RED
This paper evaluates a community based development program designed to promote climate-smart agriculture and improve food security in rural Nicaragua. Using a within-community randomized controlled trial, we estimate short- and medium-term impacts on agricultural practices, production, and welfare. The program combined productive asset transfers, technical assistance, and training delivered through local solidarity groups. Results show significant increases in the adoption of improved inputs—such as certified seeds, biofertilizers, and post-harvest technologies—along with higher maize and bean yields, greater crop diversification, and expanded participation in producer organizations. Beneficiaries also report better food security and higher satisfaction with their quality of life. Because randomization occurred within communities, spillovers likely make these estimates conservative. The findings suggest that community-based delivery can effectively scale up CSA practices and strengthen food security in vulnerable rural areas.
This paper proposes a novel framework for analyzing collaborative innovation that captures both competition and cooperation among firms, and examines the impact of private appropriation through IP rights licensing on firms’ incentives to innovate and on the overall outcome. I show that when developing technology together firms compete and cooperate, and that the intensity of each force depends on their technological similarity and business model. To study the net effect of these forces in equilibrium, I focus on the standardization of mobile telecommunications technologies and use a novel dataset on the development of 3G and 4G standards to estimate my model. I show that enforcing royalty-free clauses reduces the participation and contributions of firms, delaying the completion of the initial release of 4G by almost one year beyond the almost 3 years it took to develop.
We study choice models with piecewise smooth objective functions and provide conditions under which introducing latent variables derived from regional components yields a censoredmodel– like representation. These latent variables can then be treated as potential outcomes, enabling tractable estimation via the stochastic EM algorithm. We illustrate the framework using two examples: responses to taxes and the (S, s) model. We further estimate a joint retirement decision model for European couples using an interdependent duration framework with our methods. The results provide empirical evidence of complementarities between spouses in the retirement process in Europe.
This paper examines how public organizations respond to institutional incentive design by comparing an input-based contract with a mixed input- and outcome-based contract. Using a clustered randomized controlled trial across 539 rural municipalities in Peru, I study how these contracts shape managerial practices in the implementation of a national Home Visit Program. While the mixed incentive did not alter home-visit coverage, it produced clear shifts in managerial behavior: municipalities expanded their supervisory staff, rewarded Community Health Workers more frequently, and intensified monitoring of the anemia indicator tied to the contract. They also adopted more targeted innovations for children at risk of anemia, although broader processes, such as training and supervision intensity, remained largely unchanged.
Do meeting locations shape who influences telecom standards? Using quasi-random variation generated by 3GPP rules that rotate venues across cities, we study attendance at 2,241 working group meetings (1999–2018). In a gravity-style linear probability model, geographic distance and national borders sharply reduce individual participation, even after controlling for role, seniority, and inventive activity. Crucially, the distance penalty is substantially larger for women and cannot be explained by differences in experience or technical expertise. By contrast, participation by core firms and senior technical leaders is comparatively insensitive to travel frictions. These results show that, despite cheaper communication and abundant air connections, spatial barriers still govern access to standard-setting and can tilt representation in a key arena of innovation policy.
This paper provides a systematic characterization of the organizational architecture of municipal governments in Mexico and how it varies with municipal size. Using detailed data from the National Census of Municipal Governments, the analysis documents patterns in the number of organizational units, staffing levels, sectoral specialization, and the allocation of budgetary and labor resources across functional areas. The results show that municipal bureaucracies expand initially through the creation of new units and, at later stages, through increased staffing within existing units, and that core functions such as public works, public services, and public security account for a large share of organizational resources. By describing these patterns, the paper helps address the scarcity of empirical evidence on the internal organization of the public sector and motivates further research on the relationship between organizational form and local state capacity.
The study analyzes how the inclusion of women in community governance bodies affects the management of common resources. It takes advantage of the 2016 reform of Mexico's Agrarian Law, which imposed gender quotas on agrarian committees, to estimate causal effects using a staggered event design. With data from more than a decade (2012–2023), it finds that greater female participation reduces annual deforestation by approximately 6%, without affecting local economic activity. Furthermore, inclusion changes interaction with the state: applications for empowerment programs increase and those for production subsidies decrease, although approval rates fall in communities with more women, highlighting institutional barriers. In summary, the formal inclusion of women transforms the governance of shared resources, but structural obstacles persist.
This paper studies the effects of mandated urban planning introduced by Brazil’s 2001 City Statute, which required municipalities with at least 20,000 inhabitants to adopt a master plan. Exploiting this population threshold in a fuzzy regression discontinuity design and combining survey, fiscal, census, and satellite data, I show that having a master plan generated sustained improvements in housing and urban infrastructure by strengthening local state capacity. Municipalities expanded their set of urban planning and land management instruments beyond the master plan and increased investment in housing and urban infrastructure, financed through higher land-based revenues. State governments further supported these investments by conditioning earmarked transfers on plan adoption.
