bluuebunny/crossref_metadata_2025 huggingface dataset:
The Impact of National Research Funds: An Evaluation of the Chilean FONDECYT
Authors: Maffioli Alessandro , Benavente José Miguel , Crespi Gustavo
Published: March 2024

This paper is part of the project: "IDB's Science and Technology Programs: An Evaluation of the Technology Development Funds (TDF) and Competitive Research Grants (CRG)." This paper analyzes the role of National Research Funds in promoting scientific production in emerging economies. The investigation focuses on the impact of the Chilean National Science and Technology Research Fund (FONDECYT). To measure the program's impact, we implement a Regression Discontinuity (RD) design on projects submitted for funding between 1988 and 1995. The results do not show any significant impact either in terms of publications or in terms of quality of publications in the proximity of the program threshold ranking. Although results show that the program has been partially effective in identifying the best projects in terms of expected quality, evidence suggests that the FONDECYT's lack of impact may be due to targeting problems in terms of both researchers and research projects.
Biofuels and Rural Economic Development in Latin America and the Caribbean
Authors: Zambrano Patricia , Falconi César , Falck-Zepeda José , Sulser Timothy
Published: March 2024

This report analyzes the current state of R&D in agricultural biotechnology in Latin America and the Caribbean in the context of development of the sector. The objectives of this report where first to estimate biofuel production potential based on current land use, productivity patterns and available technologies, examine the determinants of energy and biofuel supply and demand, and finally, develop a forward looking analysis of the long term impact of biofuel expansion in Latin America and its effects on prices, trade, food security, malnutrition and other indicators. The analysis of the current feedstock production possibilities show that most countries in Latin America continue to lag behind in terms of productivity, with a few exceptions. This conclusion leads to the need to further support strengthening the agricultural sector by improving input and output markets and value added chains.
The Impact of ICT on Vegetable Farmers in Honduras
Authors: Espinoza Sandra Karina , Pineda Burgos Allan Edgardo , Agüero Rodríguez Marco Antonio
Published: March 2024

Honduran farmers are at a disadvantage when dealing with intermediaries because they lack timely information about market prices. This paper first analyzes which information and communications technology (ICT) would be most suitable for sending price information to producers scattered throughout the country at a reasonable cost and in a sustainable way. Negotiations by two groups of farmers were compared: one to which market prices were not sent (control) and one to which prices were sent (treatment). A simple uninterrupted time series research design was used, followed by linear regression analysis and univariant analyses to determine the cases in which the treatment had an impact on farmers' negotiations. Findings are reported, as well as recommendations and lessons learned.
Financial Crises and Macro-Prudential Policies
Authors: Otrok Christopher , Chen Huigang , Rebucci Alessandro , Benigno Gianluca , Young Eric R.
Published: March 2024

Stochastic general equilibrium models of small open economies with occasionally binding financial frictions are capable of mimicking both the business cycles and the crisis events associated with the sudden stop in access to credit markets (Mendoza, 2010). This paper studies the inefficiencies associated with borrowing decisions in a two-sector small open production economy, finding that this economy is much more likely to display under-borrowing rather than over-borrowing in normal times. As a result, macro-prudential policies (e. g, Tobin taxes or economy-wide controls on capital inflows) are costly in welfare terms. Moreover, macro-prudential policies aimed at minimizing the probability of the crisis event might be welfare-reducing in production economies. The analysis shows that there is a much larger scope for welfare gains from policy interventions during financial crises. That is to say that, ex post or crisis-management policies dominate ex ante or macro-prudential ones.
Export Promotion: Heterogeneous Programs and Heterogeneous Effects
Authors: Volpe Martincus Christian , Carballo Jerónimo
Published: March 2024

Export promotion agencies provide exporters with a broad range of services, going from counseling to sponsoring their participation in international trade missions and fairs. These services may have heterogeneous effects and thus contribute differently to achieve the goals of these organizations. Empirical evidence on their relative effectiveness is rather limited. This paper aims at filling this gap in the literature. We compare the impact of different public trade promotion programs on the extensive and intensive margin of firms¿ exports, both to each other and with respect to no participation in these activities, by applying multiple treatment matching difference-in- differences on highly disaggregated export data for the whole population of Colombian exporters over the period 2003-2006. We find that the use of programs combining different services is associated with better export performance, primarily along the country-extensive margin, than their basic individual components.
Export Promotion Activities in Developing Countries: What kind of Trade Do They Promote?
Authors: Volpe Martincus Christian , Carballo Jerónimo
Published: March 2024

