nep-lam New Economics Papers
on Central and South America
Issue of 2024‒04‒08
seven papers chosen by

  1. Inequality in the Early Years in LAC: A Comparative Study of Size, Persistence, and Policies By Attanasio, Orazio P.; Lopez Boo, Florencia; Perez-Lopez, Diana; Reynolds, Sarah Anne
  2. Financial Fragility Indexes for Latin American Countries By Martinez Ventura, Constanza; Cizek, Pavel; Benink, Harald
  3. Gender Inequality in Latin America and the Caribbean By Berniell, Inés; Fernández, Raquel; Krutikova, Sonya
  4. Come Out and Play: Public Space Recovery, Social Capital, and Citizen Security By Matías Braun; Francisco Gallego; Rodrigo R. Soares
  5. Measuring Effective Labor Regulation in the Less Developed World: Recent Advances and Challenges Ahead By Ronconi, Lucas; Raphael, Steven
  6. Debt Reduction in Latin America and the Caribbean By Powell, Andrew; Panizza, Ugo
  7. Modeling the trend, persistence, and volatility of inflation in Pacific Alliance countries: an empirical application using a model with inflation bands By Gabriel Rodríguez; Luis Surco

  1. By: Attanasio, Orazio P.; Lopez Boo, Florencia; Perez-Lopez, Diana; Reynolds, Sarah Anne
    Abstract: Gaps in child development by socioeconomic status (SES) start early in life, are large and can increase inequalities later in life. We use recent national-level, cross-sectional and longitudinal data to examine inequalities in child development (namely, language, cognition, and socio-emotional skills) of children 0-5 in five Latin American countries (Chile, Colombia, Mexico, Peru and Uruguay). In the cross-section analysis, we find statistically significant gaps with inequality patterns that widely differ across countries. For instance, gaps in language and cognition for Uruguay and Chile are much smaller than those for Colombia and Peru. When turning to the longitudinal data, average SES gaps are similar to those of the cross-section in language but differ substantially in cognition, mainly in Uruguay where they emerge as more unequal when cohort effects do not operate. Importantly, we also find that the ECD gaps found at early ages (0-5), still manifest 6-12 years later in almost all locations and realms in which we have measures of early child development, but they do not increase with age. Results are robust to using different measures of inequality (income and maternal education). Gaps are smaller but generally remain when adjusting for possible explanatory factors (e.g., family structure, parental education, geographic fixed effects). To reduce ECD inequality and promote equality in later life outcomes, policymakers should look to implementing evidence-based interventions at scale to improve developmental outcomes of the most disadvantaged children in society.
    Keywords: child development;inequalities;Latin America and the Caribbean
    JEL: I14 I24 I25 J13 J24 O54
    Date: 2023–12
  2. By: Martinez Ventura, Constanza (Tilburg University, School of Economics and Management); Cizek, Pavel (Tilburg University, School of Economics and Management); Benink, Harald (Tilburg University, School of Economics and Management)
    Date: 2024
  3. By: Berniell, Inés; Fernández, Raquel; Krutikova, Sonya
    Abstract: This chapter examines gender inequality, focusing on two critical spheres in which gender inequality is generated: education and work. The objective is to provide a current snapshot of gender inequality across key indicators as well as a dynamic perspective that highlights successes and failures. Facilitating a cross-country comparison as well by grouping countries within Latin America by their level of economics development and drawing comparisons with countries outside the region. Finally, it reflect on differences in the ways that gender inequalities play out across different socio-economic groups, particularly those that highlight other sources of inequality. The second part of the chapter focuses on the worksphere. Here it document significant improvements in female labor force participation over the last 20 years, especially among the least-educated women (those with incomplete secondary education). However, progress has not been equal across all the countries in the region the pace of improvement in this dimension has been slowest in the least economically developed countries. These are also the countries where a significant proportion of the adult working population, especially among men, continue to hold highly conservative norms about women's participation in work.
    Keywords: Education and Inequality;Education and Economic Development;Economics of Gender;human capital;skills;Labor productivity
    JEL: I24 I25 J16 J24
    Date: 2023–12
  4. By: Matías Braun; Francisco Gallego; Rodrigo R. Soares