This paper examines the effects of a climate adaptation policy on production and environmental outcomes in the context of Brazil’s semiarid region, the country’s poorest and most drought prone region. The large-scale, low-cost water policy builds rainwater reservoirs designed to boost production and strengthen rural producers’ resilience. Using a difference-in-differences approach and linking property-level administrative data to high resolution satellite data, we find that cistern construction real locates land toward higher-productivity uses. Results indicate an increase in cropland area by 7.6% and higher-quality pasture area by 14.5%, while lower-quality pasture area decreases by 3.2%. Forest cover increases by 1.1%, consistent with a land saving effect driven by a reduction of lower-quality pasture. Effects hold across property sizes and are slightly larger in magnitude for small-sized properties. Our cost-benefit analysis reveals a positive aggregate return with each invested monetary unit generating 1.76 units of benefits, indicating that adaptation policies can also advance mitigation goals via forest preservation.
Gender-based violence in the U.S. is a silent epidemic. Twenty percent of women experience rape, yet only one in three reports it. Using FBI data and a regression discontinuity design, we examine the impact of female U.S. House Representatives on reported rapes and femicides. Our findings suggest an increase in reporting, rather than higher levels of violence. Our setting and additional analysis allow us to rule out policy channels. We argue that female politicians serve as role models, influencing reporting through symbolic and social pathways. Congressional speech data support this argument: female legislators advocate more against gender-based violence, and their speeches correlate with higher reporting in their districts.
This paper explores an information intervention designed and implemented within a school assignment mechanism in Mexico City. Through a randomized experiment, we show that providing a subset of applicants with feedback about their academic performance can enhance sorting by skill across high school tracks. We embed the experimental variation into an empirical model of schooling choice and outcomes to assess the impact of the intervention for the overall population of applicants. Feedback provision is shown to increase the efficiency of the student school allocation, while congestion externalities are detrimental for the equity of downstream education outcomes.
This study experimentally examines the long-term effects of school-based financial education, analyzing data from nearly 60,000 individuals in Peru, seven years post-intervention. Treated students increased their total debt by 7.2% and average loan size by 7.8%, shifting from revolving to non-revolving credit. Borrowing terms improved slightly, and repayment performance remained unaffected despite increased borrowing. Formal employment and business formation remained unchanged. Impacts were equitable across sex and socioeconomic status, but higher performing students gained more in credit access. During the COVID-19 pandemic, financial education enhanced resilience by reducing reliance on revolving credit in favor of productive loans.
Do cooperative firms foster local economic development? This paper examines Mexico, assembling a new georeferenced panel dataset at the 10 × 10 km grid-cell level for 2015–2023. Across multiple research designs, we consistently find that cooperative presence boosts local development, measured by nightlight intensity. An event-study design shows persistent extensive-margin gains of 6–8% within four years of entry. To address selection concerns, we implement a shift–share IV strategy based on endogenous lagged-cooperative presence and plausibly exogenous sectoral growth shocks; the results imply that one additional cooperative increases nightlight density by about 2.7%.Complementary census evidence links cooperatives to higher schooling, home asset ownership, and decrease migration pressures. We also document stronger effects in Indigenous communities, where cooperatives have longer survival spells. Aggregate patterns suggest that cooperatives increase agricultural specialization but with clear productivity gains, while redistributive effects raise local disposable income and decrease poverty. These findings provide novel causal evidence that cooperatives can function as engines of inclusive local development.
Structural transformation—the shift from agriculture to industry and services—is key to economic development and can reshape labor market gender gaps. Yet little is known about how this process has unfolded in rural Latin America, where women face disadvantages from both gender and rurality. We document rural women’s labor market outcomes in 14 countries using harmonized household surveys, estimate motherhood effects using a pseudo-event study around first childbirth, and examine mechanisms using time-use data from Mexico. Despite educational gains, rural women still lag behind rural men and urban women in employment, hours, and earnings. While structural transformation has reduced informality and increased service and formal job participation, unpaid family work and precarious employment remain widespread among rural women. Motherhood further exacerbates disadvantages. Rural mothers face smaller employment drops than urban mothers but are increasingly pushed into unpaid work and low-skilled self-employment. Evidence from Mexico shows this stem less from childcare than from heavier household chores, home production, and limited access to labor-saving technologies. This paper provides the first evidence on how structural transformation interacts with motherhood in rural Latin America, showing that structural change alone cannot ensure inclusive opportunities for rural women.
This working paper quantifies the role of current land quality and geographic conditions as well as projected future climate change for agricultural productivity differences across and within Latin American and Caribbean (LAC) countries. It combines geospatial data on potential yields by crop and grid-cell, with a spatial accounting framework. If LAC countries produced their crops in the locations, they produce them with potential yields rather than actual, the 18 percent aggregate yield deficit relative to the richest countries would be reversed to an 18 percent surplus. While there are considerable cross-country and within-country heterogeneity, overall LAC countries have favorable natural land productivity. With improved input application and cultivation practices most LAC countries can double agricultural productivity, with substantial structural change implications. Climate change will reduce average yields in most LAC countries, but because of its heterogeneous effects across regions, there is more scope for yield gains from the spatial reallocation of production than under current conditions.