Information problems involved in trading differentiated goods are a priori acuter than those associated with trading more homogeneous products. The impact of export promotion activities intending to address these problems can be therefore expected to differ across goods with different degree of differentiation. Empirical evidence on this respect is virtually inexistent. This paper aims at filling this gap in the literature by providing estimates of the effect of these activities over firms trading different goods using highly disaggregated export data for the whole population of Costa Rican exporters over the period 2001-2006. We find that trade promotion actions favor an increase of exports along the extensive margin, in particular, in terms of destination countries, in the case of firms that are already selling differentiated goods. However, these actions do not seem to encourage exporter to start exporting these goods. Further, no significant impacts are observed for firms exporting reference-priced and homogeneous goods.
Environmental Mainstreaming: Applications in the Context of Modernization of the State, Social Development, Competitiveness, and Regional Integration
Authors: Maurer Crescencia , Quiroga Ricardo , Seyour Frances
Published: March 2024

As part of a collaborative effort between the IDB's Environment Division and the World Resources Institute, this document discusses environmental mainstreaming considerations in the context of the four pillars of the Bank's Institutional Strategy: Modernization of the State, Social Development, Competitiveness, and Regional Integration. The purpose of the document is to set forth ideas and recommendations that will help identify mainstreaming opportunities to strengthen environmental sustainability across sectors, which in turn should enhance development outcomes.
Income, Deprivation, and Perceptions in Latin America and the Caribbean: New Evidence from the Gallup World Poll
Authors: Gasparini Leonardo , Marchionni Mariana , Sosa Escudero Walter , Olivieri Sergio
Published: March 2024

This paper is part of a large project on quality of life and deprivation in LAC commissioned by the IDB's Research Department (RES) that makes extensive use of the Gallup World Poll. This survey provides rich data on a wide range of issues in over 130 countries, 23 of them from LAC. This paper aims to provide evidence on the multiple dimensions of deprivation in LAC by exploiting this new dataset, combined with the national household surveys. The authors estimate levels and patterns of income, multidimensional non-monetary, and subjective deprivation for all countries in the region based on Gallup data, and compare the results with those from household surveys.
Revisiting the Employability Effects of Training Programs for the Unemployed in Developing Countries
Authors: Calderón Madrid Angel
Published: March 2024

Data sets used for evaluations in developing countries do not lend themselves to measuring the impact of training programs on the re-employment dynamics of trainees. An exception is a data set collected for an evaluation conducted in 1994 on participants in a training program targeting the unemployed in Mexico. In addition to having a control group of eligible individuals who did not participate in the program, this data set is the only one with longitudinal data covering not only the length of unemployment episodes after the training of the respondent, but also the duration of his/her employment spells. The authors show that a failure to distinguish between finding a "sustained" job versus finding "a job" can lead to misleading conclusions about a program's effectiveness. The authors also illustrate the need to correct for unobserved heterogeneity across individuals in hazard functions to avoid misleading implications in an evaluation.
Labor Market Regulation and Employment in the Caribbean
Authors: Mamingi Nlandu , Downes Andrew S. , Antoine Rose-Marie Belle
Published: March 2024

One of the major economic challenges facing the Caribbean is the generation of employment opportunities to reduce the high levels of unemployment experienced primarily among the young and female segments of the workforce. An analysis of unemployment requires an examination of both the supply and demand sides of the labor market. This research project focuses on the demand side of the labor market by examining the impact which labor market regulations have had on employment creation in the English-speaking Caribbean countries of Barbados, Jamaica and Trinidad and Tobago. The main objectives of this research project are to i) document the range of labor market regulations existing in the three English-speaking members of the IADB; ii) identify the costs implications of such regulations; iii) empirically determine the impact which such measures have on employment determination, using econometric methods.
The Impact of Training Policies in Latin America and the Caribbean: The Case of Programa Joven
Authors: Aedo Cristían , Nuñez Sergio
Published: March 2024

This paper evaluates Programa Joven, a training program conducted by Argentina's Ministerio del Trabajo. The paper adapts and applies a non-experimental evaluation methodology to answer the following questions: (1) Did Programa Joven increase the labor income of the trainees? (2) Did Programa Joven increase the probability of employment? (3) What was the rate of return to dollars spent on Programa Joven? The basic methodology used was the Matching Estimators approach. The application of this methodology requires two steps: first, the estimation of a model of program participation (propensity scores), and second, conditional upon the estimated propensity scores, the use of matching estimators to calculate the impact of the program. Three different information sources permitted the analysis of an additional question: how sensitive are program impact estimates to different propensity score specifications? The paper hypothesizes that impact estimates are in fact sensitive to different propensity score specifications. Additionally, the paper reports and compares the propensity scores estimated from each of these data sources, and then estimates the program impact on earnings and employment based upon these propensity scores. Finally, the authors carry out a cost-benefit analysis of Programa Joven based upon cost information and program impact estimates (benefits).
Public Debt and Social Expenditure: Friends or Foes?
Authors: Lora Eduardo , Olivera Mauricio
Published: March 2024

