bluuebunny/crossref_metadata_2025 huggingface dataset:
The Effect of Conditional Transfers on School Performance and Child Labor: Evidence from an Ex-Post Impact Evaluation in Costa Rica
Authors: Morrison Andrew , Duryea Suzanne
Published: March 2024

This study examines the impact of Superémonos, a conditional transfer program in Costa Rica, which provides poor families with a subsidy for the purchase of food conditional upon children regularly attending school. Using three different empirical techniques -simple comparison of mean outcomes, regression analysis and propensity score matching- the authors examine the program's impact on school attendance, performance in school and child labor. The authors found strong evidence that the program achieves its goal of improving school attendance and much weaker evidence regarding school performance. The program does not reduce the likelihood that youth will work. These findings are discussed in the context of the results from impact evaluations of other conditional transfer programs.
Training Quality and Earnings: The Effects of Competition on the Provision of Public-Sponsored Training Programs
Authors: Chong Alberto E. , Galdo José
Published: March 2024

This paper evaluates the effectiveness of market-based approaches in the provision of public-sponsored training programs. In particular, we study the link between training quality and labor earnings using a Peruvian program that targets disadvantaged youths. Multiple proxies for training quality are identified from bidding processes in which public and private training institutions that operate for profit compete for limited public funding. Using difference-in-differences kernel matching and standard regression-based approaches, we find that beneficiaries attending high-quality training courses have higher average and marginal treatment impacts. These earnings differentials are larger for females rather than males, and are larger in the medium term rather than in the short run. External validity was assessed by using five different cohorts of individuals over an eight-year period.
Investment Climate and Employment Growth: The Impact of Access to Finance, Corruption and Regulations across Firms
Authors: Aterido Reyes , Hallward-Driemeier Mary , Pagés Carmen
Published: March 2024

Using firm level data on 70,000 enterprises in 107 countries, this paper finds important effects of access to finance, business regulations, corruption, and to a lesser extent, infrastructure bottlenecks in explaining patterns of job creation at the firm level. The paper focuses on how the impact of the investment climate varies across sizes of firms. The results suggest strong composition effects: A weak business environment shifts downward the size distribution of firms. In the case of finance and business regulations this occurs by reducing the employment growth of all firms, particularly micro and small firms. On the other hand, corruption and poor access to infrastructure reduce employment growth by affecting the growth of medium size and large firms. With significant differences between firms with less than 10 employees and SMEs, these results indicate significant reforms are needed to spur micro firms to grow into the ranks of the SMEs.
The Political Economy of Fiscal Policy: Survey
Authors: Eslava Marcela
Published: March 2024

This paper surveys the recent literature on the political economy of fiscal policy, in particular the accumulation of government debt. The authors examine three possible determinants of fiscal balances: opportunistic behavior by policymakers, heterogeneous fiscal preferences of either voters or politicians, and budget institutions. The focus is on the contributions of the last 10 years and emphasize findings related to developing countries. Included is original empirical evidence along with a recent body of literature on the fiscal preferences of voters, which, interestingly, seems to suggest that voters do not favor high-spending governments.
The Impact of Electricity Sector Privatization on Public Health
Authors: Rossi Martín , Gonzalez-Eiras Martín
Published: March 2024

This paper uses provincial-level data for Argentina to test for the causal relationship between electricity distribution and health. It examines the impact of privatization on two output measures: incidence of low birth weight and child mortality rates caused by food poisoning. Privatization improves service coverage which, through the use of refrigerators, may improve nutritional intake. Privatization also results in a reduction in the frequency of interruptions, and thus may reduce the likelihood of food poisoning. Though the evidence indicates that privatization reduced the frequency of low birth weight and child mortality rates caused by food poisoning, the results are not strong enough to inform the policy debate with respect to the benefits of privatization for the welfare of the poor.
Provision of Public Services and Welfare of the Poor: Learning from an Incomplete Electricity Privatization Process in Rural Peru
Authors: Nakasone Eduardo , Alcázar Lorena , Torero Máximo
Published: March 2024

The incomplete privatization of the electric sector in Peru provides a unique scenario for evaluating the impact of public versus private provision. The results in this paper suggest that management of electricity firms by the private sector leads to a significant improvement in the quality of the provision of electricity. These improvements in quality and supply of electricity provision yield some efficiency gains in terms of the time allocation of the working labor force that can be directly linked to the use of electricity. Rural households under private provision of electricity had more opportunities to work in non-farm activities, and as a result, the share of time in non-farm activities increased, indicating both a substitution effect and a potential price effect through higher non-farm wages.
Political Institutions, Policymaking Processes and Policy Outcomes in Paraguay, 1954-2003
Authors: Molinas José R. , Saiegh Sebastián , Montero Marcela , Pérez-Liñán Aníbal
Published: March 2024