Este trabajo contribuye a la medición de “grados de ruralidad” en Argentina. El trabajo propone un índice multidimensional relativo de ruralidad que integra la clasificación tradicional de áreas de INDEC con datos censales y estimaciones de distancias a centros poblados. Como ejercicios de robustez, se comparan los resultados con los obtenidos de luces en la noche e imágenes satelitales. Además de presentar mapas del grado de ruralidad para todo el territorio argentino, el trabajo ofrece una caracterización amplia de la población por categorías de ruralidad para el año 2022 y de los cambios en el período intercensal 2010-2022. Esta caracterización incorpora variables socioeconómicas clave, como ingresos familiares, que trascienden la información disponible en los censos. A través de una medición más granular de la ruralidad, el trabajo contribuye a una mejor caracterización de las necesidades y realidades de las poblaciones que habitan zonas aisladas y de transición.
This paper examines the causal effects of trade shocks on local labor markets (LLMs), with a focus on the rural–urban divide. In particular, it analyzes the impact of China’s integration into global trade on Chilean LLMs with varying degrees of rurality. The identification strategy exploits variation in pre-shock industrial specialization across LLMs and changes over time in global Chinese import penetration and industry-specific export demand. We study short-run effects (1996–2006) and medium run dynamics (through 2022). Urban LLMs, more exposed to import competition, experienced declines in income, increases in poverty and informality, and persistent schooling losses. Rural LLMs, linked to primary sectors benefiting from Chinese demand, saw sustained income growth and reductions in poverty and informality. These asymmetric effects likely contributed to narrowing regional disparities and underscore the importance of geographic exposure in shaping the distributional consequences of global trade integration.
International migration is a recurrent phenomenon that has grown rapidly over the past two decades. This paper examines the role of agricultural distortions in shaping emigration patterns and influencing productivity and welfare in developing countries, using Guatemala as a case study. We develop a theoretical framework where household members can work in agriculture, non-agriculture, or emigrate, and calibrate the model combining detailed micro and aggregate data. Our model identifies two key channels through which agricultural distortions affect migration and productivity: a first channel where distortions increase emigration among more productive agents, reducing aggregate productivity, and a second channel where distortions drive factor misallocation, lowering incomes and increasing overall emigration.
The study examines how labor market shocks originating in non-agriculture affect the organization of agricultural production. Using data from Brazil between 1986 and 2017, it shows that the entry of large non-agricultural firms leads to persistent increases in local wages, declines in agricultural employment, and a shift toward more capital-intensive farming. Farms consolidate, the number of small operations declines, and mechanization increases. To study the magnitude of this reorganization, we develop a general equilibrium model which predicts that a reduction in entry costs in non-agriculture leads to labor reallocation out of agriculture, farm exit, and capital deepening. When we hold mechanization fixed, these adjustments are substantially attenuated, highlighting the role of endogenous technology adoption as an important amplification mechanism.
Este estudio analiza las diferencias en la calidad del empleo entre ocupaciones verdes y no verdes utilizando datos de la encuesta PIAAC, con especial atención al ingreso salarial. El enfoque se centra en México, Chile y Ecuador, comparando sus patrones con los de países de la OCDE de ingresos altos y medios. Al controlar por habilidades cognitivas y otras variables, se identifican premios salariales en empleos verdes en América Latina y en países OCDE de ingresos medios, pero no en los de ingresos altos. Además, se abordan otras dimensiones de calidad laboral como automatización, formalidad, satisfacción y acceso a capacitación, reforzando la evidencia de beneficios asociados al empleo verde.
Este trabajo estima el acceso de los hogares latinoamericanos a distintas fuentes de energía (modernas y no modernas), así también como el gasto asociado a su consumo. En particular, se estudia cómo difiere el acceso a lo largo de la distribución del ingreso, entre hogares residiendo en áreas urbanas y rurales y entre hogares localizados en distintas regiones de los respectivos países. En la medida de lo posible se presenta información para comienzos de siglo, comienzos de los 2010s y la información más reciente. Los resultados obtenidos indican que la región ha logrado avanzar bastante en la universalización del acceso a electricidad residencial, pero muestran que existe un largo camino a recorrer para garantizar el acceso a gas de red y gas licuado de petróleo. Asimismo, la evidencia presentada también señala que existen importantes diferencias, tanto entre países como al interior de ellos, en el acceso y utilización de las distintas fuentes de energía.
La transición hacia una matriz energética libre de emisiones de gases invernadero presenta múltiples desafíos desde el punto regulatorio. Primero, será necesario proveer los incentivos para que haya capacidad de generación y transmisión suficiente para mantener un sistema confiable, lo que se hace más difícil debido a que la intermitencia de las tecnologías renovables aumenta la volatilidad de la generación y la hace más difícil predecir. Para esto, también es importante proveer incentivos para que el sistema opere de manera eficiente, para lo cual es necesario que los precios a los que se transan los distintos servicios reflejen el costo de producirlos. En el artículo se discuten los desafíos en estas dos líneas, y finalmente se discute brevemente el caso de algunos países en su transición energética.