This paper assesses the effects of total public debt (external and domestic) on social expenditure worldwide and in Latin America using an unbalanced panel of around 50 countries for the period 1985-2003. The most robust and important finding is that higher debt ratios do reduce social expenditures, as popular opinion holds. Debt displaces social expenditures not so much because it raises the debt burden, but because it reduces the room (or the appetite) for further indebtedness. Loans from multilateral organizations like the World Bank or the Inter-American Development Bank do not seem to ameliorate the adverse consequences of debt on social expenditures. In accordance with popular wisdom, our results indicate that defaulting on debt obligations does help to increase social expenditures. The main policy implication is that there is no better way to protect social expenditures than to avoid over-indebtedness, especially in Latin America.
Female-Headed Households and Homeownership in Latin America
Authors: Gandelman Néstor
Published: March 2024

The gender of the household head has often been treated as an exogenous determinant of homeownership. This paper argues that several determinants of homeownership also affect household headship and that failing to explicitly account for this endogeneity leads to inconsistent results. Using individual level data for Chile, Honduras and Nicaragua, the paper shows that although on average women have lower probability of being homeowners, women who head households (single, separated or divorced) have a greater probability of attaining homeownership. Thus household level analysis should control for the endogeneity of household headship in order to properly address the gender effect on housing tenure. Estimating a bivariate probit model, the paper finds evidence that femaleheaded families have a lower probability of owning their home in Latin American countries. Without the endogeneity control this result was not present in eight countries.
Occupational Training to Reduce Gender Segregation: The Impacts of ProJoven
Authors: Robles Miguel , Ñopo Hugo R. , Saavedra-Chanduví Jaime
Published: March 2024

This paper discusses program evaluation for ProJoven, the Peruvian youth labor training program. Complementing detailed fieldwork, the econometric work implements a two-stage matching procedure on propensity scores, gender and labor income. This allows identification of differentiated program impacts on males and females and attacks the problem of Ashenfelter's Dips. The evaluation shows substantial differences in ProJoven's impact for males and females. Eighteen months after participation in the program, employment rates for females improve by about 15 percent (while employment for males reduces by 11 percent), gender occupational segregation reduces by 30 percent, and females' labor income improves by 93 percent (while males' earnings increase by 11 percent). Nonetheless, gender equality promotion represents only 1.5 percent of ProJoven's budget. These results suggest that labor-training programs that promote equal gender participation have disproportionately positive effects on outcomes for women trainees in a labor market with substantial gender differences.
The Impact of ICT on Adolescents' Perceptions and Consumption of Substances
Authors: Porzecanski Rafael , Gandelman Néstor , Balsa Ana
Published: March 2024

This paper reports the results of a three-month randomized controlled trial to estimate the impact of an Internet and mobile telephone short message service (SMS) intervention on adolescents' information about substances and rates of consumption. A low percentage of participants logged on to the Web platform, but most participants were reached through e-mails and SMS. It is found that the intervention was able to affect awareness that certain substances are drugs, but no significant changes in consumption habits were found.
Political Institutions, Policymaking Processes and Policy Outcomes in Brazil
Authors: Mueller Bernardo , Pereira Carlos , Alston Lee J. , Melo Marcus André
Published: March 2024

This paper analyses the dynamics of policy-making among the various political institutions in Brazil. The authors find that the driving force behind policies in Brazil is the strong set of powers given to the President, though several institutions constrain and check this power, in particular the legislature, the judiciary, the public prosecutors, the auditing office, state governors and the Constitution itself. The electorate of Brazil holds the President accountable for economic growth, inflation and unemployment. At least for the past ten years, and particularly during the Lula administration, executive power has been aimed at pushing policy towards macro orthodoxy. Achieving stable macro policies required constitutional amendments as well as considerable legislation. To attain their goals, the past administrations used their property rights over pork to trade for policy changes. The rationale for members of Congress to exchange votes on policy for pork is that the electorates reward or punish members of Congress based on the degree to which pork lands in their district.
Macroeconomic Effects of Infrastructure Financing: A Tale of Two Countries
Authors: Zhai Fan , Brooks Douglas H.
Published: March 2024

The primary objectives of this presentation are to compare and contrast the experiences of China and India in financing infrastructure investment; quantify the macroeconomic impacts of public infrastructure investment; and focus on the different modes of financing. It was presented at the Third LAEBA Annual Meeting in Seoul, South Korea in November 2006.
Tacit Collusion in the Santiago Housing Market
Authors: Vargas Miguel , Lefort Fernando
Published: March 2024

