    Date: 2019–09
  5. By: José Andrée Camarena; Luciana Galeano; Luis Morano; Jorge Puig; Daniel Riera-Crichton; Carlos Vegh; Lucila Venturi; Guillermo Vuletin
    Abstract: This paper studies the time-series behavior of a set of widely-used social indicators and uncovers two important stylized facts. First, not all social indicators are created equal in terms of the importance of cyclical fluctuations. While some social indicators such as the unemployment rate and monetary poverty show large cyclical fluctuations, other social measures such as the Human Development Index are, by construction, dominated by long-run trends. Second, a large fraction of the cyclical fluctuations in social indicators can be explained by the cyclical changes in income (proxied by real GDP per capita). Since cyclical income volatility is much larger in the developing world, these two critical facts raise fundamental issues regarding how permanent are improvements in social indicators (like the ones observed in many developing countries during the last commodity super-cycle). Finally, and relying on a global sample of industrial and developing countries, we dig deeper into the importance of cyclical versus permanent components by extending the seminal contribution of Datt and Ravallion (1992). In particular, we show that more than 40 percent of the fall in monetary poverty observed in Latin America and the Caribbean during the so-called Golden Decade can be attributed to cyclical changes in income.
    JEL: E32 I32 O54
    Date: 2019–08
  6. By: Alison Andrew; Orazio Attanasio; Raquel Bernal; Lina Cardona Sosa; Sonya Krutikova; Marta Rubio-Codina
    Abstract: Global access to preschool has increased dramatically yet preschool quality is often poor. We use a randomized controlled trial to evaluate two approaches to improving the quality of Colombian preschools. We find that the first, which was rolled out nationwide and provides additional resources for materials and new staff, did not benefit children’s development and, unintentionally, led teachers to reduce their involvement in classroom activities. The second approach additionally trains teachers to improve their pedagogical methods. We find this addition offset the negative effects on teacher behavior, improved the quality of teaching and raised children’s cognition, language and school readiness.
    JEL: H43 I10 I20 J13
    Date: 2019–08
  7. By: Sergio Urzua (Department of Economics at the University of Maryland)
    Abstract: This chapter assesses how publicly funded education affects the income distribution. It discusses and compares different approaches to measuring the consequences of government education spending. The empirical quantification of the private returns to education, the estimation of the elasticity of school enrollment to public spending in the sector, and the identification of ageearnings profiles are the building blocks of the analysis. The methods are implemented using aggregate level data and cross-sectional household surveys from Chile and Ghana. Real-world data limitations are taken into account. From the country comparison, we identify differences in how families demand education, how labor markets “value” human capital, and how public initiatives might shape income inequality and poverty. The analysis illustrates the extent to which conventional incidence analysis informs about the distributional effects of fiscal expenditure on education.
    Keywords: Public Spending, Education, Incidence Analysis, Inequality
    JEL: I28 I22 J31
    Date: 2019–06

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