This paper characterizes the evolution of Paraguay's policymaking process (PMP) between 1954 and 2003. The authors present an overview of the PMP under the rule of Alfredo Stroessner (1954-89) and explore the institutional setting emerging after 1989. In addition, they discuss how the Colorado Party progressively broke up into several factions and characterize the distinctive patterns of policymaking that emerged after the adoption of the 1992 Constitution. The authors hypothesize that the presence of a large number of veto players has made policy change more difficult and that legislators are inclined to pursue particularistic policies. In order to test those hypotheses, they rely on a database containing virtually every bill introduced in Congress since April 1992. The conclusions suggest that the current Paraguayan PMP may be flexible for the provision of particularistic benefits but is rigid for the approval of broad regulatory or redistributive policies.
Innovation Policy for Development: an Overview
Authors: Trajtenberg Manuel
Published: March 2024

This paper was prepared for the LAEBA 2005 second annual meeting in Buenos Aires, Argentina. It is meant to provide a framework for thinking systematically about innovation policies for development, without venturing into specific, recipe-like policy recommendations. It does so by identifying and dissecting the key issues that arise in this context, and by examining in some detail the case of innovation policy in Israel, which sheds light both on the promise and the limitations of such policies.
Determinants of Maritime Transport Costs
Authors: Micco Alejandro , Pérez Natalia
Published: March 2024

Recent literature has emphasized the importance of transport costs and infrastructure in explaining trade, access to markets, and increases in per capita income. For most Latin American countries, transport costs are a greater barrier to U.S. markets than import tariffs. The authors investigate the determinants of shipping costs to the U.S. with a large database of more than 300,000 observations per year on shipments of products at the six-digit HS level from different ports around the world. In addition, the authors find that efficiency of ports is an important determinant of shipping costs. Inefficient ports also increase handling costs, which are one of the components of shipping costs. The authors try to explain variations in port efficiency and find that they are linked to excessive regulation, the prevalence of organized crime, and the general condition of the country's infrastructure. Finally, the authors present a number of success stories in Latin America to show that private involvement in port management leads to efficiency and lower costs whenever it is accompanied by labor reform, and when monopoly power is reduced through either regulation or competition.
Revisiting Economic Growth in Colombia: A Microeconomic Perspective
Authors: Harker Arturo , Meléndez Arjona Marcela
Published: March 2024

This paper revisits economic growth in Colombia using a growth diagnostics methodology to identify the most binding constraints for economic growth and the policies that, if implemented, can have the largest positive impact. The data shows economic reactivation in areas with falling violence. Results from analysis at the microeconomic level, however, give a particular spin to this conclusion by showing that investment decisions at the firm level are also explained by the restoration of some form of public order connected to the cessation of paramilitary violence. From a public policy perspective, perhaps the most relevant result is the confirmation that in Colombia, investment decisions are negatively affected by the cost of financing. Empirical results single out the provision of access to financing at fair prices as a policy priority for economic growth, independent of whether uncertainties from poor protection to property rights are resolved.
The Emergence of New Successful Export Activities in Latin America: The Case of Chile
Authors: Agosin Manuel R. , Bravo Ortega Claudio
Published: March 2024

This paper surveys overall export growth in Chile and focuses on three case studies of the emergence of successful export activities in Chile: wine, pork and blueberries. Each case study discusses how companies, associations, and governments at various levels have addressed market failures and facilitated the provision of public goods necessary for each activity. The case studies additionally profile first movers in each activity and describe the positive externalities they provide to imitators, particularly diffusion of export knowledge. Also included are counterfactual cases of a less successful firm or activity (an unsuccessful wine exporter, other types of berries, and commodity pork production rather than custom cuts, respectively) and a discussion of policy implications.
The Role of Flagship Firms, External Actors and Support Institutions in the Emergence of Successful Export Activities in Brazil: Two Industrial Cluster Studies
Authors: Monteiro Joana , Kury Beatriz , Da Rocha Angela
Published: March 2024

This paper examines the process by which firms in a cluster start to export based on systemic interactions and the process of diffusion of exporting as a business strategy within the cluster. Two Brazilian manufacturing industries are studied, and within each one a geographic cluster was identified as the origin of dynamic export growth. Players in each industrial cluster, as well as other significant players, were interviewed or identified using secondary sources, and extensive secondary data research was undertaken to study clusters' historical development. Detailed analysis and a comparison of the two experiences made it possible to draw some general conclusions concerning the similarities and differences between the two clusters in terms of the adoption and diffusion of exporting.
Housing Finance in Brazil: Institutional Improvements and Recent Developments
Authors: Martins Bruno , Lundberg Eduardo , Takeda Tony
Published: March 2024

