nep-lam New Economics Papers
on Central and South America
Issue of 2021‒02‒15
five papers chosen by
Maximo Rossi
Universidad de la República

  1. Rules, institutions, or both? Estimating the drivers of telecommunication investment in Latin America By Jung, Juan; Melguizo, Angel
  2. The Social Divide of Social Distancing: Lockdowns in Santiago during the COVID-19 Pandemic By Carranza, Aldo; Goic, Marcel; Lara, Eduardo; Olivares, Marcelo; Weintraub, Gabriel Y.; Covarrubia, Julio; Escobedo, Cristian; Jara, Natalia; Basso, Leonardo J.
  3. Impacts of Labor Market Institutions and Demographic Factors on Labor Markets in Latin America By Adriana D. Kugler
  4. Populism, Protectionism, and Political Instability By Tyler Daun; Sebastian Galiani; Gustavo Torrens
  5. Trade and Informality in the Presence of Labor Market Frictions and Regulations By Rafael Dix-Carneiro; Pinelopi K. Goldberg; Costas Meghir; Gabriel Ulyssea

  1. By: Jung, Juan; Melguizo, Angel
    Abstract: This paper analyzes the link between regulation, institutions, and telecommunications investment in Latin America. The investment levels of the region lag behind those of advanced economies and are impeding substantial progress on digital transformation. Using a database built for this analysis, which covers nearly 90% of Latin American countries for 2007-2017, we confirm the relevance of regulatory and institutional frameworks to explain investment trends in the sector. We also show that a “good” institutional quality contributes significantly to counteract partially a “bad” regulatory environment, and vice versa. Moreover, their impact is significantly stronger when good regulation and institutions interact, suggesting that joint reforms to improve institutions and the regulatory environment would pay off. In particular, improving cybersecurity and piracy control regulation, and fighting corruption and undue influence stand out as the priorities to increase telecommunication investment in Latin America.
    Keywords: Telecommunications, Regulation, Institutions
    JEL: L51 L96 L98
    Date: 2020–09–20
  2. By: Carranza, Aldo (Stanford U); Goic, Marcel (Universidad de Chile and Institute of Complex Engineering Systems); Lara, Eduardo (Universidad de Chile and Institute of Complex Engineering Systems); Olivares, Marcelo (Universidad de Chile and Institute of Complex Engineering Systems); Weintraub, Gabriel Y. (Stanford U); Covarrubia, Julio (Digital Entel Ocean, Empresa Nacional de Telecommunicaciones); Escobedo, Cristian (Digital Entel Ocean, Empresa Nacional de Telecommunicaciones and Universidad de Chile); Jara, Natalia (Digital Entel Ocean, Empresa Nacional de Telecommunicaciones); Basso, Leonardo J. (Universidad de Chile and Institute of Complex Engineering Systems)
    Abstract: Shelter-in-place and lockdowns have been some of the main non-pharmaceutical interventions that governments around the globe have implemented to contain the Covid-19 pandemic. In this paper we study the impact of such interventions in the capital of a developing country, Santiago, Chile, that exhibits large socioeconomic inequality. A distinctive feature of our study is that we use granular geo-located cell-phone data to measure shelter-at-home behavior as well as trips within the city, thereby allowing to capture the adherence to lockdowns. Using panel data linear regression models we first show that a 10% reduction in mobility implies a 13-26% reduction in infections. However, the impact of social distancing measures and lockdowns on mobility is highly heterogeneous and dependent on socioeconomic level. While high income zones can exhibit reductions in mobility of around 60-80% (significantly driven by voluntary lockdowns), lower income zones only reduce mobility by 20-40%. Our results show that failing to acknowledge the heterogenous effect of shelter-in-place behavior even within a city can have dramatic consequences in the contention of the pandemic. It also confirms the challenges of implementing mandatory lockdowns in lower-income communities, where people generate their income from their daily work. To be effective, lockdowns in counties of low socioeconomic levels may need to be complemented with other measures that support their inhabitants, providing aid to increase compliance.
    Date: 2020–09
  3. By: Adriana D. Kugler
    Abstract: This paper documents recent labor market performance in the Latin American region. The paper shows that unemployment, informality, and inequality have been falling over the past two decades, though still remain high. By contrast, productivity has remained stubbornly low. The paper, then, turns to the potential impacts of various labor market institutions, including employment protection legislation (EPL), minimum wages (MW), payroll taxes, unemployment insurance (UI) and collective bargaining, as well as the impacts of demographic changes on labor market performance. The paper relies on evidence from carefully conducted studies based on micro-data for countries in the region and for other countries with similar income levels to draw conclusions on the impact of labor market institutions and demographic factors on unemployment, informality, inequality and productivity. The decreases in unemployment and informality can be partly explained by the reduced strictness of EPL and payroll taxes, but also by the increased shares of more educated and older workers. By contrast, the fall in inequality starting in 2002 can be explained by a combination of binding MW throughout most of the region and, to a lesser extent, by the introduction of UI systems in some countries and the role of unions in countries with moderate unionization rates. Falling inequality can also be explained by the fall in the returns to skill associated with increased share of more educated and older workers.
    Keywords: Employment;Wages;Employment protection;Labor markets;Unemployment;WP,unemployment rate,Gini coefficient,collective bargaining,wage inequality,inequality in Latin America,reservation wage
    Date: 2019–07–17
  4. By: Tyler Daun; Sebastian Galiani; Gustavo Torrens
    Abstract: Most populist regimes in Latin American countries used trade policy to redistribute income, despite being less efficient than other redistribution schemes such as transfers financed with an income tax. Often, this outcome is attributed to the lack of fiscal capacity in Latin American countries. Instead, we develop a simple political economy game where the populist government may use trade policy to encourage capitalists to invest in the more labor-intensive industry. Since moving capital is costly, those capitalists will support the continuation of the protectionist trade policy even after the populist government falls from power. The populist government may therefore choose to implement the less efficient but politically-sustainable policy instead of the more efficient policy that will be easily overturned after a regime change. Building fiscal capacity does not change the equilibrium. Only a long run commitment to a minimum level of redistribution restores efficiency.
    JEL: F13
    Date: 2021–01
  5. By: Rafael Dix-Carneiro; Pinelopi K. Goldberg; Costas Meghir; Gabriel Ulyssea
    Abstract: We build an equilibrium model of a small open economy with labor market frictions and imperfectly enforced regulations. Heterogeneous firms sort into the formal or informal sector. We estimate the model using data from Brazil, and use counterfactual simulations to understand how trade affects economic outcomes in the presence of informality. We show that: (1) Trade openness unambiguously decreases informality in the tradable sector, but has ambiguous effects on aggregate informality. (2) The productivity gains from trade are understated when the informal sector is omitted. (3) Trade openness results in large welfare gains even when informality is repressed. (4) Repressing informality increases productivity, but at the expense of employment and welfare. (5) The effects of trade on wage inequality are reversed when the informal sector is incorporated in the analysis. (6) The informal sector works as an "unemployment," but not a "welfare buffer" in the event of negative economic shocks.
    JEL: F14 F16 J46 O17
    Date: 2021–01

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