nep-lam New Economics Papers
on Central and South America
Issue of 2021‒08‒09
two papers chosen by

  1. Fiscal policy and informality in Colombia By García-Suaza, A; Gómez, M; Jaramillo, F
  2. Long Term Effects of Cash Transfer Programs in Colombia By Orazio P. Attanasio; Lina Cardona-Sosa; Carlos Medina; Costas Meghir; Christian Posso

  1. By: García-Suaza, A; Gómez, M; Jaramillo, F
    Abstract: This paper studies how informality reacts to fiscal policy instruments. We develop an analytical framework with a dual labor market with frictions, where the formal sector, in contrast to the informal sector, produces with technology using capital and pay taxes. We calibrate the model for the Colombian economy and quantify to what extent a decrease in payroll taxes is effective to create formal jobs in a context where government compensates for the reduction in revenues by using other fiscal instruments, such as reducing expenditure or increasing other taxes, e.g., consumption or capital income taxes.
    Keywords: Informality; occupational choice; payroll taxes; fiscal policy
    JEL: E24 E62 J01 J21 J32
    Date: 2021–06–28
  2. By: Orazio P. Attanasio (Cowles Foundation, Yale University); Lina Cardona-Sosa (World Bank); Carlos Medina (Banco de la República); Costas Meghir (Cowles Foundation, Yale University); Christian Posso (Banco de la República)
    Abstract: Conditional Cash transfer (CCT) programs have been shown to have positive effects on a variety of outcomes including education, consumption and health visits, amongst others. We estimate the long-run impacts of the urban version of Familias en Acción, the Colombian CCT program on crime, teenage pregnancy, high school dropout and college enrollment using a Regression Discontinuity design on administrative data. ITT estimates show a reduction on arrest rates of 2.7pp for men and a reduction on teenage pregnancy of 2.3pp for women. High school dropout rates were reduced by 5.8pp and college enrollment was increased by 1.7pp for men.
    Keywords: CCT programs, human capital accumulation, crime, adolescent pregnancy, RDD
    JEL: D04 K42 I23 I28 I38 J13
    Date: 2021–07

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