effects of economic shocks on children s employment and schooling in brazil abstract this paper uses longitudinal employment survey data to analyze the impact of household economic shocks on the schooling and employment transitions of young people in metropolitan brazil the paper uses data on over 100 000 children ages 10 16 from brazil s monthly employment survey pme from 1982 to 1999 taking advantage of the rotating panels in the pme we compare households in which the male household head becomes unemployed during a four month period with households in which the head is continuously employed probit regressions indicate that an unemployment shock significantly increases the probability that a child enters the labor force drops out of school and fails to advance in school the effects can be large implying increases of as much as 50 in the probability of entering employment for 16 year old girls in contrast shocks occurring after the school year do not have significant effects suggesting that these results are not due to unobserved characteristics of households that experience unemployment shocks the results suggest that some households are not able to absorb short run economic shocks with negative consequences for children

population increase economic growth educational inequality and income distribution some recent evidence abstract using a recent inter country sample impacts of population increase short run growth rate and educational level and inequality on income distribution are assessed as in almost all other studies high population increase is observed to be a disequalizer however unlike the position indicated in several earlier studies rapid short run economic growth seems to reduce income inequality while higher mean schooling level appears to be a mild equalizer contrary to the results reported by earlier researchers no adverse effect of educational inequality on income distribution is found

changes in human capital and earnings inequality recent evidence from brazil 1 abstract this paper estimates changes in the rates of return to human capital across the earnings distribution using data from over a 10 year period for brazil it uses these estimates to simulate the separate impacts of changes in returns to skills and changes in the supply of skills on earnings inequality evidence points strongly to growing inequality in rates of return to education in brazil this finding suggests that recent macroeconomic and trade reforms have been of most benefit to the skilled rather than the unskilled supporting evidence points to an improved competitiveness in the labour market with workers increasingly rewarded for productivity however although increases in returns to education are more pronounced at the top of the earnings distribution this did not in practice led to increased inequality this is because levels of education and other labour market rewarded endowments have increased and offset the rate of return effect appropriate education policy is therefore an essentia

effects of family background on earnings and returns to schooling evidence from brazil we investigate whether omitted family background variables are responsible for high returns to schooling estimated in brazil returns to schooling fall by about one third when parental schooling is added to wage equations surprisingly the schooling of fathers in law has larger effects on wages than the schooling of fathers on the basis of a model of assortative mating we interpret this as evidence that parental characteristics represent unobservable worker attributes rather than nepotism in the labor market we conclude that the family background bias in returns to schooling is modest and need not imply returns to family connections

india s industrial development an interpretative survey in recent years there has been a significant shift in indian industrial strategy from a heavily regulated and inward oriented structure toward significant liberalization in both domestic and trade policy at the same time indian industry has sustained its historically impressive growth performance the two waves of liberalization in the 1980s and after 1991 have been associated with significant structural change there is some question however as to whether this change in strategic orientation is consistent with rising per capita incomes this paper reviews these changing strategic perspectives and the economic performance of the industrial sector in the post independence period it concludes that most studies which have been undertaken of indian industrialization have been macroeconomic in nature and that there has been a poor tradition of microeconomic research into the determinants of industrial competitiveness

fiscal policy and economic reconstruction in latin america abstract this paper surveys the fiscal landscape of latin america it analyzes external and domestic factors that over the years have led to the deterioration of the fiscal accounts it also discusses difficulties that are encountered in pursuing a sound fiscal policy under inflationary conditions issues such as the connection between external debt and fiscal policy and the role of public investment are also discussed general guidelines are provided for a fiscal policy for the economic reconstruction of latin america

ranking income distributions a large variety of policy questions involve choices between social states and a consequent ordering of the feasible alternatives when these social states are related to the levels of welfare experienced by individuals or households two central issues stand out in determining the relative desirability of different social outcomes one of these is the essentially positive exercise of achieving comparability between households with different characteristics such as composition or preferences operating in different environments for example facing different price structures the other concerns the normative judgments implicit in the evaluation of alternative allocations of resourcesthe emphasis placed on inequality between households and the extent to which greater inequality can be compensated by higher average living standards this paper focuses on the second of these issues and in doing so we abstract from the problem of household comparability by considering a population of n households identical in all respects except for their incomes the question of ordering social states then becomes one of ranking income distributions over a group of anonymous households or individuals borrowing the usual assumptions imposed on consumer preferences we may suppose that a social ordering of income distributions can be represented by a welfare function 2