Despite a recent expansion in housing finance, Brazil still faces a severe housing shortage, especially among lower-income people, and it is important to examine the development, limitations and prospects of the country's housing finance market. This paper investigates the recent evolution of that market in Brazil, focusing on whether the current expansion in mortgage lending is the result of institutional and economic improvements favoring economic stability and compliance with contractual obligations or is merely an effect of the higher level of housing loans imposed by the government on financial institutions. Different explanations are found for private and public institutions.
Why Don't We Tax the Rich? Inequality, Legislative Malapportionment, and Personal Income Taxation around the World
Authors: Ardanaz Martín , Scartascini Carlos
Published: March 2024

This paper argues that the details of political institutions help explain the low levels of personal income taxation. In particular, legislative malapportionment enables rich elites to exercise disproportionate political influence. Because over-represented districts tend to be dominated by parties aligned with the elite, these groups can block legislative attempts to introduce progressive taxes. Using a sample of more than 50 countries (including 17 across Latin America) between 1990 and 2007, this paper finds that i) countries with historically more unequal distributions of wealth and income systematically present higher levels of legislative malapportionment, and ii) higher levels of malapportionment are associated with lower shares of personal income taxes in GDP. present higher levels of legislative malapportionment, and ii) higher levels of malapportionment are associated with lower shares of personal income taxes in GDP.
Simplification of Labor Registration in Argentina: Achievements and Pending Issues
Authors: Ronconi Lucas , Colina Jorge
Published: March 2024

This paper describes the reforms aimed at simplifying the administrative procedures for labor registration and the payment of social security contributions that were carried out in Argentina in 2005 and 2007. Analysis of the legislation, as well as a survey conducted among accountants, reveals that although the reforms did reduce the administrative burden, the effect was only partial. By using microdata gathered from household surveys conducted quarterly between 2003 and 2009, and the discontinuities according to company size that the legislation engenders, differences-in-differences coefficients have been estimated regarding the impact of the simplification reforms on the labor market. The results indicate that the simplification reforms had a positive, although limited, effect on the labor registration rate (of approximately two percentage points for all workers and nine percentage points for newly-hired workers), but that there was no effect on employment levels. Finally, policy recommendations are put forward aimed at deepening the administrative simplification process and thereby improving its effectiveness as a labor registration promotion mechanism.
Industrial Policy in Chile
Authors: Agosin Manuel R. , Larraín Christian , Grau Nicolás
Published: March 2024

This paper studies three horizontal policy instruments and two vertical ones in Chilean industrial policy, particularly regarding small and medium enterprises (SMEs). The horizontal instruments are (1) a guarantee program for borrowing by SMEs (FOGAPE), (2) a small subsidy to new exports that was applied from 1985 through 2003, and (3) the innovation subsidies provided by the Corporación de Fomento de la Producción (CORFO). The vertical policy instruments are the activities of Fundación Chile (FCh), a semi-public entrepreneur cum venture capitalist, and a CORFO program to attract foreign direct investment in information technology. Although most programs are well designed, they are numerous and insufficiently funded; Chile could benefit from a prioritization of needs and consolidation of these programs. Moreover, the instruments for making strategic bets on new sectors are particularly weak. In particular, FCh needs to refocus its activities on high-risk projects with long payoffs, something it cannot do with its small endowment.
The Presidency and the Executive Branch in Latin America: What We Know and What We Need to Know
Authors: Bonvecchi Alejandro , Scartascini Carlos
Published: March 2024

The presidential politics literature depicts presidents either as all-powerful actors or figureheads and seeks to explain outcomes accordingly. The president and the executive branch are nonetheless usually treated as black boxes, particularly in developing countries, even though the presidency has evolved into an extremely complex branch of government. While these developments have been studied in the United States, far less is known in other countries, particularly in Latin America, where presidential systems have been considered the source of all goods and evils. To help close the knowledge gap and explore differences in policymaking characteristics not only between Latin America and the US but also across Latin American countries, this paper summarizes the vast literature on the organization and resources of the Executive Branch in the Americas and sets a research agenda for the study of Latin American presidencies.
The Impact of Bank Credit on Employment Formality in Uruguay
Authors: Gandelman Néstor , Rasteletti Alejandro
Published: March 2024

This paper examines the effect of bank credit on employment formalization in Uruguay. Using a difference-in-differences methodology proposed by Catão, Pagés and Rosales (2011), the paper finds that financial deepening decreases informality, especially in more financially dependent sectors. The effect is additionally found to be greater for women and younger workers. Despite the severe economic crisis and a sharp contraction of bank credit experienced by the economy in the period of analysis, no evidence is found that the effect of bank credit on employment formality has changed over time.
Mobility and Entrepreneurship in Ecuador: A Pseudo-Panel Approach
Authors: Villa Ramón , Ordeñana Xavier
Published: March 2024