Las temperaturas extremas afectan negativamente el aprendizaje, la productividad y la salud. La exposición de las poblaciones a las mismas adquiere especial relevancia debido al cambio climático. El presente trabajo presenta la distribución completa de las necesidades de calefacción y refrigeración presentes y futuras de la población y el territorio de América Latina y el Caribe. Si bien en la región predominan las necesidades de calefacción, dicha distribución completa permite identificar subpoblaciones y territorios con necesidades de refrigeración similares a las de los países fríos de Europa. La distribución completa futura de las necesidades de climatización según la senda socioeconómica compartida del IPCC (SSP2-4.5) revela incrementos del 25 % en el mediano plazo y del 50 % en el largo plazo en las necesidades de refrigeración en los países cálidos, que constituyen la mayoría. Por último, se utiliza la distribución completa de necesidades de refrigeración para estimar la posesión actual y futura de aires acondicionados para todos los países, dato esencial para prever el incremento en la demanda de electricidad y cuyo valor actual se encuentra disponible solo para la mitad de los países.
Este estudio examina la desigualdad en salud en América Latina y el Caribe (LAC). En primer lugar, se describe cómo las transformaciones demográficas han modificado la carga de enfermedad en los últimos 30 años. Inicialmente dominada por problemas maternos, neonatales y transmisibles, la región enfrenta ahora un aumento de enfermedades cardiovasculares, cánceres, diabetes y trastornos de salud mental. Luego se documentan las marcadas disparidades en salud por condición socioeconómica. Los hallazgos subrayan que las desigualdades de salud en la infancia y adolescencia son más críticas que en la adultez, con diferencias notables en salud infantil según la riqueza del país y en algunos resultados de salud en adultos.
La transición verde representa una de las fuerzas de transformación más significativas del mercado laboral en los próximos años. Esta tendencia del mercado laboral asociada a la transición verde se ha enmarcado en el estudio sobre empleos verdes. Este capítulo analiza la incidencia de empleos verdes en cuatro países de América Latina utilizando información proveniente de portales de empleo. Los resultados muestran que los mercados laborales actuales presentan una baja incidencia de demanda por empleo con potencial verde o de ocupaciones nuevas y emergentes relacionados con la transición verde. Dichas ocupaciones se caracterizan por requerir altos niveles educativos y ofrecen una prima salarial significativa. Estos resultados destacan el principal desafío de la transición verde, que radica en la necesidad de implementar procesos de formación, al mismo tiempo que revelan oportunidades para la creación de empleos decentes en la región.
Using DHS data for six Latin American countries, we estimate the relation between a mother’s teenage childbearing status and that of her daughter. Restricting the estimating sample to mother-daughter matches in the data leads to a large negative selection bias in the estimated effect because missing matches are non-random and affected by the teen childbearing status of mothers and daughters. We deal with this selection bias by developing a Maximum Likelihood estimation using all available data, including incomplete mother-daughter pairs, and allowing missing observations to be endogenous. Our results show that being the daughter of a teen mother increases the chances of being a teen mother between 8.7 and 26.2 percentage points (between 61 and 172%). We conclude that the prevalence of such high intergenerational transmission is at the core of persistent high teenage childbearing rates in Latin America and suggests alternative public policy fixes.
Latin America has experienced high rates of teen childbearing for decades. Using DHS data for six Latin American countries, we estimate the relation between a mother’s teenage childbearing status and that of her daughter. Restricting the estimating sample to mother-daughter matches in the data leads to a large negative selection bias in the estimated effect because missing matches are nonrandom and affected by the teen childbearing status of mothers and daughters. We deal with this selection bias by developing a maximum likelihood estimation using all available data, including incomplete mother-daughter pairs, and allowing missing observations to be endogenous. Our results show that being the daughter of a teen mother increases the chances of being a teen mother between 9.1 and 23.7 percent age points (75 and 123% relative to the mean incidence of teen childbearing). We conclude that the prevalence of such high intergenerational transmission is at the core of persistent high teenage childbearing rates in Latin America.
This paper documents how unwanted childbirths relate to women’s education and wages. Unwanted childbirths, especially early in life, can affect women’s education and labor market decisions. Using data from the National Longitudinal Survey of Youth 1979, I document that on average, mothers whose first childbirth was unwanted have lower levels of education, lower wages, and have their first childbirth at younger ages compared to the rest of the mothers. Results are stronger when using a self-reported question about unwantedness, compared with the definition that accounts for pregnancies while using contraception.