Given the numerous and widely acknowledged benefits of a well-functioning housing market, it is vital to understand the degree of competition in that market, which is the starting point for undertaking any policy tool aimed at improving its efficiency. This paper tests the extent of competition in the housing market in Santiago, Chile using a two-step methodology. In the first step, using a hedonic price model, the Santiago housing market is divided into sub-markets, which are analyzed separately. The second step is the tacit collusion test itself, which compares the industry markup with the business cycle in each sub-market using panel data regression models. Evidence of collusion is found in certain sub-markets.
Export Growth and Industrial Policy: Lessons from the East Asian Miracle Experience
Authors: Weiss John
Published: March 2024

The presentation discusses the East Asian Miracle Experience regarding industrial policy and export growth. It commences reviewing the strategic policies for global competition that were implemented in the region; then it continues with the analysis of a series of models and finally it highlights the lessons learned from the Miracle. This presentation was prepared to be presented at the LAEBA Second Annual Meeting, Buenos Aires, Argentina, 28-29 November, 2005.
Does the Stopler-Samuelson Theorem Explain the Movement in Wages?: The Linkage between Trade and Wages in Latin American Countries
Authors: Shinkai Naoko
Published: March 2024

Stolper-Samuelson (SS) and Specific-Factors (SF) versions make opposite predictions about the correlation between prices and wages of certain types of workers (specific factors in industries) when they are not used intensively. The analysis in this paper provides evidence that may allow one to distinguish empirically between these two versions of the HO model, using wage data from household surveys in several Latin American countries Bolivia, Mexico, and Venezuela.
Titling, Credit Constraints and Rental Markets in Rural Peru: Exploring Channels and Conditioned Impacts
Authors: Zegarra Eduardo , Escobal Javier , Aldana Ursula
Published: March 2024

This paper constructs a baseline and pursues an overall impact evaluation of the PETT (Programa Especial de Titulación de Tierras), an ambitious rural titling program created in Peru in 1992. The general evaluation of impacts on farmers shows a picture of not many positive effects, at least in the short period of the evaluation (2004-2006). On average, most income variables (and income composition) do not seem to be impacted by titling, and there are no detectable effects on investments or other outcome variables, such as credit, land markets, or land conflicts. However, this general picture hides important impacts that may occur for some groups of farmers, or for farmers facing different constraints in the pre-intervention stage. Given the limitations, we investigated in more detail two important channels that are behind the potential impacts of rural titling programs: credit access and use of land rental markets.
Women in the Latin American Labor Market: The Remarkable 1990's
Authors: Ureta Manuelita , Cox Edwards Alejandra , Duryea Suzanne
Published: March 2024

In this paper, the authors examine levels and trends of labor market outcomes for women in the 1990's using household survey data for 18 Latin American countries covering several years per country. The outcomes analyzed include labor force participation rates, the distribution of employment of women across sectors of the economy (formal versus informal), and earnings. Next, the authors examine the role of schooling in explaining the increase in female labor force participation in LAC countries. All of these findings suggest a fair degree of change in the role of women within households and in the labor market. The authors conclude that the macro economic picture of stagnation for LAC in the 1990s masks non-trivial developments in the division of labor and time allocation by gender.
A New Way of Monitoring the Quality of Urban Life
Authors: Lora Eduardo , Powell Andrew
Published: March 2024

This paper proposes a methodology to resolve the problems that result from using a combination of objective and subjective information in evaluating urban quality of life. The paper further suggests techniques to identify and rank issues of potential importance for urban dwellers. In order to combine objective and subjective information in a coherent manner and focus on the most relevant dimensions of the quality of life in a city or neighborhood, the paper attempts to exploit the complementary nature of two approaches: the "hedonic" approach, which employs market prices for housing, and the "life satisfaction" approach, which addresses subjective well-being. Results using both approaches in selected Latin American cities are discussed and compared. The paper concludes with a discussion of potential uses of the two-pronged methodology for policy analysis.
Cash Transfers, Behavioral Changes, and Cognitive Development in Early Childhood: Evidence from a Randomized Experiment
Authors: Vakis Renos , Macours Karen , Schady Norbert
Published: March 2024

Cash transfer programs have become extremely popular in the developing world. There is a large literature on the effects of these programs on schooling, health and nutrition, but relatively little is known about possible impacts on child development. This paper analyzes the impact of a cash transfer program on cognitive development in early childhood in rural Nicaragua. Identification is based on random assignment. We show that children in households assigned to receive benefits had significantly higher levels of development nine months after the program began. There is no fadeout of program effects two years after the program had ended and transfers were discontinued. We show that the changes in child development we observe are unlikely to be a result of the cash component of the program alone.
Protecting Workers against Unemployment in Latin America and the Caribbean: Evidence from Argentina
Authors: Ronconi Lucas , Ruffo Hernán , González Rozada Martín
Published: March 2024

