nep-lam New Economics Papers
on Central and South America
Issue of 2019‒12‒02
three papers chosen by

  1. How Do Early-Life Shocks Interact with Subsequent Human Capital Investments? Evidence from Administrative Data By Duque, Valentina; Rosales-Rueda, Maria; Sanchez, Fabio
  2. Violence and Children’s Education: Evidence from Administrative Data By Duque, Valentina
  3. Inequality in Latin America: The role of the nature of trade and partners By García Muñoz, Teresa María; Milgram Baleix, Juliette; Odeh, Omar Odeh

  1. By: Duque, Valentina; Rosales-Rueda, Maria; Sanchez, Fabio
    Abstract: We explore how early-life shocks interact with subsequent human capital investments to influence children’s long-term outcomes. Using large-scale administrative data from Colombia, we combine a difference-in-difference framework with a regression discontinuity design to exploit two sources of exogenous variation: i) early-life exposure to adverse weather shocks that affect children’s initial skills and ii), the introduction of conditional cash transfers (CCT) that promote investments in children’s health and education. We show that the timing and type of CCT-induced investments matter for both the effects of CCTs and their interactive effects with weather shocks. When the CCT-induced investments occur in sensitive periods of human capital formation (e.g., early childhood), the effects are large and their interactive effects with weather conditions suggest that the returns of the program are even larger for children exposed to “normal” weather conditions. In contrast, CCT-induced investments that come relatively late in childhood (e.g., adolescence), have a smaller “main” effect and a smaller or zero interactive effect with weather shocks. We also find that initial CCT-induced health investments tend to have larger returns than initial CCT-induced educational investments. These findings shed new light on the developmental production function for human capital and the role of social policies in closing gaps generated by early-life adversities.
    Keywords: Early-life influences, Human development, Social programs
    Date: 2019–11
  2. By: Duque, Valentina
    Abstract: This paper exploits the sharp escalation of violence in Colombia in the 1980s associated with the emergence of drug cartels to provide novel evidence on the long-run effects of violence exposure throughout the life-course, on children’s educational attainment and academic achievement, using administrative data. I find that, a higher homicide rate in early-childhood is associated with a higher probability of school dropout and conditional on completing high school, lower scores on a national end-of-high school exam. Results are robust to several falsification tests, analyses of potential sources of selection bias, and to controlling for family fixed effects. I provide suggestive evidence that changes in fetal, child, and adolescent health outcomes are important potential mechanisms.
    Keywords: Education, Human capital formation, Early-life shocks, Violence, Parental investments
    Date: 2019–10
  3. By: García Muñoz, Teresa María; Milgram Baleix, Juliette; Odeh, Omar Odeh
    Abstract: This paper investigates the relationship between trade openness and income inequality in 11 Latin American countries over the period 1989-2015. We use a panel dynamic approach to take into account the high persistence of income inequality. The analysis classifies trade flows, exports and imports according to trading partner's economic development and income level. Then, we split trade flows according to different stages of production. The results show that overall trade flows lessen income inequality in Latin America. However, trade has divergent effects depending on the trade partners: trade with similar-income countries exacerbates inequality, while trade with developing countries and higher-income countries reduces income dispersion. The results also emphasise the role of the export channel (in particular in primary commodities) in explaining income inequality in Latin American countries and imports of consumption goods seem to matter more than imports of intermediate and capital goods.
    Keywords: trade openness,trade direction,income inequality,Latin America
    JEL: F14 O54 E25
    Date: 2019

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