This paper studies the impact of high dismissal protection on bureaucratic turnover and productivity in the context of public school teachers in Chile. We take advantage of a law that required education administrators to grant a permanent contract to temporary teachers with a minimum seniority and implement a difference-in-differences strategy comparing eligible and ineligible teachers. We find that high dismissal protection reduces turnover by 25 percent in the first two years. The reduction is only statistically significant among teachers at the bottom and top of the distribution of baseline performance. We then examine the impact on teacher productivity and find a significant decline in the learning of students taught by teachers with low baseline performance. These findings are consistent with the hypothesis that high dismissal protection can be a double-edged sword. It can help to retain high-performing employees, but at the cost of making it more difficult to separate and motivate low-performing employees.
Policy makers and international organizations often argue that teenage pregnancy affects girls’ life trajectories by, for example, limiting their employment opportunities. These concerns are amplified in regions with high teen pregnancy rates such as Latin America. We use a unique dataset from Colombia that allows us to instrument for early motherhood with the age at menarche. We find that teen pregnancy reduces school attainment and increases the number of children ever born. However, when considering eight indicators of labor supply, including labor force participation, type of job and occupation while accounting for multiple hypothesis testing, we find that much (if not all) of the negative effects on labor supply attributed to teen motherhood are due to selection. Our findings weaken the claim that early motherhood leads to a path of low-quality employment or a misallocation of talent due to job sorting. We discuss the role that family network and co-residence plays as a mechanism to buffer the effects of early motherhood on labor supply.
This paper studies how the admission of a student to an elite school changes the schooling outcomes of younger cohorts in the student’s origin school in Peru. Using a sharp regression discontinuity design, the analysis finds that the admission of an older schoolmate increases the probability that students in origin schools will apply and gain admission to the same elite school system. The effect is concentrated among students whose parents have low education levels, which indicates a process of information diffusion. Furthermore, there is a slightly positive effect on the learning achievement of potential applicants and no negative effect on the learning of students who are ineligible to apply. Overall, the findings show that selective schools can have effects that go beyond their own students and indicate that role models can be an effective mechanism for increasing the demand from high-achieving, low-income students for high-quality education.
We present causal evidence of the effect of local labor supply shocks on labor outcomes of young job seekers in a developing country. We study a large-scale internship program in Argentina that randomly alters job seekers’ local labor environment. Exposure to areas with high program saturation results in adverse effects on labor market outcomes following program completion, while having a nearby individual who participated in the program improves labor outcomes. These results are compatible with the coexistence of a mechanism of transmission of valuable labor market information among peers and a competition mechanism.
Keywords: Local labor market shocks, Labor market frictions, Spacial frictions, Information frictions, Networks, Externalities, Displacement effects
We provide empirical evidence on the impact of raising the minimum age of marriage to 18 years old on child marriage, early motherhood, and school enrollment in Mexico. Using a difference-in-differences model that takes advantage of the staggered adoption of this reform across states, we show that banning child marriage leads to a large and statistically significant reduction in the number of registered child marriages. However, we find no effect on school attendance or early fertility rates. We provide evidence that the mechanism behind these results is the substitution of formal marriage for informal unions. These findings suggest that when informal unions are a viable option for young couples, raising the minimum age of marriage is not enough to prevent early unions and their negative consequences.
Brazil began the implementation of SUS (Universal Health Insurance) in 1988. To the extent that SUS broke the link between employment contract and health insurance, it may have changed the incentives for individuals to participate in the labor market and in which sector to work (formal or informal). Our goal is to study the labor market impacts of SUS. We do so by structurally estimating a labor market model that allows us to address three main questions (i) How much of the increase in informality in Brazil is due to the introduction of non-contributory health insurance? (ii) How much do individuals value health insurance? And (iii) What are the welfare impacts of increases in the value of non-contributory health insurance? The model is fitted to Brazilian employment data and used to simulate changes in welfare, employment, informality and wages of different noncontributory health insurance policies.
There are many journalistic and anecdotal accounts about the prevalence of electoral corrals in Brazil, geographic areas where brokers, politicians, or community leaders influence residents to vote for a specific candidate. In this paper, I investigate one particular type of suspected electoral corral: the favela, urban slum. This analysis focuses on the 1000+ favelas in the city of Rio de Janeiro, Brazil. I explore whether or not vote share is indeed more concentrated in urban slums, and then whether or not vote concentration is related to criminal dominance. I contend that politicians in Rio de Janeiro have incentives to work with criminal groups in order to get more votes, and that finding a way to access these electoral corrals may be an election-winning strategy. Using novel, geospatial data and introducing a new text dataset on criminal dominance in Rio de Janeiro, I show that vote concentration is indeed more concentrated in urban slums and, within these slums, even more concentrated in slums that have steady criminal dominance from one election to the next.
This paper uses detailed ownership information of private firms in Ecuador and the identity of bureaucrats to document the effects of political connections on firm size and the allocation of government contracts. Reduced-form estimates show a significant positive effect of political connection on sales, assets, debt, and costs. Using contract-level data, we find that politically connected firms enjoy higher probability of winning discretionary contracts and charge higher prices for homogeneous goods and services than unconnected firms. Back-of-the-envelope calculations indicate a political connection premium of 475 million USD per year in overpricing. Further analysis from production function estimates suggest that politically connected firms are less efficient than unconnected ones. This translates into a 1.5 to 3.5 percent excess cost of provision.