Does entrepreneurship contribute to improving social mobility in Ecuador? This paper constructs a pseudo-panel to analyze the dynamic effect of entrepreneurship on Ecuadorian household incomes during the period 2002-2010. Using three estimation scenarios, the paper finds a significant level of unconditional mobility and an important effect of entrepreneurship (conditional mobility).
Latin American Middle-Class Entrepreneurs and their Firms: A Regional View and International Comparison
Authors: Kantis Hugo , Federico Juan , Trajtenberg Luis A.
Published: March 2024

Based on a cross-country comparison of dynamic new firms, this paper attempts to characterize Latin American middle-class entrepreneurs and their firms. In general, Latin American middle-class entrepreneurs tend to face more difficult conditions in terms of resources and skills acquisition than those belonging to more affluent social strata. They tend to have earlier exposure to business experience since they generally belong to families in which their fathers' occupation allowed for such exposure, and the universities where they studied are sounder platforms for developing abilities and contacts. Likewise, compared to middle-class entrepreneurs from more developed regions, Latin American middle- class entrepreneurs tend to be less exposed to the business world and entrepreneurial role models. Additionally, they are more likely to rely on a less qualified and less business-specific support network, and initial financing is less accessible to them. The paper summarizes several key policy implications and recommendations derived from the analysis.
Signaling Creditworthiness in Peruvian Microfinance Markets: The Role of Information Sharing
Authors: Frisancho Verónica
Published: March 2024

Using borrower-level data from FINCA, one of Peru's leading microfinance institutions (MFIs), this paper evaluates the effect on borrowers' access to credit of FINCA's decision to share information on individual outstanding debt records (positive information) as well as group default records (negative information). Since all borrowers were simultaneously exposed to the same policy, the paper develops a creative identification strategy that relies on the exogenous variation of the opening and closing dates of loan cycles across lending groups. A credit expansion effect is identified for some borrowers in FINCA who looked more creditworthy after their positive records were exposed, suggesting that other lenders targeted FINCA clients with good credit records. This credit expansion effect seems to have hurt FINCA through higher default rates as its better clients were skimmed off.
Labor Market Impacts of Non-Contributory Pensions: The Case of Argentina's Moratorium
Authors: Bosch Mariano , Guajardo Jarret
Published: March 2024

Argentina had traditionally enjoyed one of the highest elderly coverage rates in Latin America. However, since the mid-1990s coverage rates started a steady decline, especially for low income workers. In response, the Argentine government implemented a series of sweeping reforms in the mid-2000s. Central to these reforms was a program known as the 'Moratorium,' which allowed workers of retirement age to receive a pension regardless of whether they had completed the full 30 years of required social security contributions through formal employment. This paper studies the labor market effects of this reform. Using Argentina's Continuous Permanent Household Survey (EPHC), we employ a difference-in-difference technique to compare elderly individuals just above and below the retirement age, before and after the pension reform.
Conditional Cash Transfers, Female Bargaining Power and Parental Labour Supply
Authors: Novella Rafael , Ripani Laura , Cruces Guillermo , Alzuá Maria Laura
Published: March 2024

Recent empirical evidence has indicated that Conditional Cash Transfer (CCT) do not have an aggregate effect on adult labour supply, however little attention has been paid to the role of other intrahousehold dynamics. This paper examines how the bargaining power structure of households affects the parental labour supply response to CCT programmes. We analyse randomized experimental designs from rural areas of Honduras (PRAF), Mexico (PROGRESA), and Nicaragua (RPS), and find that CCT programmes slightly change paternal and maternal labour supply and that this effect depends on the distribution of power in the household.
Capacity-Stretching Technical Change: Some Empirical and Theoretical Aspects
Authors: Teubal Morris , Maxwell Philip
Published: March 2024

This paper has a dual origin in (i) some empirical studies of technological change in Latin American steel plants carried out by the BID/CEPAL Technology Research Programme, and ( ii ) a theoretical and review paper also written for the BID/CEPAL Programme, in which one of the aspects proposed is a model of output increasing innovations.
Spillover Effects in Healthcare Programs: Evidence on Social Norms and Information Sharing
Authors: Avitabile Ciro
Published: March 2024