This paper takes advantage of several reforms that provide time and cross sectional variation to identify the effects of unemployment insurance and severance payments on the duration of unemployment and on the separation probability in Argentina. Administrative data permits analysis of the duration of unemployment of covered spells with detailed information about transfers and their duration, while household surveys permit the study of separation probability and transitions to informal jobs, which are not observed in administrative data. It is found that unemployment duration increases significantly when unemployment insurance transfers are higher or are provided for a longer period; the effects of severance pay on unemployment duration are less robust. On the other hand, higher severance pay is found to reduce separation probability, while unemployment insurance transfers have a positive but small effect on separations.
Policy-Induced Social Interactions and Schooling Decisions
Authors: Bobba Matteo , Gignoux Jérémie
Published: March 2024

This paper considers a conditional cash transfer program targeting poor households in small rural villages and studies the effects of the geographic proximity between villages on individual enrollment decisions. Exploiting variations in the treatment status across contiguous villages generated by the randomized evaluation design, the paper finds that the additional effect stemming from the density of neighboring recipients amounts to roughly one third of the direct effect of program receipt. Importantly, these spatial externalities are concentrated among children from beneficiary households. This suggests that the intervention has enhanced educational aspirations by triggering social interactions among the targeted population.
Cash Transfers and Anemia Among Women of Reproductive Age
Authors: Schady Norbert
Published: March 2024

Iron deficiency anemia is the most prevalent nutritional deficiency in the world, affecting more than 2 billion people in developing countries. We show that a modest cash transfer substantially reduced anemia among women of reproductive age in rural Ecuador.
Capital Inflow Surges in Emerging Economies: How Worried Should LAC Be?
Authors: Tavella Pilar , Powell Andrew
Published: March 2024

This paper analyzes capital inflow surges in emerging economies from 1980 to 2005. Estimated probit models are used, which discriminate well between surges associated with banking crises or recessions, and those surges that end without such events. The results indicate that the composition of inflows and the extent of financial reform are significant determinants of outcomes. Estimated models are applied to the Latin American post-2005 inflow surge and find relatively high estimated probabilities for banking crises and recessions. This suggests that recent inflow surges characterized by high portfolio and banking inflows are a potential cause for concern and that the results constitute a prima facie case for macro prudential interventions.
Mobilizing Resources for Supporting Environmental Activities in Developing Countries: The Case of the GEF Trust Fund
Authors: Yu Bok-Keun , Miller Sebastián J.
Published: March 2024

Mobilizing sufficient resources is essential for supporting environmental activities in developing countries, and cofinancing is generally considered an important tool to help developing countries increase the resources they need. Moreover, cofinancing should increase ownership of projects by local authorities while improving accountability. The literature, however, has not explored why certain projects receive higher levels of cofinancing than others. This paper attempts to fill this gap by examining the cofinancing ratio and its determinants using projects financed by the GEF Trust Fund. The empirical results confirm that the rules of the fund, requiring different minimum cofinancing ratios by size and focal area of the GEF projects, do matter. Other important factors include funds' origins (foreign vs. domestic), types of cofinancing sources (reimbursable vs. nonreimbursable) and the particular GEF agencies involved.
International Crises and Policy Responses in the Southern Cone
Authors: Castilleja Vargas Liliana , Hernaiz Daniel , Rasteletti Alejandro , Borensztein Eduardo
Published: March 2024

This document analyzes the patterns of fiscal and monetary policy in five economies of the Latin American Southern Cone (Argentina, Brazil, Chile, Paraguay and Uruguay) during four episodes of international crises: 1994, 1997-1999, 2001 and 2008. In contrast with earlier episodes when most countries in the region applied procyclical fiscal and monetary policies, the response of the five countries to the 2008 crisis was countercyclical. On the fiscal side, countries had a larger fiscal space in 2008 to implement a countercyclical policy thanks to increases in primary balances, improvements in sustainability indicators and a reduction in financing needs in the years before the crisis. On the monetary side, the capacity to implement countercyclical policy was supported by a shift towards more flexible exchange rate regimes, and monetary policy regimes that enhanced transparency, reduced price volatility and increased the credibility of monetary authorities. For countries to be able to implement countercyclical responses in future crisis episodes, the fiscal authorities should reverse expansionary measures during good times and Central Banks should meet their inflation targets to preserve fiscal space and anchor inflation expectations.
An Updated Assessment of the Trade and Poverty Nexus in Latin America
Authors: Giordano Paolo , Li Kun
Published: March 2024

