nep-lam New Economics Papers
on Central and South America
Issue of 2022‒06‒27
five papers chosen by

  1. Heterogeneous Returns of Informality: Evidence From Brazil By Andrea Otero-Cortés
  2. The Short- And Longer-Term Effects of a Child Labor Ban By Piza, Caio; Souza, André Portela; Emerson, Patrick M.; Amorim, Vivian
  3. Effects of fiscal consolidation on income inequality: narrative evidence from South America By Dante Cardoso; Laura Carvalho
  4. Intergenerational earnings mobility and macroeconomic shocks: Evidence based on administrative records By Leites, Martín; Pérez, Tatiana; Ramos, Xavier; Santín, Sofía; Vilá, Joan
  5. Gender gaps in low and high-stakes assessments By Fabiana Rocha; Paula Pereda, Maria Dolores, Gabriel Monteiro, Luiza Karpavicius, Liz Matsunaga, Bruna Borges, Clara

  1. By: Andrea Otero-Cortés
    Abstract: This paper estimates the marginal treatment effect of informality on wages for Brazil at the individual level using regional data on labor inspectors for identification. The results show that there is significant essential heterogeneity among otherwise identical workers that lead them to self-select into the type of jobs, formal or informal, that better reward their skills. The Average Treatment Effect (ATE) is 22%, but not statistically different from zero. But there are individuals with very low non-observed costs of formality that in fact earn premiums of up to 100% of their wage rate from being formal and workers who would be hurt from switching to formality as they experience very high non-observed costs of being formal. Two policy experiments in which we tighten enforcement of the labor law via hiring more labor inspectors increases the likelihood of workers being formal, but it has, on average, a negative effect on wages for the workers who are induced to switch from informality to formality. **** RESUMEN: Este documento estima para Brasil el efecto marginal de la formalidad laboral en los salarios a nivel individual utilizando una combinación de datos regionales sobre inspecciones laborales y actividad económica. Los resultados muestran que existe una heterogeneidad esencial significativa entre trabajadores que son idénticos en sus características observadas, que los lleva a auto-seleccionarse en el tipo de trabajos, formales o informales, que recompensan mejor sus habilidades. El efecto promedio del tratamiento (ATE) es del 22%, pero no es estadísticamente diferente de cero. Sin embargo, hay individuos con costos de formalidad no observados muy bajos que de hecho ganan primas de hasta el 100% de su salario por ser formales y trabajadores que se verían perjudicados por cambiar a la formalidad ya que experimentan costos no observados muy altos de ser formales. Dos experimentos de políticas en los que imponemos una aplicación más estricta de la ley laboral mediante la contratación de más inspectores laborales aumenta la probabilidad de que los trabajadores sean formales, pero tiene, en promedio, un efecto negativo en los salarios de los trabajadores que son inducidos a pasar de la informalidad a la formalidad.
    Keywords: Labor informality, labor regulation, enforcement, marginal treatment effects, Informalidad laboral, regulación laboral, aplicación, efectos marginales de tratamiento
    JEL: H26 J24 J32 J46 K31
    Date: 2022–06
  2. By: Piza, Caio (World Bank); Souza, André Portela (Fundação Getúlio Vargas); Emerson, Patrick M. (Oregon State University); Amorim, Vivian (World Bank)
    Abstract: Are bans effective at lowering child labor and increasing school attendance and, if so, do these effects lead to positive outcomes later in life? This paper seeks to answer these questions by examining the effect of a 1998 Brazilian law that increased the minimum employment age from 14 to 16. To examine this question we use two different regression discontinuity designs to analyze Brazilian household data. We find that the ban had no overall impact across affected children in Brazil, but that it led to a significant decrease in the labor market participation of urban boys, whose paid labor dropped 35 percent, driven mainly by a decrease in informal work. We also find a concomitant 10 percent increase in the share of urban boys only attending school. Interestingly, we find that by age 18 this cohort was still almost 20 percent less likely to have a paid job and was less likely to be economically active even when they were legally allowed to work. However, we find no evidence that the impact of the ban lasted over time as reflected in measures of educational attainment, employment rates, and wages. Our results suggest that when enforced, bans on child labor can have significant immediate impacts amongst affected populations, leading to a decrease in work and an increase in school attendance. It remains unclear if these impacts translate to improved adult outcomes.
    Keywords: child labor, education, labor laws
    JEL: C21 J08 J22 J24 K31
    Date: 2022–05
  3. By: Dante Cardoso; Laura Carvalho
    Abstract: Based on a narrative dataset constructed by David and Leigh (2018) for annual fiscal consolidation shocks, this paper estimates the dynamic effects of fiscal consolidations on income inequality from Jordá (2005)’s local projections method for nine South American economies in the 1991-2017 period. By decomposing fiscal shocks, the baseline results suggest that spending-based fiscal consolidations significantly increase the Gini index, while tax-based fiscal consolidations do not show statistically significant effects on income inequality. The Gini index for disposable income rises 2.48% in eight years after a spending-based fiscal adjustment of 1% of GDP. The magnitude of this effect is higher than in most of the previous studies carried out for OECD countries. Our main finding for the impact of spending-based fiscal consolidation on inequality in the medium run is robust when using alternative control variables, lag structures, country samples, and the Cyclically Adjusted Primary Balance (CAPB) strategy for identifying the fiscal shocks.
    Keywords: income inequality; fiscal consolidation; fiscal austerity; South America; local projections
    JEL: D30 D63 E60 E62
    Date: 2022–06–02
  4. By: Leites, Martín; Pérez, Tatiana; Ramos, Xavier; Santín, Sofía; Vilá, Joan
    Abstract: This paper provides novel evidence on trends in intergenerational earnings mobility in a developing country and explores some transmission mechanisms associated with the characteristics of the labor market. Using a novel social security records database for Uruguay, we study the intergenerational earning ranking association from cohorts between 1966-1983. To explore intergenerational transmission mechanisms, we exploit the arguably exogenous variation induced by the 2002 macroeconomic crisis to analyse the impact of parental displacement from jobs on their children’s labor trajectories. First, we focus on the effect of the crisis on parents’ labor market performance. In a second stage, we use this information as a shock to identify the effect on children outcomes of a parent’s employment shock. Results suggest (i) heterogeneity on the degree of intergenerational earning mobility across birth cohorts; (ii) weak evidence of downward trend in relative mobility, (iii) intergenerational transmission of the shock produced by the 2002 crisis.
    Keywords: Desarrollo, Desempleo, Economía, Estudiantes, Familia, Investigación socioeconómica, Políticas públicas, Prácticas laborales y pasantías,
    Date: 2022
  5. By: Fabiana Rocha; Paula Pereda, Maria Dolores, Gabriel Monteiro, Luiza Karpavicius, Liz Matsunaga, Bruna Borges, Clara
    Abstract: A comprehensive body of literature suggests that women do not perform as well as men in competitive settings. In this paper, we use individual-level administrative data to investigate if women and men respond differently to exam stakes in Brazil. We compare performances of students at the University of São Paulo in undergraduate Economics courses (low stakes) and in the national admission exam to Economics graduate programs (high stakes). We find evidence that women outperform men in undergraduate disciplines but underperform on the graduate admission exam. Our study indicates that there are indeed gender differences in low and high-stakes evaluations.
    Keywords: Gender; High-stakes assessments; Graduate admissions; Higher education
    JEL: I23 J16
    Date: 2022–06–02

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