nep-lam New Economics Papers
on Central and South America
Issue of 2021‒03‒29
three papers chosen by
Maximo Rossi
Universidad de la República

  1. Political Power, Elite Control, and Long-Run Development: Evidence from Brazil By Claudio Ferraz; Federico Finan; Monica Maretinez-Bravo
  2. Earnings Cyclicality of New and Continuing Jobs: The Role of Tenure and Transition Length By Elías Albagli; Gabriela Contreras; Matías Tapia; Juan M. Wlasiuk
  3. Learning about Farming: Innovation and Social Networks in a Resettled Community in Brazil By Margherita Comola; Carla Inguaggiato; Mariapia Mendola

  1. By: Claudio Ferraz (University of British Columbia); Federico Finan (UC-Berkeley); Monica Maretinez-Bravo (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: This paper analyzes how changes in the concentration of political power affect long-run development. We study Brazil’s military dictatorship whose rise to power dramatically altered the distribution of power of local political elites. We document that municipalities that were more politically concentrated prior to the dictatorship in the 1960s are relatively richer in 2000, despite being poorer initially. Our evidence suggests that this reversal of fortune was the result of the military’s policies aimed at undermining the power of traditional elites. These policies increased political competition locally, which ultimately led to better governance, more provision of public goods, and higher income levels.
    Keywords: Political power, elites, regime transition, economic development.
    JEL: D72 O43 N46
    Date: 2020–06
  2. By: Elías Albagli; Gabriela Contreras; Matías Tapia; Juan M. Wlasiuk
    Abstract: This paper contributes to the literature on the effect of the unemployment rate on individual job earnings by using administrative data for the universe of formal wage earners in Chile. A relevant advantage of this dataset relative to previous papers is that provides precise measures of the length of job transitions, as well as the tenure of job keepers. We show that this detailed characterization of the worker’s employment status is important to understand the cyclical behavior of earnings. We find that, consistent with the previous literature, earnings of newly created jobs (new hires) are significantly more sensitive to aggregate unemployment than those of continuing jobs (job keepers). However, and contrary to recent evidence for the US, we find that the larger sensitivity of the earnings of new jobs is a feature of both job-to-job transitions as well as hires from up to six months of non-employment. We also find a relevant degree of heterogeneity in the cyclical response of earnings among job keepers, with earnings being less cyclical for workers with longer tenure. These results highlight that the precise length of tenure and job transitions is relevant to correctly understand the cyclicality of wages. Our results are robust to controlling for changes in the workers relative wage position, suggesting that earnings cyclicality is not only an artifact of the behavior of job transitions inside and outside the firm.
    Date: 2021–03
  3. By: Margherita Comola (University Paris-Saclay and Paris School of Economics); Carla Inguaggiato (University of Bern, Centre for Development and Environment); Mariapia Mendola (University of Milano{Bicocca and IZA)
    Abstract: We study the role of social learning in the diffusion of cash crops in a resettled village economy in northeastern Brazil. We combine detailed geo-coded data on farming plots with dyadic data on social ties among settlers, and we leverage natural exogenous variation in network formation induced by the land occupation movement and the agrarian reform. By using longitudinal data on farming decisions over 15 years we find consistent evidence of significant peer effects in the decision to farm new cash fruits (pineapple and passion fruit). Our results suggest that social diffusion is heterogeneous along observed plot and crop characteristics, i.e. farmers growing water-sensitive crop are more likely to respond to the actions of peers with similar water access conditions.
    Keywords: Technology Adoption, Agrarian Reform, Social Networks, Peer Effects, Brazil
    JEL: C45 D85 J15 O33 Q15
    Date: 2021–02–09

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