nep-lam New Economics Papers
on Central and South America
Issue of 2020‒04‒06
three 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 Burdín, Gabriel; De Rosa, Mauricio; Vigorito, Andrea; Vilá, Joan
  2. Wandering Astray: Teenagers' Choices of Schooling and Crime By Chao Fu; Nicolás Grau; Jorge Rivera
  3. Fiscal Consolidations and Informality in Latin America and the Caribbean By Thibault Lemaire

  1. By: Burdín, Gabriel (Leeds University Business School); De Rosa, Mauricio (Universidad de la República, Uruguay); Vigorito, Andrea (Universidad de la República, Uruguay); Vilá, Joan (Universidad de la República, Uruguay)
    Abstract: To contribute to the debate on the recent inequality fall in Latin America, we provide evidence on the primary income distribution in Uruguay for 2009-2016 and assess mobility patterns. Comparing household surveys micro-data and a unique array of matched personal-firm income tax records, we find that trends are sensitive to the data source and inequality measure. Gini and Theil indices decreased, with a milder fall in tax records than in household surveys. Whereas in tax records synthetic indices fell within the bottom 99% offsetting increased concentration at the top, in household surveys the largest reduction occurred at the top. In turn, tax records estimates of top 1% income shares remained steady at around 15%, but decreased in household surveys throughout the whole period. Moreover, top income positions were stable, with average persistence rates at the top 1% close to 80%. Meanwhile, the equalizing effect of income mobility was very modest.
    Keywords: top incomes, income inequality, mobility, personal income taxation, tax records, Uruguay
    JEL: D31 H24 O54
    Date: 2020–03
  2. By: Chao Fu; Nicolás Grau; Jorge Rivera
    Abstract: We build and estimate a dynamic model of teenagers' choices of schooling and crime, incorporating four factors that may contribute to the different routes taken by different teenagers: heterogeneous endowments, unequal opportunities, uncertainties about one's own ability, and contemporaneous shocks. We estimate the model using administrative panel data from Chile that link school records with juvenile criminal records. Counterfactual policy experiments suggest that, for teenagers with disadvantaged backgrounds, interventions that combine mild improvement in their schooling opportunities with free tuition (by adding 22 USD per enrollee-year to the existing voucher) would lead to an 11% decrease in the fraction of those ever arrested by age 18 and a 17% increase in the fraction of those consistently enrolled throughout primary and secondary education.
    JEL: I2 I3
    Date: 2020–03
  3. By: Thibault Lemaire (Centre d'Economie de la Sorbonne - Université Paris 1 panthéon-Sorbonne, Banque de France;
    Abstract: The transmission mechanisms of fiscal policy are significantly affected by informality in the labour market. Extending a narrative database of fiscal consolidations in 14 countries from Latin America and the Caribbean between 1989 and 2016 in order to account for heterogeneity in terms of commitment to the reforms, I show that tax-based and spending-based multipliers are both recessionary and do not significantly differ one from another in this region. Furthermore, these multipliers decline in absolute value as the level of labour informality increases in the economy, although evidences are less robust for spending-based consolidations. An analysis of the effects of tax-based consolidations on private demand suggests that labour market informality constitutes a short-term social buffer that attenuates the contractionary effects of this type of policy by increasing investment opportunities through tax evasion and entrepreneurial alternatives to unemployment for dismissed workers
    Keywords: Fiscal consolidation; taxation; informality; emerging market economies
    JEL: E62 E26 E32 H5 H6
    Date: 2020–01

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