Despite the growing political priority given to making trade work for the majority in Latin America, a notable gap exists in the knowledge about the distributive impacts of trade integration. This study attempts to fill this gap: it surveys the most recent contributions to the mainstream trade economics literature, assesses their relevance for Latin America and concentrates on specific quantitative empirical available on the region. It concludes that despite the impossibility to rigorously and unambiguously assert that trade openness is conducive to growth and poverty reduction, the preponderance of evidence supports this conclusion. However, the majority of empirical studies also show that the impact of trade on growth and poverty is generally small and that the causes of indigence are to be found elsewhere. Likewise, it is extremely arduous to find evidence that supports the notion that trade protection is good for the poor.
Synopsis of the Study of the Insertion of Environmental Management in Sectorial Policies:The Energy and Industry case in Bolivia
Authors:   Interdisciplinary Centre of Development Studies
Published: March 2024

This document summarizes the results of a study on insertion of environmental policies in sectoral activities in Bolivia, prepared for the IDB by the Center for Development Studies of the University of Los Andes. The analysis focuses on the industrial, mining and energy sectors in Bolivia.
Unemployement Protection for Informal Workers in Latin America and the Caribbean
Authors: Finkelstein-Shapiro Alan , Sarzosa Miguel
Published: March 2024

We use a dynamic stochastic general equilibrium search and matching model with salaried employment and informal self-employment to analyze the implications of introducing universal unemployment protection for informal workers through transfers, which are conditional on participation in training programs. We study how changes in unemployment benefits (UB) for unemployed workers in training programs (training UB), modify labor market outcomes for the unemployed. The model suggests that increasing training UB reduces unprotected unemployment and improves labor market outcomes through higher formal salaried employment and lower informal self-employment. Allowing for idiosyncratic quality in these training programs is key for these results. Higher training UB can also reduce total informal employment through a drastic reduction in the share of informal self-employment, without necessarily causing a large increase in total unemployment. Finally, the model suggests that increasing training UB may increase the volatility of unprotected unemployment. The influence of training programs on formal wage-setting is crucial to explain these results.
Labor Market Effects of Introducing Unemployment Benefits in an Economy with High Informality
Authors: Bosch Mariano , Esteban-Pretel Julen
Published: March 2024

Unemployment benefit systems are nonexistent in many developing economies. Introducing such systems poses many challenges, which are partly due to the high level of informality in the labor markets of these economies. This paper studies the consequences on the labor market of implementing an unemployment benefit system in economies with large informal sectors and high flows of workers between formality and informality. We build a search and matching model with endogenous destruction, on-the-job search, and intersectoral flows, where agents in the economy decide optimally whether or not to formalize jobs. We calibrate the model for Mexico, and show that the introduction of an unemployment benefit system, where workers contribute when employed in the formal market and collect benefits when they lose their jobs, can lead to an increase in formality in the economy, while also producing small increases in unemployment. The exact impact of incorporating such benefits depends on the relative strength of two opposing effects: the generosity of the benefits and the level of the contributions that finance those benefits. We also show important policy complementarities with other interventions in the labor market. In particular, combining the unemployment benefit program with policies that reduce the cost of formality, such as lower employment taxes and firing costs, can produce greater decreases in informality and lower impacts on unemployment than when the program is applied in isolation.
VAT Collection and Social Security Contributions: Is There a Link?
Authors: Hernández Fausto , Antón-Sarabia Arturo
Published: March 2024

Mexican public finances are weak; national tax collection as a percentage of GDP is among the lowest in the world. On the other hand, expenditure needs are enormous. There have been several attempts to reform our tax system but they have not been successful due to different factors such as political interests, excess of oil revenues, and deficient design of the reforms. One of the most important problems is that every reform has been attempted with no significant change on the expenditure side, or what is more, ignoring links between taxes and other economic areas such as social security contributions. Recently Levy (2008) has proposed a major change on the expenditure side. In particular he argues that social policy should dramatically be modified to be able to provide a universal health care system together with unemployment insurance, which at the end would promote formality. This calls for an adequate financial source. In this work we estimate the potential VAT collection to finance this proposal, taking into account some partial equilibrium effects in a context of coexistence of formality and informality. Here the former is defined in terms of tax compliance only.
Decentralization, Fiscal Effort and Social Progress in Colombia at the Municipal Level, 1994-2009: Why Does National Politics Matter?
Authors: Pachón Mónica , Sánchez Torres Fabio
Published: March 2024