dynamic linkages among carbon energy and financial markets a smooth transition approach this article explores how price linkages between carbon allowances and market fundamentals in the eu emissions trading scheme eu ets vary over time i adopt a multivariate garch model that allows the conditional correlation between carbon energy and financial prices to change smoothly across regimes governed by functions of two transition variables that explain why price linkages vary i use i time as transition variable to allow for structural changes associated with institutional advances in the eu ets and ii implied volatility to account for heterogeneity in the behaviour of correlations in times of distress compared to calm periods the results point to a new pricing regime with much closer carbon energy price linkages in the second phase of the eu ets furthermore i find that correlations depend on market uncertainty conditions which exposes the link between carbon and financial markets due to common macroeconomic shocks during the current financial crisis

the effect of changes in the population on several measures of income distribution an economic model is used to explore the relationship between population growth and 2 of the most commonly used income distribution statistics the share of the rich and the poor in total income and the rate of growth of real income of the rich and the poor brazilian statistics applied to the model illustrate the difficulty of interpreting the common inequality measures under conditions of rapid population growth neither income shares nor growth rates can tell much about the degree of progressivity in the growth strategy of a particular country without adjustment absolute income for the base period poor or base period teenagers was greater than reported for either the poor or teenagers however the rise in inequality was also greater for the base period population growth in brazil was seen to be even more regressive than previously thought significant upward mobility was however still possible

labor markets and adjustment in open asian economies the republic of korea and malaysia this article deals with the adjustment following external shocks in two open asian economies the republic of korea and malaysia there were important differences in the economic structure of the two countries as well as significant differences in the way external events produced crises that interrupted their dynamic economic growth detailed analyses of economic cycles in the two decades preceding 1987 88 show that the behavior of factor markets particularly the markets for labor and foreign exchange helped korea to adjust quickly to the shocks but in malaysia actually caused the crisis to deepen for economies heavily dependent on exports the unit cost of labor in dollars is of central importance as an index of the competitiveness of exports and hence of their ability to mount a sustained recovery after a difficult period accordingly the heart of the analysis is the determination of the unit cost of labor and the factors affecting its change throughout the cycles concentration on this critical variable helps to spotlight the crucial differences in the factor markets of the two economies

stagflationary effects of stabilization programs in reforming socialist countries enterprise side and household side factors dismantling subsidies could give rise to serious macroeconomic difficulties in the short run this article explores a view based on the enterprise sector as a central source and main channel of the stagflation phenomenon using as an example the stagflation that followed the 1990 stabilization program in poland the stagflation phenomenon is linked to features of the financial market that are somewhat peculiar to reforming socialist economies the weak credit links between households and enterprises and the existence of large interenterprise debt the policy implications of the enterprise side view include more explicit consideration of initial conditions in the credit market implementation of privatization schemes and the development of a domestic banking

overview and summary this symposium analyzes the recent liberalization and stabilization attempts in chile argentina and uruguay attempts remarkable for their speed and coverage to bring these analyses together in one volume seems natural because the three experiences were so similar all three countries started with highly protected economies inflation balance of payments crises widespread government intervention and production systems in considerable disarray all three countries launched liberalization policies that spanned commodity and factor markets and all three followed the same path toward stabilization the battle against inflation was first based on control of the money supply then the exchange rate was used to reduce inflationary expectations the initial results were as remarkable as the reforms inflation was reduced fiscal deficits were controlled and growth was restored but in the early 1980s all three countries were again in crisis the objective of the reforms was to realize the gains from better allocations of resources and investment this objective was to be achieved by moving to market regulated economies one intention was to eliminate the traditional bias against exports and thus to spur the growth of exports which required an increase in the effective exchange rate for exportables and a decrease in that for import competing sectors a second intention was to deregulate interest rates and foreign capital inflows and thus to provide more credit to activities with the highest returns the motive here is to draw the lessons for other developing countries confronting liberalization and stabilization problems why did these unusual experiments fail to what extent did various parts of the packages succeed or fail was the failure due to external events or to bad policies were the institutional arrangements for deregulation appropriate the introduction to part i presents some analytical issues that arise from the experiences of the three countries it addresses the general issue of opening an economy to trade and to flows of foreign capital and the related issues of sequencing and policy coordination it also explores differences in the speed of adjustment in labor and commodity markets and the implications of these differences for the design of macroeconomic policy the other papers in part i explain and evaluate the macroeconomic performance of the liberalization and stabilization policies in each country first each paper describes the reforms and in an appendix provides a chronology of the many reforms perhaps the place to start for the uninitiated reader the descriptions are accompanied by summaries of the authorities intentions when the reforms were launched the approach to implementation is also addressed when it gave rise to policy reversals and conflicting signals second the papers construct stylized analytical frameworks to help interpret the macroeconomic outcome of the liberalization and stabilization policies in each country these frameworks help to draw the stylized outcomes of the reforms the papers in part ii rely on financial statements to analyze the adjustments by firms the data span the period covered by the reforms in each country and provide the basis for simple statistical models groups of firms exporters vs