This paper proposes a test to estimate the nature of political corruption in developing countries: embezzlement by self enriching politicians versus corruption that originates as a quid-pro-quo from campaign contributions. If politicians decide whether to be corrupt rationally, then increasing the punishment for corrupt practices or the probability of getting caught should reduce corrupt practices (Becker, 1968). If corruption is a response of politicians to firms that finance their campaigns, an increase in punishment should yield not only a reduction in corruption but also a reduction in the demand for projects that are corruptible, such as projects on infrastructure. We test these explanations for corrupt practices using a randomized policy experiment in Brazil. We exploit the fact that some municipalities were randomly chosen to have their probability of being audited increased and we analyze public data of block grants. We find a significant decrease in the resources requested by the mayors to execute projects in infrastructure. This effect is stronger if the municipality has been audited in the past, evidence that mayors respond to credible policies. Moreover, this effect is larger if the mayor’s campaign was strongly financed by construction companies. Finally, treated mayors have their performance in subsequent elections worsened and get less financed by construction companies after the experiment happened. In sum, our findings suggest that mayors are committed to campaign contributors and respond to larger probability of audits by reducing the amount of resources requested for infrastructure projects.
One-third of the developing world’s population lives in urban slums and the absolute number of slum residents grew from 650 million in 1990 to 863 million in 2012. Although negative impacts of slum living conditions on several dimensions of slum residents’ lives are well documented, much less research exists on why slums emerge and grow in the first place. This paper provides novel evidence on the effect of local political conditions and slum policies on slum growth. Using a regression discontinuity design in close municipal elections in Brazil, I show that victories by a center-left, pro-poor party led to both more slum upgrading policies and a higher share of slum housing. I further show evidence indicating that the pro-slum incentive effect from slum upgrading policies was the main mechanism behind this party’s effect on slum growth. By highlighting the relevance of local institutional conditions for understanding where slums are more likely to grow, these findings innovate over traditional explanations based on the role of rural-urban migration and rapid urban economic growth. This paper’s evidence on the potential incentive effect of slum upgrading policies on slum growth does not imply that slums upgrading efforts should stop. Given the solid evidence on the positive impacts of slum upgrading programs on the lives of the poor, these programs should continue to develop, and governments should consider, for example, complementing slum upgrading efforts with policies expanding the supply of non-slum housing.
La presente investigación tiene como objetivo analizar el efecto de los instrumentos de apoyo público a la innovación sobre el desempeño productivo y la inversión en innovación de las empresas manufactureras y de servicios en Colombia. El estudio se concentra en analizar el impacto sobre la productividad y la intensidad del gasto en innovación de los instrumentos que financian proyectos bajo las modalidades de cofinanciación y crédito otorgados por entidades gubernamentales que tienen mayor peso en definición de políticas y la financiación de la innovación en Colombia. En la estimación se utiliza una combinación de registros administrativos y resultados de encuestas de innovación para identificar los beneficiarios de los programas. Para estimar el impacto de los programas se utiliza el método de diferencias en diferencias en combinación con el procedimiento de Propensity Score Matching. La evidencia empírica aportada sugiere que las firmas manufactureras y de servicios que han recibido fondos públicos para innovar obtuvieron mejoras significativas en productividad y realizan un mayor esfuerzo en actividades de investigación y desarrollo, con respecto a las empresas que no participan en esos programas.
Customs are often prone to corruption because it concentrates a lot of discretionary power in the hand of custom agents who take decisions with high economic stakes for the firms, providing an opportunity for custom agents to extract a rent from the firms. Communication technologies offer the possibility to limit this discretionary power by reducing direct interactions between firms and custom agents. Combining firm level panel data on about 6,000 manufacturing firms with custom level data, we assess the effects on firm level outcomes of a computerization of import transactions that occurred sequentially in the 26 Colombian customs between 2000 and 2005. We apply a triple difference strategy that makes use of the variation between customs, time and the firms' exposure to the reform, based on whether it was an importing firm before it started. We find large effects of the computerization of the custom on the growth of importing firms' inputs, investments and value added. We also provide evidence of a large increase of imports declared, taxes collected, and a reduction in corruption cases following the custom reform.
In this paper, we study how parents react to a widely-used school policy that puts some children at a learning disadvantage. Specifically, we first document that, in line with findings in other countries, younger children in Spain perform significantly worse at school than their older peers and – key to causal interpretation – that for children born in winter this effect is not due to birth seasonality. Furthermore, the age of school entry effect is significantly greater among children from disadvantaged families. To understand why, we analyze detailed data on parental investment and find that college-educated parents increase their time investment and choose schools with better inputs when their children are the youngest at school entry, while non-college-educated parents do not.