Although cervical cancer is considered one of the most preventable types of cancer, mortality rates in many developing countries are extremely high. This paper exploits the randomized research design of a large welfare program "PROGRESA" to study the existence of spillover effects in cervical cancer screening in rural Mexico. I find significant evidence of increased demand for Papanicolaou cervical cancer screening among women ineligible for the transfer, yet no evidence of similar externalities in non-gender specific tests, such as blood pressure and blood sugar checks. Different pieces of evidence from the evaluation sample and the nationwide rollout are consistent with the hypothesis that the PROGRESA program has weakened the social norm related to husbands' opposition to screening of their wives by male doctors. I find less evidence to support the hypothesis that the spillover effect is driven by higher levels of health information.
Legislative Effort and Career Paths in the Argentine Congress
Authors: Rossi Martín , Tommasi Mariano
Published: March 2024

This paper uses data from the Argentine House of Representatives to study the relationship between legislative effort and political success, as measured by reelection, becoming a leader of the House, and moving to higher political positions. It is found that more effort is associated with a higher probability of being reelected, and also that for those legislators that are reelected, higher effort is positively associated with acquiring leadership positions in the House. This happens in a context of fairly high legislative turnover and in a political context in which career paths of legislators are largely dictated by provincial party leaders. Interestingly, it is found that higher legislative effort is associated with a lower probability of improving politically outside Congress. These findings suggest the presence of various alternative career paths for Argentine politicians, and some degree of sorting. The paper concludes with some speculation on these politician types and with ideas for further research.
Home Computers and Child Outcomes: Short-Term Impacts from a Randomized Experiment in Peru
Authors: Cristia Julian P. , Malamud Ofer , Beuermann Diether , Cruz-Aguayo Yyannu , Cueto Santiago
Published: March 2024

This paper presents results from a randomized control trial in which approximately 1,000 OLPC XO laptops were provided for home use to children attending primary schools in Lima, Peru. The intervention increased access and use of home computers, with some substitution away from computer use outside the home. Beneficiaries were more likely to complete domestic chores but less likely to read books. Treatment children scored almost one standard deviation higher in a test of XO proficiency, though there were no effects on objective and self-reported skills for using a Windows-based PC and Internet. There were positive impacts on the Raven's Progressive Matrices test among children who did not have a home computer before the intervention, but no significant effects for the sample as a whole. Finally, there was little evidence for spillovers within schools, although close friends and classmates of laptop recipients did exhibit higher proficiency with the XO computer.
Does Easing Monetary Policy Increase Financial Instability?
Authors: Cesa-Bianchi Ambrogio , Rebucci Alessandro
Published: March 2024

This paper develops a model featuring both a macroeconomic and a financial stability objective that speaks to the interaction between monetary and macroprudential policies. First, we find that interest rate rigidities in a monopolistic banking system have an asymmetric impact on financial stability: they lead to greater financial instability in response to contractionary shocks, while they act as an automatic financial stabilizer in response to expansionary shocks. Second, we find that when the policy interest rate is the only instrument, a monetary authority subject to the same constraints as private agents cannot always achieve a (constrained) efficient allocation and faces a trade-off between macroeconomic and financial stability in response to contractionary shocks. This has important implications for the role played by U. S. monetary policy in the run-up to the global financial crisis: the model suggests that the weak link in the U. S. policy framework was not the monetary policy stance after 2002, but rather the absence of an effective second policy pillar aimed at preserving financial stability.
Does Participatory Budgeting have an Effect on the Quality of Public Services?: The Case of Peru's Water and Sanitation Sector
Authors: Jaramillo Miguel , Alcázar Lorena
Published: March 2024

Since 2004 the government of Peru has implemented a process of participatory budgeting (PB), which is mandatory for every sub-national government. We analyze the link from PB to coverage and water service quality indicators. We find no statistically significant relationship between PB and our measures of coverage and service continuity, regardless of whether the outcome variables are measured in levels or in changes. Qualitative evidence collected in a sample of municipalities is consistent with this result. Further, PB in the water sector may also lead to inequitable outcomes as the poor may confront greater costs of participation. At the root of this lack of connection we find weaknesses both in the PB process itself as well as among the different actors in the process: citizens, municipalities and water service providers.
Equilibrium Unemployment During Financial Crises
Authors: Fernández Martín Andrés , Herreño Juan David
Published: March 2024

Financial crises in both emerging and developed economies have been characterized by large output drops and spikes in unemployment and interest rates. To account for these stylized facts this paper builds a business cycle model where financial and la- bor market frictions interact as occasionally binding borrowing constraints and search frictions. The model is calibrated to a Sudden Stop-prone emerging economy and also to some peripheral European economies in the recent crisis. The model accounts for unemployment dynamics both during crises and at regular business cycle frequencies. The paper also assesses the welfare implications of policies that reduce real minimum wages during crises.
Weather and Welfare: Health and Agricultural Impacts of Climate Extremes, Evidence from Mexico
Authors: Guerrero Compeán Roberto
Published: March 2024