    Abstract: This paper examines the effects of renovating deteriorated public spaces on local socioeconomic outcomes. We analyze the impacts of a randomized experiment implemented in 28 fragile neighborhoods of Santiago, Chile. Our findings indicate that the renovation of local squares led to increased use and maintenance of the public space, enhanced neighborhood engagement, and a stronger sense of ownership among residents, along with a reduction in leisure activities outside the neighborhood. Moreover, treated neighborhoods experienced improvements in public security perceptions both within the square and in the broader neighborhood area. We also observe positive effects on trust (among acquaintances) and participation in community organizations. By exploring heterogeneous treatment effects across neighborhoods, we do not find evidence supporting theories emphasizing the joint determination of public security and social capital. Instead, our results suggest that the effects are better explained by increased neighborhood use, particularly in areas that are densely populated and have a higher proportion of social housing.
    Keywords: public space recovery, crime, social capital, urban infrastructure
    JEL: K42 O18 R53
    Date: 2023
  5. By: Ronconi, Lucas (University of Buenos Aires); Raphael, Steven (University of California, Berkeley)
    Abstract: This paper reviews recent efforts in social science to analyze labor enforcement in low-and-middle income countries (LMIC) and inform policy debates. Despite the existing limitations, the empirical evidence suggests that: 1) Enforcement is quite low in LMIC; there are fewer inspectors and inspections, lower penalties, and less trust in the judiciary compared to developed countries. 2) Increasing enforcement produces more compliance with little job destruction, although there is substantial debate and heterogeneity across countries. 3) Countries with more protective labor codes tend to enforce less. 4) Countries that become more open to trade also tend to enforce less. However, trade agreements with special clauses protecting workers can promote higher labor enforcement. 5) Inspection agencies in LMIC tend to focus their efforts on formal firms, leaving informal firms out of the radar which implies that the most vulnerable workers are usually excluded. 6) The constituency base of the government shapes labor enforcement, wherein labor-based governments devote more resources to inspection, although this is a debated issue. 7) Labor unions help promote enforcement, although in LMIC they can displace public inspections from small informal firms to larger formal firms because there is where labor unions members work. 8) Autonomous and professional bureaucracies do more labor enforcement presumably because they internalize the long-run benefits of enforcing the law and allow inspectors to accumulate experience.
    Keywords: labor, inspections, enforcement, informality, development, judiciary
    JEL: J88 K42 O43 P48
    Date: 2024–03
  6. By: Powell, Andrew; Panizza, Ugo
    Abstract: During the pandemic, public debt in Latin America and the Caribbean rose to more than 70 percent of GDP, and countries are now attempting to lower debt ratios. We analyze past debt reduction episodes and find inflation and the real interest rate were the most frequent main drivers, while higher growth, fiscal consolidation and debt restructuring were relatively rare. Interestingly, inflation episodes tended to be with independent central banks and low real interest rates, highlighting the value of monetary credibility. We find debt reduction is not associated with a rise in inequality nor in unemployment, and growth or fiscal consolidation may improve these indicators.
    Keywords: Debt;Fiscal policy;Inflation;Debt restructuring
    JEL: E62 F34 H63
    Date: 2023–12
  7. By: Gabriel Rodríguez (Departamento de Economía de la Pontificia Universidad Católica del Perú.); Luis Surco (Departamento de Economía de la Pontificia Universidad Católica del Perú.)
    Abstract: This paper estimates and analyzes the dynamics of trend inflation, as well as the persistence and volatility of the inflation gap in the Pacific Alliance countries (Chile, Colombia, Mexico, and Peru). For this purpose, the econometric approach is based on methodologies proposed by Stock and Watson (2007) and Chan et al. (2013). Among these, the AR-Trend-Bound model considers the implications of inflation targeting in estimating the unobserved components of inflation. The results indicate that this model effectively allocates most of the permanent component to trend inflation. Additionally, a decreasing trend in inflation in the 1990s, stabilization in the first two decades of the 21st century, and a growing trend inflation following the onset of the COVID-19 pandemic are observed in all four countries. The low levels of inflation gap persistence prior to the pandemic reflect the effectiveness of central banks in maintaining inflation close to its trend level. Finally, the volatility of the inflation gap identifies the “Great Moderation” of inflation, with increases in volatility during the pandemic reaching levels similar to those estimated in the 1990s. JEL Classification-JE: C32, E32, E51.
    Keywords: Inflation, Trend Inflation, Inflation Gap Persistence, Inflation Gap Volatility, Inflation Targets, Pacific Alliance.
    Date: 2024

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