nep-lam New Economics Papers
on Central and South America
Issue of 2020‒03‒09
five papers chosen by

  1. Was falling inequality in all Latin American countries a data-driven illusion? Income distribution and mobility patterns in Uruguay 2009-2016 By Gabriel Burdín; Mauricio de Rosa; Andrea Vigorito; Joan Vilá Author-X-Name-First. Joan
  2. The Distributive Impact of Taxes and Expenditures in Colombia By Jairo,Nunez; Olivieri,Sergio Daniel; Parra,Julieth; Pico,Julieth
  3. Common trends in producers’ expectations, the nonlinear linkage with Uruguayan GDP and its implications in economic growth forecasting By Juan Gabriel Brida; Bibiana Lanzilotta; Lucía Rosich
  4. Producto regional en Uruguay durante la Primera Globalización (1872-1908): desigualad decreciente y convergencia entre regiones By Pablo Castro Scavone; Henry Willebald
  5. Formal Employment and Organized Crime: Regression Discontinuity Evidence from Colombia By Gaurav Khanna; Carlos Medina; Anant Nyshadham; Jorge Tamayo

  1. By: Gabriel Burdín (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Mauricio de Rosa (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Andrea Vigorito (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Joan Vilá Author-X-Name-First. Joan (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: Although many studies based on household surveys indicate that over the last two decades income inequality decreased in most Latin American countries, income tax records estimations for specific countries suggest that top incomes shares remained steady or even increased. To contribute to the current debate, we provide evidence for Uruguay on primary income distribution among income receivers in the time-span 2009-2016 and assess income dynamics along the income distribution. Our research is based on household surveys micro-data and a unique array of longitudinal matched personal-firm income tax micro-data that covers around 75% of the adult population. Our findings suggest that inequality trends are sensitive to the data source and inequality measure. Pre and post-tax Gini and Theil indices decreased, with a milder fall in tax records than in harmonized household surveys. However, reduction patterns were different the two data-sets: whereas in tax records synthetic indices fell within the bottom 99% offsetting increased concentration at the top, household survey estimations indicate that the largest inequality reduction occurred at the top. In turn, while falling in harmonized household surveys throughout the whole period, tax records based estimates of top 1% income share remained steady around 15% in 2009-2014 and grew afterwards. We also investigate income dynamics, showing that positions were very stable with average persistence rates at the top 1% close to 80%. Interestingly, persistence rates were slightly lower in the period of decreasing inequality. Finally, we highlight that, in the time-span considered, income mobility had a very modest equalizing effect.
    Keywords: top incomes, income inequality, mobility, personal income taxation, tax records, Uruguay
    JEL: D31 H24 O54
    Date: 2019–12
  2. By: Jairo,Nunez; Olivieri,Sergio Daniel; Parra,Julieth; Pico,Julieth
    Abstract: Colombia has reduced extreme poverty in the past 16 years by almost half, moderate poverty by 22 percentage points, and made more than four million Colombians jump the threshold of multidimensional poverty. However, it remains one of the most unequal countries in the region, after Brazil and Panama. Fiscal policy is one of the instruments that allow governments to speed up the decline in inequality levels and reduce poverty. This study presents an exhaustive and comprehensive analysis of the distributional impacts of taxes and expenditures in Colombia in 2017. It makes a methodological comparison with the Commitment to Equity, which was previously implemented, and includes multiple improvements in the methodology. The results suggest that the combined effect of taxes and social spending in Colombia contributes to poverty reduction between 0.3 and 2.6 percentage points for US$5.5 and US$3.2 per day per person respectively, while inequality is reduced by almost one Gini point. Taxes and direct transfers, as well as indirect transfers, are progressive and pro-poor, while indirect taxes are regressive and contribute to an increase in inequality. Finally, transfers in-kind for education and health services are progressive and contribute to the reduction of inequality.
    Date: 2020–03–03
  3. By: Juan Gabriel Brida (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Grupo de Investigación en Dinámica Económica); Bibiana Lanzilotta (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Lucía Rosich (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Grupo de Investigación en Dinámica Económica)
    Abstract: This paper examines the common trends between producers’ expectations and their interdependence with economic growth in Uruguay, for the last two decades (1998-2017). We consider producers’ expectation indicators derived from qualitative surveys collected by the “Cámara de Industrias del Uruguay” classified in four groups: exporters, low-trade industries, import-substitution industries and intra-sectoral trade industries. In base on Multivariate Structural Models estimations, we found that there is a common level between the expectation indicators of four manufacturing groups. The group who lead expectations of all manufacturing firms is the more exposed to international competition. So, the trend component of the exporters' expectations drives that of the other groups. The research additionally shows that there is a nonlinear cointegration relationship between producers’ expectations and Uruguayan GDP growth. Although it indicates that in the long-run there is bidirectional causality between both variables, in the short-run causality goes uniquely from expectations to GDP growth. Besides, this finding suggests that expectations could be an accurate leader indicator; the driver of the global expectation is the aggregate indicator of the more tradable manufacturers in Uruguay.
    Keywords: agents’ expectations, common factors, Multivariate Structural Models, GDP forecasting, nonlinear cointegration
    JEL: C32 D84 E32
    Date: 2019–12
  4. By: Pablo Castro Scavone (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Henry Willebald (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: We present estimates of regional products in Uruguay during the First Globalization (from the 1870s to the years previous to the World War I). Our results show a decreasing and irregular trend in the regional inequality which is consistent with a process of income convergence between provinces. The irregularity of the trajectory would be evidence of the performance of centrifugal and centripetal forces that alternated influences during the period. The forces that trended to decentralize production were the combination of abundant natural resources suitable for livestock production throughout the territory with the reduction of transport costs that made possible to access more easily to Montevideo and, through its port, to the global market. Centripetal forces would have responded to a process characterized by the increasing importance of Montevideo as urban and administrative center, a huge market of goods and services and a dynamic centre of labour market. In addition, Montevideo evidenced the increasing importance of commercial and financial activities (and its potential for making industrial development more flexible), which was only interrupted by the economic and financial crisis of 1890-1891. In facts, the crisis constituted one of the main equalizing forces of the period. The result was to start the twentieth century with levels of regional inequality lower than those recorded in the 1870s-1880s.
    Keywords: regional inequality, regional convergence, Uruguay
    JEL: N5 N6 N9 R12
    Date: 2019–12
  5. By: Gaurav Khanna (University of California - San Diego); Carlos Medina (Banco de la Republica de Colombia); Anant Nyshadham (University of Michigan; NBER); Jorge Tamayo (Harvard Business School)
    Abstract: Canonical models of crime emphasize economic incentive. 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 Medellín 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: organized crime, informality, occupational choice, gangs, Medellin
    JEL: K42 J46 J24
    Date: 2019–10–31

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