Using data for all 2,454 municipalities of Mexico for the period 1980-2010, this paper analyzes the relationship between exposure to extreme temperatures and precipitation and death, as well as the relationship between severe weather and agricultural income and crop production in the country. It is found that extreme heat increases mortality, while the health effect of extreme cold is generally trivial. Precipitation extremes seem to affect the agricultural system, but their impact on mortality is ambiguous. More specifically, exchanging one day with a temperature of 16-18 °C for one day with temperatures higher than 30 °C increases the crude mortality rate by 0. 15 percentage points, a result robust to several model specifications. It is also found that the extreme heat effect on death is significantly more acute in rural regions, leading to increases of up to 0. 2 percentage points vis-à-vis a 0.07-point increase in urban areas. The timing of climate extremes is relevant: if a weather shock takes place during the agricultural growing season, the effects on mortality and agricultural output, productivity, prices, and crop yields are large and significant, but not so if such shocks occur during the non-growing season.
Regional Review of Water Charge Instruments for Water Management in Latin America and the Caribbean Case Studies of Brazil, México and France
Authors: Seroa da Motta Ronaldo
Published: March 2024

This is the last version available of this study, in which we will review the water charge experiences in France, Mexico and Brazil. However, prior to country cases, the next chapter sets the theoretical and conceptual boundaries of the study. It will not attempt to propose new analytical insights relevant to economic instruments. Instead it will point out the most important issues brought up in the literature that will be useful to the understanding and the evaluation of the country case. In doing so, it will not only present these theoretical and practical issues but also it will bring in existing experiences that will help to elucidate the discussion. These country reviews were undertaken by local experts and are presented in the following sequence: France in Chapter 3, Mexico in Chapter 4 and Brazil in Chapter 5.
Unemployment Insurance in High Informality Countries
Authors: Espino Emilio , Sánchez Juan M.
Published: March 2024

Providing unemployment insurance is particularly problematic in countries with high informality because workers can claim unemployment benefits and work in the informal sector at the same time. This paper proposes a method to evaluate alternative schemes to provide insurance for unemployed individuals. First, it presents an economy that can be calibrated to reproduce key features of the economy for which the reform will be evaluated. Then, it shows how the implementation of an unemployment insurance savings account (UISA) scheme can be evaluated. The method is applied to Mexico, and the results show how the UISA scheme would eliminate incentives for participation in the informal sector. The implementation of the UISA would imply large welfare gains from the ex-ante perspective.
Is Entrepreneurship a Channel of Social Mobility in Latin America?
Authors: Lora Eduardo , Castellani Francesca
Published: March 2024

This paper provides a summary of the findings contained in a forthcoming issue of the Latin American Journal of Economics on entrepreneurship in Latin America as a vehicle for upward social mobility, especially for the middle class. The income persistence coefficients estimated with pseudo-panel data for Colombia, Ecuador, and Uruguay indicate that entrepreneurial activity is a channel of intergenerational mobility, while the estimates of asset persistence for Mexico using a special survey show that entrepreneurship increases mobility across generations. Although persistence coefficients do not indicate the direction of such mobility, the estimates of income differentials between entrepreneurs and non-entrepreneurs for Ecuador and Mexico lend support to the hypothesis that upward mobility dominates.
Intercontinental Evidence on Socioeconomic Status and Early Childhood: Cognitive Skills: Is Latin America Different?
Authors: López Bóo Florencia
Published: March 2024

This paper documents disparities in cognitive development- as measured by a receptive vocabulary test-between children from households with high and low socioeconomic status (SES) in two different phases of childhood (before and after early school years) in four developing countries: Peru, Ethiopia, India, and Vietnam. Intercontinental evidence on the timing, shape, pattern, and persistence of these disparities is provided. The nonparametric analysis suggests that disparities found at age 5 persist into the early school years across all four countries, and the conditional analysis shows that SES disparities seem to fall over time. However, both the magnitude of the gap and the degree of persistence vary. The main result is that Peru stands out, not only as the country with the largest cross-section disparity between rich and poor (of around 1.30-1.40 standard deviations), but also as the country with the highest persistence in cognitive development, as shown by the value-added specification. The latter suggests fewer opportunities for convergence in cognitive development between rich and poor over time in this Latin American country. Some channels behind these trends are discussed, but overall, the SES gradient persists even when controlling for a large number of important mediators, such as preschool, early nutrition, and schooling. Past performance on the Peabody Picture Vocabulary Test (PPVT) is the most important mediator of the SES gradient at age 8.
The Organization of Public-Private Cooperation for Productive Development Policies
Authors: Cornick Jorge
Published: March 2024