We investigate the extent to which financial frictions shape the aggregate effects of a trade liberalization through their impact on aggregate total factor productivity (TFP) and capital misallocation. We study a small open economy populated with heterogeneous entrepreneurs who differ in their productivity and are subject to financing constraints. Individuals choose whether to be workers or entrepreneurs, and entrepreneurs choose whether to export or not. We show how financial frictions distort these decisions and aggregate TFP. We calibrate the model to match key features of Chilean plant-level data and use it to quantify the TFP losses due to misallocation. We then investigate how the presence of financial constraints affects the output and TFP gains from trade liberalization. We find that lowering trade barriers has a stronger positive effect in less financially developed economies. The higher profits that result from trade liberalizations allow firms to accumulate assets and relax their credit constraint, which is particularly valuable in economies where firms are severely constrained.
We study how unemployment shocks in the United States affect Mexican households’ migration decisions. We emphasize households at origin (as op-posed to individuals) as the decisionmaking units for migration decisions. We show that negative changes in US labor market conditions, which are diffused by household members at destination to those at origin, lead to heterogeneous migration responses by Mexican households that have members abroad. We argue that this heterogeneous response is driven by the relative magnitudes of income and substitution effects after a negative employment shock in the United States. While the income effect dominates the substitution effect for poor households, the opposite holds for richer households. These results also inform the literature on selection patterns in international migration, which suggests a new channel through which negative shocks in the host economy negatively affect the skill composition of subsequent migrants.
In an effort to increase female labor participation in Chile, firms with more than 19 women must pay for childcare for the children of their female employees. We evaluate the effects of such policy using a model that features firm heterogeneity and three factors of production: women, men and capital. In our model the policy misallocates resources, driving firms to stop hiring once they are close to the threshold, depressing female participation and wages. We calibrate the model to the Chilean economy, and analyze via counterfactuals the effects of removing this distortion. First, we find that the policy reduces female labor participation by 1%, and wages by 2%. Second, the policy redistributes welfare from men to women, increasing female welfare by 0.05%. Third, we suggest alternatives policies that would be more successful at increasing female labor participation. For example, financing childcare with a tax on profits would increase female labor participation by 4%, with similar welfare consequences as the policy in place.
We provide a novel approach to estimate the deadweight loss of congestion. We implement it for road travel in the city of Bogotá using information from a travel survey and counterfactual travel data generated from Google Maps. For the supply of travel, we find that the elasticity of the time cost of travel per unit of distance with respect to the number of travelers is on average about 0.06. It is close to zero at low levels of traffic, then reaches a maximum magnitude of about 0.20 as traffic builds up and becomes small again at high levels of traffic. This finding is in sharp contrast with extant results for specific road segments. We explain it by the existence of local streets which remain relatively uncongested and put a floor on the time cost of travel. On the demand side, we estimate an elasticity of the number of travelers with respect to the time cost of travel of 0.40. Although road travel is costly in Bogotá, these findings imply a small daily deadweight loss from congestion, equal to less than 1% of a day’s wage.
We study the design of optimal unemployment protection schemes to evaluate its impact on labor markets, welfare and productivity. We consider a life-cycle economies with formal and informal labor markets, unobservable effort to find and keep formal jobs, and unobservable heterogeneities across worker to find better formal jobs. We analyze the first best allocation to compare with the allocations stemming from the implementation of two alternative schemes: (i) a simple unemployment insurance system with a defined profile of unemployment benefits; (ii) an unemployment insurance saving account scheme parameterized by a replacement rate, an initial contribution to the saving account, a minimum level of savings at which the payment is suspended, and a maximum level of savings at which the contributions are suspended. Our quantitative analysis makes clear that both schemes can have a significant impact on welfare and productivity. Two additional lessons can be learned. First, no scheme is necessarily better in both economies. Second, a reform that implements an scheme that it is welfare improving does not necessarily boost productivity and viceversa.
This paper uses the particular features of the tax-sharing regime Coparticipación Federal de Impuestos and the fact that some provinces earn hydrocarbon royalties to investigate public expenditures and debt at the subnational level in Argentina.We obtain that facing a one peso increase in intergovernmental transfers, provinces spend on average 36 cents in public expenditures with no changes in public debt. On the other hand, when royalties increase one peso, 59 cents are used to pay back public debt while public expenditures are not affected. These results, which are robust to many different specifications of the basic regressions, suggest a non-negligeable expenditure/debt smoothing behavior of Argentine provinces.
This study investigates how early-life conditions interact with subsequent human capital investments to influence future educational outcomes. To provide causal evidence, we exploit two sources of exogenous variation: i) variation in early-life environments resulting from a child's exposure to extreme rainfall and drought shocks in early-life; and ii), variation in subsequent investments resulting from the availability of conditional cash transfers (CCT) that promote investments in children's health and education. Using Colombian administrative data, we combine a natural experiment with a regression discontinuity design using the CCT assignment rule. Results show that, although the CCT has an overall positive impact on children's educational outcomes, it does not have a differential effect on children exposed to early-life shocks; however, the overall effect of the program is large enough to mitigate the negative impact of the weather shock. These findings have important policy implications as they provide evidence of the role of social policies in closing gaps generated by early-life trauma.
