nep-lam New Economics Papers
on Central and South America
Issue of 2020‒05‒18
four papers chosen by

  1. Market income inequality, left-wing political parties, and redistribution in Latin America By Branko MILANOVIC
  2. The effect of class assignment on academic performance and the labour market: Evidence from a public federal university in Brazil By Henrique Z. Motte; Rodrigo C. Oliveira
  3. International and domestic interactions of macroprudential and monetary policies: the case of Chile By Tomás Gómez; Alejandro Jara; David Moreno
  4. More roads, more conflict? The effect of rural roads on armed conflict and illegal economies in Colombia By Moreno, L. E; Gallego, J.A.; Vargas, J. F

  1. By: Branko MILANOVIC
    Abstract: The paper uses household-level data from more than 200 household income surveys from 20 Latin American and Caribbean countries to explore the (revised) median voter hypothesis and the political determinants of the recent decrease of Latin American inequality. We find that more unequal market-income countries, and greater market-income inequality within a given country, are associated with greater pro-poor redistribution, although such redistribution is rather weak in Latin America compared to the economically advanced countries. We also find that more pro-left political orientation of national legislatures has been associated with greater redistribution. We thus argue that there are political roots to the recent decrease of inequality in Latin America.
    Keywords: Amérique latine
    JEL: Q
    Date: 2019–06–12
  2. By: Henrique Z. Motte; Rodrigo C. Oliveira
    Abstract: Can students' rank in the ability distribution of their class impact their academic achievement? We aim to answer this question using a discontinuity generated by a rule for the distribution of students between classes at a prestigious Brazilian university. The rule means that in almost 30 per cent of its courses, the Federal University of Bahia allocates 50 per cent of the best students in the university entrance exam to the group that starts in the first semester, and the other 50 per cent to the group that starts in the second semester.
    Keywords: Affirmative action, Brazil, Education, labour markets, Peer effect
    Date: 2020
  3. By: Tomás Gómez; Alejandro Jara; David Moreno
    Abstract: In this paper, we study whether prudential and monetary policy interactions play a role in the dynamic of domestic banks' lending growth rates in Chile. We look at a group of internationally active banks during 2000q1-2017q4. We ask whether the stance of domestic prudential (monetary) policies in Chile changes international monetary (prudential) policy spillovers and if the transmission of domestic monetary policy shocks to bank credit is affected by the stance of domestic prudential policy. We stress the importance of analysing each prudential policy separately, as results may vary due to banks' exposure to such policies as well as different mechanisms of transmission in place. Overall, tight foreign-currency reserve requirements seem to dampen the transmission of foreign monetary policy shocks significantly, while reinforcing that of local monetary policy. However, this result is less robust for other prudential policies considered. Finally, adverse spillovers from tightening capital requirements abroad may be amplified by a tight monetary policy at home.
    Date: 2020–04
  4. By: Moreno, L. E; Gallego, J.A.; Vargas, J. F
    Abstract: This paper estimates the impact of rural roads on armed conflict and illicit crops in Colombia over a fourteen year period of rapid growth of road investments. We estimate the causal impact of these interventions using micro-data of the royalties revenues to the transport sector at the municipal level, and implement a strategy of Difference-in-Differences with staggered adoption. The results show that new rural roads, in particular small projects known as placa-huella, have a positive causal effect on armed conflict and on coca crops. These unintended effects of road provision are mainly driven by the intensification of violence in wealthier municipalities. In these places, we find that the new connectivity leads to an increase in the production of legal crops. Hence, wealthier municipalities are more attractive to armed groups and more vulnerable to attacks that seek to expropriate these new rents. In addition, the institutional background seems to be determinant in the sign of the effect: in municipalities with qualified and stable institutions, road provision mitigates the development of illegal activity. These results highlight the importance of providing public goods in parallel with strengthening the local state capacity through reliable institutions.
    Keywords: Roads, Public Goods, Armed Conflict, Illegal Economies, Royalties
    JEL: H41 H54 O12 D2 D74 O11 O4 R4
    Date: 2020–05–08

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