Productive development policies (PDPs), what used to be called industrial policies, are increasingly recognized as an essential part of the development toolkit, and the need for public-private cooperation is increasingly viewed as a key element for the successful design and implementation of such policies. If so, how should the cooperation be organized and how should the public sector organize itself to successfully participate in it? This paper suggests that public sector organization should be a response to three key variables: the scope of the PDP, the scope of the intended cooperation, and the organizational characteristics of the private sector. It further proposes the appropriate selection of public sector participants; the alignment of policy, political, and organizational time frames; the ensured quality of the bureaucracy; the protection against private and bureaucratic capture and against unbounded financial risk; and a reasonable regulatory environment of key elements for success.
The Economic Effects of Constitutions: Do Budget Institutions Make Forms of Government More Alike?
Authors: Scartascini Carlos , Ardanaz Martín
Published: March 2024

According to an influential theoretical argument, presidential systems tend to present smaller governments because the separation between those who decide the size of the fiscal purse and those who allocate it creates incentives for lower public expenditures. In practice, forms of government vary greatly, and budget institutions -the rules according to which budgets are drafted, approved, and implemented- are one (of many) drivers of such variation. This paper argues that under more hierarchical budget rules, presidential and parliamentary systems generate a similar incentive structure for the executive branch in shaping the size of government. This hypothesis is tested on a broad cross-section of countries, presidentialism is found to have a negative impact on government size only when executive discretion in the budget process is low (that is, in a context of separation of powers). However, the negative effect of presidentialism on expenditures vanishes or is even reversed when the executive`s discretion over the budget process is higher. Hence, budget institutions that impose restrictions on the legislature`s ability to amend budget proposals can make political regimes look more alike in terms of fiscal outcomes.
Are We All Playing the Same Game?: The Economic Effects of Constitutions Depend on the Degree of Institutionalization
Authors: Tommasi Mariano , Scartascini Carlos , Caruso Germán
Published: March 2024

The understanding of the economic effect of formal institutional rules has progressed substantially in recent decades. These formal analyses have tended to take for granted that institutional arenas such as Congress are the places where decision-making takes place. That is a good approximation in some cases (such as many developed countries today) but not in others. If countries differ in how institutionalized their policymaking is, it is possible that the impact of formal political rules on policy outcomes might depend on that. This paper explores that hypothesis and finds that some important claims regarding the impact of constitutions on policy outcomes do not hold for countries in which institutionalization is low. The findings suggest the need to develop a broader class of policymaking models in which the degree to which decision-making follows "the rules" is also endogenized.
Capital Flows: Issues and Policies
Authors: Montiel Peter J.
Published: March 2024

This paper presents an analytical overview of recent contributions to the literature on the policy implications of capital flows in emerging and developing countries, focusing specifically on capital inflows as well as on the links between inflows and subsequent capital-flow reversals. The objective is to clarify the policy challenges that such inflows pose and to evaluate the policy alternatives available to the recipient countries to cope with those challenges. A large menu of possible policy responses to large capital inflows is considered, and experience with the use of such policies is reviewed. A policy `decision tree`-i. e. , an algorithm for determining how to deploy policies in response to an exogenous inflow episode- is developed, and strategies to achieve resilience to both inflows and outflows in a world where exogenous events may frequently drive capital flows in both directions are discussed.
Risk Management with Thinly Traded Securities: Methodology and Implementation
Authors: Cortazar Gonzalo , Bernales Alejandro , Beuermann Diether
Published: March 2024

Thinly traded securities exist in both emerging and well developed markets. However, plausible estimations of market risk measures for portfolios with infrequently traded securities have not been explored in the literature. We propose a methodology to calculate market risk measures based on the Kalman filter which can be used on incomplete datasets. We implement our approach in a fixed- income portfolio within a thin trading environment. However, a similar approach may be also applied to other markets with thinly traded securities. Our methodology provides reliable market risk measures in portfolios with infrequent trading.
Knowledge Spillovers of Innovation Policy through Labor Mobility: An Impact Evaluation of the FONTAR Program in Argentina
Authors: Stucchi Rodolfo , Maffioli Alessandro , Rojo Sofía , Castillo Victoria
Published: March 2024