The present paper explores the relationship between political competition and effective public goods delivery systems in a decentralized context to study whether the awareness generated through such a competitive environment and the existence of more political options are a part of the causal mechanisms for effective governance. In particular, we want to observe the effect of electoral competition on the incentives to build fiscal capacity and provide public goods such as education and water, that are to a large extent the responsibility of the local municipalities. The research hypothesis is that political competition strengthens the decentralized municipalities through building their local fiscal capacity. In turn, the fiscal capacity is the fundamental variable that explains the differences in sector performance across local governments. Local fiscal capacity brings about better policy outcomes, as well as a better match between resources and the needs - what we call responsiveness - which simultaneously ensures greater efficiency in local spending. Using a rich panel municipal dataset from 1994 till 2009, we have shown that on comparing the differences across education and the water and sewerage sectors, the power of fiscal effort appears to be the driving force behind better policy outcomes than any other resource commonly made available to the municipalities, such as national transfers or royalties.
The Distance between Perception and Reality in the Social Domains of Life
Authors: Lora Eduardo
Published: March 2024

The distance between perception and reality with respect to the social domains of life is often striking. Using survey data collected on Latin American countries, this paper provides an overview of the main empirical findings on the gaps between perception and reality in four social domains--health, employment, the perception of security, and social ranking. The overview emphasizes the psychological biases that may explain the gaps. Biases associated with cultural values are very relevant with respect to health and job satisfaction. Cultural differences across countries are pronounced in perceptions of health, while cultural differences across socioeconomic groups are more apparent with respect to job satisfaction. Affect and availability heuristics are the dominant sources of bias in the case of perceptions of security. The formation of subjective social rankings appears to be less culturally dependent but more dependent on the socioeconomic development in the country. The gaps between objective and subjective indicators in the social domains of life are a rich source of data to help understand how perceptions are formed, identify important aspects of people's lives that do not appear in official indicators, inform public debate on social policy, and shed light on public attitudes on key social issues.
The Impact of the Sense of Security from Crime on Residential Property Values in Brazilian Metropolitan Areas
Authors: Beltrão Kaizô I. , Massena Rosa M. R. , Vetter David M.
Published: March 2024

Using a hedonic residential rent model for Brazil's metropolitan areas calibrated with microdata from Brazil's annual household survey, this study estimates that increasing the sense of security in the home by one standard deviation would increase average home values by R$1,513 (US$757), or about US$13. 6 billion if applied to all 18.0 million households in the study area. The principal components analysis of sense of security and crime victimization variables indicates that higher-income households feel more secure from crime in the home, even though theft and robbery victimization rise with household income and rent level. Higher levels of home protection measures by higher-income households partially explain this result.
Government Debt and Economic Growth
Authors: Fuentes J. Rodrigo , Calderón César
Published: March 2024

The growth prospects of a nation are stymied by the burden of government debt. This study has two goals: first, it tests whether public debt hinders growth; and, second, it explores whether economic policy ameliorates this effect. A large panel data of countries for 1970-2010 reveal a negative and robust effect of public debt on growth. Strong institutions, high quality domestic policies, and outward-oriented policies partly mitigate this adverse effect. An enhanced policy environment and its interaction with public debt has helped explain the improved growth performance of industrial and developing countries for the years 2001-05 compared to the years 1991-95. Viewing the actual performance of the Latin America and the Caribbean region, South America encompasses the group of countries more benefited by improvement of economic policies, while Central America and the Caribbean lag considerably. A simultaneous sharp reduction in public debt and an improvement in the policy environment induce an increase in the growth rate per capita of 1.7 percentage points for the Caribbean and 2 percentage points for South America. A more conservative scenario that considers an upgrade in quality of policies and a reduction of public debt leads to lower but still significant growth benefits for the Caribbean and South America, by 0.85 and 1.5 percentage points, respectively.
Paving the Road to Export: Assessing the Trade Impacts of Road Quality
Authors: Blyde Juan S.
Published: March 2024

Assessing the trade impacts of domestic transport costs is data demanding and analyses that examine the effects of road quality, a critical aspect in regional and public policy, practically do not exist in the international trade literature. The few studies available rely mostly on distance-based measures as proxies of transport costs which impede analyzing the trade effects of transport-infrastructure improvements. In this paper, we combine highly disaggregated records of export flows with detailed geo-referenced information of the Colombian transport network, including its road quality, as well as real measures of transport costs of shipping goods within the country to measure the trade impacts of improving road quality. We find that the trade effects of improvements in road quality are relatively small on average; however, there is considerable heterogeneity in the magnitude of the effects. We show that longer routes have larger shares of their roads in poor conditions; accordingly, the trade impacts of shipments originated in remote regions are found to be quite substantial.
Intensity-Based Permit Quotas and the Business Cycle: Does Flexibility Pay Off?
Authors: Amacher Gregory S. , Kuuselaa Olli-Pekka , Tsang Kwok Ping
Published: March 2024