understanding the soft budget constraint we propose a clarification of the notion of a soft budget constraint a concept widely used in the analysis of socialist transitional and market economies our interpretation is broad enough to embrace most existing approaches to soft budget constraint phenomena and provides a classification of their causes and consequences in light of this interpretation we then review the theoretical literature on the subject and compare it with those on other dynamic commitment problems in economics

effects of schooling on fertility labor supply and investments in children with evidence from brazil this study examined the impact of schooling on fertility decline in brazil brazils fertility decline began with few organized family planning programs and continued during periods of economic growth and recession it is argued that the link between schooling and fertility decline occurred through parents investment in producing healthy well educated children and trading off quantity for quality data were obtained from retrospective fertility histories among over 100000 women who participated in the pnad household survey in 1984 fertility decline was only weakly associated with increased female labor force participation the theoretical background suggests that schooling affects fertility investments in children and the labor market child survival varied widely between women with no schooling and women with 11 years of schooling mean schooling for males and females rose steadily over time the most rapid increase occurred for 1940 54 birth cohorts the percentage of women with under 1 year of schooling declined steadily for men and women and was faster for women under 10 for the youngest cohort an increase in wifes schooling from 0 4 years was associated with a decline in children by age 30 years of 0 85 births for younger women and 0 60 births for older women a model predicted 68 of actual fertility decline in 1935 39 and 1951 53 cohorts the effect of husbands schooling disappeared after 8 years of schooling while wifes effects continued to be negative labor force participation was less at lower levels of education schooling strongly effected measures of child quality

investments in the schooling and health of women and men quantities and returns this paper surveys the evidence on recent trends in the growth of human capital investments in women that raised womens productivity in thus century in most countries patterns in school investments in men and women across regions and across birth cohorts within countries indicate that expected years of school enrollment is converging between low and high income countries to where the gaps have closed from about seven years in 1950 to five years in 1985 women today are receiving nearly as many years of education as men in industrially advanced high income countries latin america south east and east asia are relatively similar to the high income countries at the other extreme in most of the countries of south and west asia and north and sub saharan africa women receive about two fifths to three fourths the number of years of schooling as men do in every region however the ratio of female to male expected years of enrollment increased from 1950 to 1985 gender differences in mortality and nutritional status reveal that there has been a dramatic but largely unexplained advance in female longevity relative to male in the 20th century in most countries with the exception of certain countries in south asia this development is associated with the shift of populations from dependence on agriculture to working in urban areas these changes are a major source of decreasing inequality within and between countries in this century market failure could be responsible for families investing less than the socially efficient amount in girls than boys there are problems in measuring without bias these private and social return empirical patterns across countries in estimated returns to schooling illustrate that private returns at the primary secondary and higher education levels can vary for women and men

student t distribution based var mgarch an application of the dcc model on international portfolio risk management significant second moment transmission effects and obvious time varying patterns of correlation coefficients among major equity and currency markets in the us japan and the uk are found to exist such observations inspire the time varying setting of dynamic conditional correlation coefficients in mgarch models on the other hand the multivariate student t distribution is suitable for analysing the visible leptokurtosis that is common in financial markets both are important for international portfolio risk management thus a comparison on the hedging efficiency of hypothetical portfolios consisting of stock and currency future positions is conducted in order to justify the multivariate student t distribution based on the dcc mgarch model

educational expansion and schooling inequality international evidence and some implications fairly recent data for about 100 countries indicate that as the average level of schooling increases educational inequality first increases and after reaching a peak starts declining in later phases of educational expansion the turning point occurs when average schooling is about seven years the observed empirical generalization which seems quite robust appears to have important implications for educational and distributional policies and for research on the linkage between education and income inequality

educational expansion government policy and wage compression abstract the main objective is to measure the elasticity in the response of relative wages by education to relative supplies of educated labour using rigorously comparable urban wage labour market surveys an econometric comparison is made of kenya and tanzania countries which constitute a natural experiment having different secondary education policies but being similar in other relevant respects post primary educational expansion as kenya is an effective means of compressing wages however the tanzanian scarcity premium on post primary education is held down by the alternative means of public sector pay policy the analysis suggests an important role for occupation in the wage adjustment process

public sector employment rent seeking and economic growth surplus labor in the public sector a characteristic of many developing countries is viewed in this paper as the consequence of rent seeking behavior a theory is presented of a segmented labor market with endogenous government hiring in response to unemployment a simple computable general equilibrium model is used to illustrate how this can give rise to dynamic social costs and to quantify them fiscal resources are diverted to support the unproductive sink the effect of surplus labor on economic growth is shown to be substantial while the government s attempt to reduce unemployment is shown to be futile copyright 1991 by royal economic society