Although knowledge spillovers are at the core of the innovation policy's justification, they have never been properly measured by any impact evaluation. This paper fills this gap by estimating the spillover effects of the FONTAR program in Argentina. We use an employer-employee matched panel dataset with the entire population of firms and workers in Argentina for the period 2002-2010. This dataset allows us to track the mobility of qualified workers from FONTAR beneficiary firms to other firms and, therefore, to identify firms that indirectly benefit from the program through knowledge diffusion. We use a combination of fixed effect and matching to estimate the causal effect-direct and indirect-of the program on various measures of performance. Our findings are robust to a placebo test based on anticipatory effects and show that the program increased employment, wages, and the exporting probability of both direct and indirect beneficiaries. The analysis of the dynamic of these effects confirms that performance does not improve immediately after the treatment for neither direct nor indirect beneficiaries.
North-South Customs Unions and International Capital Mobility
Authors: Fernández-Arias Eduardo , Spiegel Mark M.
Published: March 2024

This paper examines the implications of a North-South trade accord where investments in the Southern partner nation exhibit country risk. Our analysis demonstrates that North-South trade accords can serve as credibility-enhancing mechanisms that induce additional foreign capital inflows into Southern partner nations. The presence of sovereign risk changes the tradeoffs between trade creation and diversion, enhancing the potential for regional trade accords to increase the welfare of accord members.
Does Latin American and Caribbean Unemployment Depend on Asian Labor Standards?
Authors: Belser Patrick
Published: March 2024

Many Latin American nations have recently implemented liberal trade regimes, often as part of a larger set of market-oriented reforms, and have abandoned their industrialization policies based on import substitution. In the 1980s, Chile, Mexico, and Bolivia were among the continent's first nations to slash tariff rates and virtually eliminate quantitative restrictions on imports. They were followed by many others, including Argentina, Brazil, Colombia, Jamaica, Peru, Uruguay, Venezuela, and Trinidad and Tobago. All these countries are now much more exposed to international competition than ever before. But is this a good idea? Are labor rights really more restricted in export-oriented Asian nations than they are in Latin America? And if so, are Latin American workers prejudiced by Asia's lower standards?
A Review of the Use of Contingent Valuation Methods in Project Analysis at the Inter-American Development Bank
Authors: Quiroga Ricardo , Vaughan William J. , Ardila Sergio
Published: March 2024

This paper (ENV-126) was originally presented at a National Science Foundation Workshop on Alternatives to Traditional Contingent Valuation Methods in Environmental Valuation, held at Vanderbilt University, Nashville Tennessee, on October 15-16, 1998. This paper reviews the past ten years of the Inter-American Development Bank's experience with stated preference methods, concentrating on their use in the cost-benefit analysis of projects supplying sewer service and improving ambient water quality in Latin America and the Caribbean. It reports the range of willingness to pay estimates involved, and comments on some of the most important economic analysis issues that appear to have arisen. Among these are the effect that alternative econometric specifications of the choice model can have on our estimates of average (or median) household willingness to pay derived from referendum CV surveys, the need to match what any investment project purports to achieve in a CV survey to what it will actually achieve in practice, and the role of sensitivity analysis in portraying the distribution of expected gross and net project benefits.
Financing Forest Investments in Latin America: The Issue of Incentives
Authors: Haltia Olli , Keipi Kari
Published: March 2024

This paper discusses the topic of deforestation in Latin America and the Caribbean and the use of incentives as support for private forestry investments. The paper develops the idea of using targeted and cost-effective incentives that must take into account cultural and social factors. In addition, cost recovery mechanisms for incentive schemes should ideally be indirect, based on taxes and fees.
Securing Stability and Growth in a Shock Prone Region: The Policy Challenge for Latin America
Authors: Hausmann Ricardo , Gavin Michael
Published: March 2024

What are the reasons for the costs of Latin America's volatility? Because there is no consensus on these fundamental questions, there is no consensus on the appropriate policy response to macroeconomic volatility in Latin America, and other shock-prone countries. This paper provides new evidence on these contentious issues, and discusses policy implications for the region. Paper prepared for the IDB/OECD conference on "Securing Stability and Growth in Latin America: Policy Issues and Prospects for Shock-Prone Economies", Paris, November 9-10, 1995.
Towards an Effective Regulatory and Supervisory Framework for Latin America
Authors: Rojas-Suárez Liliana , Weisbrod Steven R.
Published: March 2024

This paper raises fundamental questions about how banks in Latin America ought to be supervised. The concentration of wealth holders in Latin America and the equity markets' resulting illiquidity permit investors who control banks to subvert the intent of capital requirements, even when the bank itself is subject to rigorous accounting standards. A number of policy implications follow from the analysis. Three of policy recommendations derived from this analysis can be successfully implemented in the short run. Latin American supervisors should focus on: improving the markets that already work in Latin America, which currently are markets for bank liabilities; severely limiting public safety nets for bank liabilities so that risky banks face a high price for raising liabilities; and encouraging macroeconomic policies to play a much more important role in restraining bank risk in Latin America than in the industrial countries.