nep-lam New Economics Papers
on Central and South America
Issue of 2021‒03‒01
five papers chosen by

  1. Motherhood and flexible jobs: Evidence from Latin American countries By Inés Berniell; Lucila Berniell; Dolores de la Mata; Mariá Edo; Mariana Marchionni
  2. Integrating Latin America and the Caribbean: Potential effects of removing tariffs and streamlining non-tariff measures By Dolabella, Marcelo; Durán Lima, José Elías
  3. The perversion of public land distribution by landed elites: Power, inequality and development in Colombia By Jean-Paul Faguet; Fabio Sanchez Torres; Juanita Villaveces
  4. Trade and Informality in the Presence of Labor Market Frictions and Regulations By Rafael Dix-Carneiro; Pinelopi K. Goldberg; Costas Meghir; Gabriel Ulyssea
  5. A Fiscal Rule to achieve debt sustainability in Colombia By María Angélica Arbeláez; Miguel Benítez; Roberto Steiner; Oscar Valencia

  1. By: Inés Berniell; Lucila Berniell; Dolores de la Mata; Mariá Edo; Mariana Marchionni
    Abstract: We study the causal effect of motherhood on labour market outcomes in Latin America by adopting an event study approach around the birth of the first child based on panel data from national household surveys for Chile, Mexico, Peru, and Uruguay. Our main contributions are: (i) providing new and comparable evidence on the effects of motherhood on labour outcomes in developing countries; (ii) exploring the possible mechanisms driving these outcomes; (iii) discussing the potential links between child penalty and the prevailing gender norms and family policies in the region.
    Keywords: child penalty, event study, female labour supply, Self-employment, Informality, Developing countries, Latin America, Gender norms, Family policy
    Date: 2021
  2. By: Dolabella, Marcelo; Durán Lima, José Elías
    Abstract: This study analyses the impact of reducing intraregional trade barriers in the context of a free trade agreement in Latin America and the Caribbean. It concludes that a full tariff reduction and elimination of non-tariff measures would have positive impacts on trade, production, welfare and employment across the region.
    Date: 2021–02–15
  3. By: Jean-Paul Faguet; Fabio Sanchez Torres; Juanita Villaveces
    Abstract: Over two centuries, Colombia transferred vast quantities of public land into private hands. Much of this process was justified publicly in terms of giving land to the landless and reducing rural poverty. And yet Colombia retains one of the highest concentrations of land ownership in the world. Why? Analyzing the period 1960–2010, we show that the effects of public land distribution across 1100+ municipalities are highly heterogeneous. Where small and medium-sized farms dominate, land distribution increased average farm size, decreased land inequality, and accelerated local development. But where land was concentrated in the hands of a rural elite, distributed land was diverted to bigger farms, resulting in fewer small and more large farms, greater plot size dispersion, and lower levels of development. We explore whether these effects flow through voter turnout, political competition, or public expenditure and taxation. Land distribution increases turnout, makes politics more competitive, and increases public service provision. But landed elites use patron-client ties to distort local policy and decision-making to their benefit. Land distribution’s secondary, institutional effects on the distribution of power outweigh its primary effects on the distribution of land.
    Keywords: Land reformPublic land distributionInequalityDevelopmentLatifundiaColombia
    Date: 2020–12–14
  4. By: Rafael Dix-Carneiro (Duke University); Pinelopi K. Goldberg (Cowles Foundation, Yale University); Costas Meghir (Cowles Foundation, Yale University); Gabriel Ulyssea (University College London)
    Abstract: We build an equilibrium model of a small open economy with labor market frictions and imperfectly enforced regulations. Heterogeneous ï¬ rms 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
  5. By: María Angélica Arbeláez; Miguel Benítez; Roberto Steiner; Oscar Valencia
    Abstract: In order to enhance fiscal sustainability and regain the “investment grade†credit rating lost in 1999, Colombia implemented a fiscal rule (FR) in 2011 on the Central Government´s structural balance. Although investment grade was attained, public debt has increased continuously and is now expected to exceed 60% of GDP in 2020 as a result of the COVID-19 pandemic. We argue that although the FR has proved to be an important tool to promote fiscal discipline, it can and should be improved. We undertake several quantitative exercises in support of reforming the current FR so that it incorporates a debt anchor. First, using the synthetic control approach we show that, notwithstanding the observed increase in debt, the situation would have been worse in the absence of the FR. In the same vein, we show that despite the decline in public investment observed since the oil shock in 2014, the contraction would also have occurred in the absence of the fiscal rule. We then estimate a prudent debt level using a regime-change approach and the IMF´s buffer-risk methodology and simulate the trajectory of the FR in the medium term, incorporating a debt anchor and conditioned on different growth scenarios and additional expenditure related with the pandemic. We show that the prudent debt level should not exceed 48% of GDP and that in order to achieve this level in the medium term, a policy mix increasing fiscal revenues to 17,8% of GDP (from 15,5% during 2016-2019) and reducing primary expenditure to 15% (from 16% during 2016-2019) is required. Along with including a debt anchor, FR’s performance would also benefit from changes in its institutional design.
    Keywords: Regla Fiscal, Deuda Pública, Política Fiscal, Colombia
    JEL: E37 E62 H42 H30 H60
    Date: 2020–11–30

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