the impact of school quality on earnings and educational returns evidence from a low income country abstract the expansion of education has been widely adopted as a key element in the development strategies of low income countries while there is substantial evidence on the benefits of greater educational attainment for subsequent labor market earnings empirical evidence on the role played by school quality is scarce this paper combines household survey data with unique data on school quality from honduras to study the importance of school quality as a determinant of earnings our objective measures of school quality capture teacher training school infrastructure and school crowding the results display strong positive effects of school quality on earnings and on educational returns these effects persist across a variety of model specifications

the globalization of product markets and immiserizing growth lessons from the south african furniture industry the central issue addressed in this paper is whether some developing countries will find it difficult to compete effectively in global product markets and will therefore be locked into processes of immiserizing growth it focuses on the role of south african producers in the global furniture value chain analyzing the factors affecting firm upgrading particularly the role of global buyers the paper observes a global industry characterized by increased competition and falling unit prices with local firms dependent on a falling exchange rate it concludes with implications for policy and future research including generalizing the findings to other sectors and countries

declining inequality in schooling in brazil and its effects on inequality in earnings abstract household survey data demonstrate that brazilian males born between 1925 and 1963 experienced steady increases in mean schooling and significant declines in schooling inequality the variance in years of schooling increased for cohorts born up until 1950 with steady declines for more recent cohorts decomposition of a standard human capital earnings equation indicates that trends in schooling tended to reduce earnings inequality from 1976 to 1985 due to reductions in both the variance of schooling and in returns to schooling these improvements were more than offset however by increases in other sources of inequality although the net increase in earnings inequality from 1976 to 1985 is disturbing the reduction in schooling inequality represents a fundamental improvement in the determinants of earnings inequality in brazil that will have beneficial effects for decades

banking structure and employment growth recent studies have documented an association between financial structure and per capita income growth the relationship between financial structure and job growth by contrast is an unexplored issue of independent interest here we find that us nonmetropolitan employment grew faster in 1973 1996 where there were fewer locally owned bank offices and a more concentrated initial banking market structure these linkages were less stable in metropolitan areas in addition controlling for employment growth does not undermine the empirical linkage between initial bank structure and subsequent per capita income growth

the distribution of household income in brazil unequal and immutable summary after a period of rapid growth in the 1970s a macroeconomically turbulent decade of the 1980s the achievement of price stability during the 1990s and an impressive expansion of educational opportunities long term trends do not show an unambiguous increase or decline in brazilian household income inequality however behind the apparently invariable state of affairs one finds a marked decline in the proportion of households with incomes below 1 5 times the poverty line the use of a semi parametric procedure for constructing counterfactual income densities establishes that while advances in education were almost wholly associated with growth in absolute incomes they had little impact on their dispersion

the no exit economy soft budget constraints and the fate of economic reforms in developing countries abstract the paper investigates the general issues of the costs and sustainability of economic reforms in the light of the current economic transformation of central and eastern europe using the conceptual framework of kornai s soft budget constraint macro and microeconomic indicators of budget softness are derived with the help of factor analysis budget softness may be represented as a linear combination of these indicators in a three factor model the role of soft budget constraints is tested to substantiate two hypotheses first macroeconomic stabilization is only credible and sustainable if appropriate microeconomic incentives in the form of hard budget constraints for enterprises exist second the costs of economic adjustment to exogenous price shocks in terms of short run growth and investment performance are related to the speed with which budget constraints can be hardened while the first two hypotheses are supported by the evidence the paper does not settle a third issue raised by the conceptual framework namely whether no exit economies also grow slower in the long run

wage inequality and the distribution of education abstract this paper analyzes the relationship between education and wage inequality in metropolitan brazil the study is based on data from ten brazilian annual household surveys pnads which are available for the period 1976 1986 the universe of analysis is limited to occupied prime age males the inequality measure used was theil s second measure which is analytically convenient for a study of the determinants of inequality it is shown that there exist sharp differences in wage inequality across metropolitan areas to identify whether these large regional differences in inequality are directly associated with differences in educational levels or with differences in the steepness of the wage education profiles some simulations are conducted the results indicate that regional differences in the distribution of education are not able to explain much of the regional differences in wage inequality as a matter of fact the differences in wage inequality were shown to be intrinsically associated with differences in the steepness of the wage education profiles

education and changes in brazilian wage inequality 1976 2001 in countries with high levels of inequality progress in education has often been placed high in the list of policy proposals designed to change the unequal state of affairs this study uses brazilian annual data to chart the trends in wage inequality and a decomposition procedure to ascertain how wage distribution was affected by advances in education that doubled the median schooling level of prime age men during the sample period the results show that while falling returns to education were an equalizing factor across the wage distribution changes in the educational composition of the work force exerted a disequalizing influence that was strongest at the top of the distribution the net result was a fall in wage dispersion that was not as dramatic as might have been hoped