Tradable permit markets for carbon dioxide (C02) emissions respond to short-run fluctuations in economic activity. To provide stability, both price and quantity interventions have been proposed. This paper focuses on the relative performance of fixed versus intensity allowances in the presence of both productivity and energy price uncertainty. Both instruments achieve the same steady-state emissions reduction target of 20 percent, which is similar to the current policy proposals, and the regulator then chooses the allowance policy that has the lowest expected abatement cost. A standard real business cycle (RBC) model is used to solve for the expected abatement cost under both policies. Expected cost outcomes are compared using data from the U. S. economy as the baseline scenario. Unlike previous studies, this paper's results show that, under a reasonable model calibration, fixed allowances outperform intensity allowances by a cost difference of as much as 30 percent.
Optimal Adaptation and Mitigation to Climate Change in Small Environmental Economies
Authors: Galiani Sebastián , Chisari Omar O. , Miller Sebastián J.
Published: March 2024

This paper compares the optimal dynamic choices between policies of mitigation and adaptation for three economies: Brazil, Chile and the United States. The focus is on the optimal role of mitigation and adaptation for "environmentally small economies", i. e. , economies that are witnessing an exogenous increase in emissions to which they are contributing very little. The simulations lead to three main conclusions. First, small economies should concentrate their environmental efforts, if any, on adaptation. This is not a recommendation that such economies indulge in free-riding. Instead, it is based on considerations of cost effectiveness, ceteris paribus. Second, small economies that are unable to spend enough on adaptation may end up spending less on mitigation owing to their impoverishment as a result of negative climate shocks. Third, higher mitigation expenditures may arise not only as a result of greater optimal adaptation expenditures, but also because of increased adaptation to the incentives for mitigation provided by richer countries.
Productive Development Policies and Innovation Spillovers through Labor Force Mobility: The Case of the Brazilian Innovation Support System
Authors: Stucchi Rodolfo , Maffioli Alessandro
Published: March 2024

This paper focuses on two research problems. The first is to measure the direct impacts of innovation support measures in Brazil, and the second is to test the hypothesis of indirect effects of innovation policies on non-beneficiary firms through the labor mobility channel, whether resulting from direct support programs or indirect support via tax incentives. For this purpose, mobility is defined as the movement of workers in technical-scientific occupations, as identified by Araujo et al. (2009). It is found that, with the exception of a subvention program, direct support in the form of credit or cooperative projects fosters more innovative effort than tax incentives. Nonetheless, direct and tax- based incentives for innovation have different purposes, and sound innovation relies on both types of incentive.
Tax Reforms in Latin America in an Era of Democracy
Authors: Scartascini Carlos
Published: March 2024

The literature on taxes and public finance generally focuses on revenues, an easily observable and generally available variable, as the observable measure of tax policy. Still, revenues depend on many determinants other than the political will and policy objectives of the government. It is therefore important, when studying the politics of taxation, to evaluate specific changes to the tax code such as rates, bases and exemptions. With the underlying goal of exploring the political process and the determinants of tax policy, this paper compiles a novel and highly comprehensive database of tax reforms for Latin America between 1990 and 2004. The paper presents a description of the database as well as the stylized facts of tax reforms in Latin America. Examples of the database's uses are discussed, as is motivation for future research.
Better Luck Next Time: Learning through Retaking
Authors: Yavas Cemile , Krishna Kala , Frisancho Verónica , Lychagin Sergey
Published: March 2024

This paper provides some evidence that repeat taking of competitive exams may reduce the impact of background disadvantages on educational outcomes. Using administrative data on the university entrance exam in Turkey, the paper estimates cumulative learning between the first and the nth attempt while controlling for selection into retaking in terms of observed and unobserved characteristics. Large learning gains measured in terms of improvements in the exam scores are found, especially among less advantaged students.
Capital Requirements for Latin American Banks in Relation to their Market Risks: The Relevance of the Basle 1996 Amendment to Latin America
Authors: Balzarotti Verónica , Powell Andrew
Published: March 2024

Banks' market or 'trading' risks have increased noticeably over the past years, largely as a result of the growth of liquid assets on banks' balance sheets and the increase in banks' off-balance sheet activities. Well-publicized bank failures and significant capital losses have focussed further attention on these developments. In January 1996, the Basle Committee recommended the imposition of capital charges related to banks' trading risks, and the European Community's Capital Adequacy Directive (CAD) came into force on January 1st, adopting, in part, the Basle Amendment. The G10 countries are committed to full implementation of these recommendations by the end of 1997. This paper reviews the main features of the Basle Amendment, which allows banks a choice between a 'standardized methodology' and the use of their own internal models, subject to the authorization of the relevant supervisor and a set of parameter values. The relevance of this regulation for Latin America is analysed in the light of the region's characteristics. We suggest that these characteristics increase rather than diminish the importance of the implementation of market risk capital requirements in Latin America.