nep-lam New Economics Papers
on Central and South America
Issue of 2023‒02‒20
four papers chosen by

  1. Do Minimum Wage Hikes Lead to Employment Destruction? Evidence from a Regression Discontinuity Design in Argentina By Nicolás Abbate; Bruno Jiménez
  2. News of disinflation and firms' expectations: new causal evidence By Martin Caruso Bloeck; Miguel Mello; Jorge Ponce
  3. Local retail prices, product varieties and neighborhood change By Borraz, Fernando; Carozzi, Felipe; Gonzalez Pampillon, Nicolas
  4. (Incorrect) Perceived Returns and Strategic Behavior among Talented Low-Income College Graduates By Jorge M. Agüero; Francisco Galarza; Gustavo Yamada

  1. By: Nicolás Abbate (CEDLAS-IIE-FCE-UNLP); Bruno Jiménez (Princeton University & CEDLAS-IIE-FCE-UNLP)
    Abstract: In this paper, we evaluate a series of minimum wage hikes implemented in the early XXIst century in Argentina using administrative records of registered employment. We identify the effect of raising the minimum wage on job separations via a regression discontinuity design. More specifically, we compare the match destruction rates for a treatment group directly bound by the minimum wage hikes and a control group slightly out of its legal scope. We show that this method represents an improvement over previous ones because it reduces the incidence of Type-I error. We find that, when aggregated, these hikes had a precisely estimated zero effect on separation rates. However, the increases enacted in 2008 arise as an exception. They decreased separations by 4.8 percentage points (19%). These results suggest that the employment effects of minimum wages may not flow through employment destruction.
    JEL: J31 J80 K31
    Date: 2023–02
  2. By: Martin Caruso Bloeck (University of California, Berkeley); Miguel Mello (Banco Central del Uruguay); Jorge Ponce (Banco Central del Uruguay)
    Abstract: We causally identify how firms’ inflation and growth expectations respond to information about a comprehensive reform in the monetary policy framework by means of a randomized control trial. The reform is intended to lower inflation significantly in the coming years, making this experiment unique relative to previous ones that are carried out in stable and consolidated monetary policy frameworks. Firms treated with information about the reform lower their inflation and cost expectations by about 0.5 percentage points, with the effect being persistent sixth months after the treatment. Treated firms also expect temporarily lower GDP growth.
    Keywords: Inflation expectations, economic expectations, disinflation, monetary policy communication, randomized control trial, firms' survey
    JEL: C23 E52 E58
    Date: 2022
  3. By: Borraz, Fernando; Carozzi, Felipe; Gonzalez Pampillon, Nicolas
    Abstract: We study how local grocery prices within a city are affected by changes in housing markets. Our empirical strategy is based on an exogenous shift in the spatial distribution of construction activity induced by a large-scale, place-based tax exemption in the city of Montevideo. We provide instrumental variable estimates showing that the relative price of grocery goods decreases in areas within the city that experience more residential development: the estimated elasticity of grocery prices to newly-built residential space lies between -3 and -4%. Using a multi-product model of imperfect competition, we show that this negative effect can result from either an expansion in product varieties or firm entry. We report evidence supporting the varieties channel, with new residential development causing an increase in varieties of groceries available locally, and evidence of changes in the composition of stores.
    Keywords: retail prices; housing stock; neighborhood change
    JEL: R23 R32
    Date: 2022–01–20
  4. By: Jorge M. Agüero (University of Connecticut); Francisco Galarza (Universidad del Pacifico); Gustavo Yamada (Universidad del Pacifico)
    Abstract: Job applicants use resumes to send signals to potential employers. Applicants are free to select the items that go in their resumes and are expected to include signals they perceive will help them achieve their goals and avoid those that they anticipate could hurt them. We show that 92% of beneficiaries of a highly selective scholarship for poor and talented students avoid listing this award when applying for jobs. This is consistent with beneficiaries perceiving a negative labor market return from sending that signal. A correspondence study shows instead that listing the scholarship increases call back rates by 20%.
    Keywords: perceived returns, strategic behavior, job seeking
    JEL: C9 J1
    Date: 2023–01

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