We analyze the impact of an expansion in government-guaranteed credit for higher education in Chile on a sample of elementary and high school students. Using students who had an alternative source of funding as a control group, and administrative records before and after the reform, we present evidence that students most likely to attend college in a future are affected in different ways. First, we show that parents of students who ex ante were more likely to be credit restricted became more likely after the reform to state that their child would end up completing college. Second, we find that relaxing credit restrictions reduces the probability of dropping out of high school, specific among top students originally enrolled in low-performance schools and low-performance students attending better schools. Third, we find that the reform led to an increase in educational sorting. Best students switch to better schools while lowperformance students go to lower-ranked schools. This sorting helps to explain why we observe a decrease (increase) in GPA and an increase (decrease) in grade repetition among better (worse) students. Then, for a sample of students that were in transition from elementary to secondary school, we show that good students are more likely to enroll in a college-oriented track. Finally, using household data and birth records aggregated at the municipal level, we find, consistent with previous findings, a reduction in teen pregnancy.
This paper investigates whether lowering the cost of divorce can reduce domestic violence. The cost of divorce influences the bargaining position of spouses, and thus, their behavior within the marriage. This study takes advantage of a large and unexpected reform of the divorce regime in Spain, which allowed for unilateral and no-fault divorce, and eliminated the pre-existing 1-year mandatory separation period, to estimate the causal effects. This reform dramatically reduced the cost of exiting a partnership for married couples, but not for unmarried ones, which favors a differencein-differences identification strategy. This study analyzes several measures of spousal conflict, ranging from self-reported spousal abuse and technical definitions of spousal violence based on recorded behavior, to more extreme measures of well-being such as partner homicide. Results suggest a decline of 27-36 percent in spousal conflict and around 30 percent in extreme partner violence as a consequence of the reform. Moreover, spousal violence has been found to decrease among couples who remain married after the legal modification, which suggests an important role for changes in bargaining within the marriage when divorce becomes a more credible (cheaper) option. The results are not driven by selection and are robust to a variety of checks.
Recent empirical evidence at the cross-country and subnational levels suggests that internal conflicts harm state capacity and tax performance. On the face of it this is odd: internal conflict should create strong incentives for governments to develop the fiscal capacity necessary to assert full control over their territory, just as sociological theories argue external conflict did. We argue that one reason for the pattern is that internal conflict enables groups with de facto power to capture local political and economic institutions. We test this mechanism in the case of Colombia using data on tax performance and institutions in each of Colombia’s 1,120 municipalities. We show that municipalities most affected by internal conflict have tax institutions consistent with the preferences of the parties engaging in violence. Those suffering right-wing violence feature higher total property tax revenues and more land formalization. Municipalities with substantial left-wing guerrilla violence collected less tax revenue and saw less land formalization. These outcomes translate into differential level of social investment and social outcomes. Our findings provide the first concrete evidence that internal armed conflict helps interest groups capture municipal institutions for their own private benefit.
En este trabajo se emplea información acerca del desempeño escolar a nivel de establecimiento educativo para Chile y Perú con el objeto de estudiar la eficiencia en la provisión de servicios educación en la dimensión de calidad. Se emplea el método de la "frontera estocástica" y se hace especialmente énfasis en los diferenciales de eficiencia entre escuelas públicas y privadas. Se encuentra que parte de la brecha en los resultados de las pruebas entre estos dos tipos de instituciones, se explica por falta de insumos y por el background socioeconómico de los estudiantes; sin embargo, aun el incorporar estos factores, una brecha de eficiencia entre escuelas públicas y privadas persiste; especialmente en el caso el Perú. Este hallazgo pone en el centro de la discusión la pregunta sobre qué prácticas e instituciones favorecen un mejor uso de los insumos educativos; discusión que es presenta sucintamente al final de este documento.
In this paper, we study the characteristics and growth dynamics of young businesses, and the contribution of these businesses to aggregate growth, in a developing economy: Colombia. Our study covers the 17 years between 1993 and 2009. We limit our study to manufacturing plants of 10 or more employees (and some with less employees but large production). By doing so, we concentrate our attention on the segment of young businesses that are most likely truly entrepreneurial efforts. We characterize young manufacturing plants and compare them to older ones. This characterization covers several dimensions of business performance: employment, output, exports, survival patterns, productivity and investment. We contrast these patterns with those observed in the US. We also study the contribution of establishments of different ages to overall employment and output growth over our 17 year period. The paper makes several contributions to the existing literature. First, it characterizes young business dynamics for a developing economy. Second, it focuses on establishments that are born large enough that they plausibly represent truly entrepreneurial initiatives. That focus enables us to show that part of the wide variation in growth patterns among young businesses found by previous studies reflects the poor performance of micro establishments. In particular, we find much less destruction from exit of young businesses when the micro segment is removed from the data.
Fiscal contract theories of the state hypothesize that government performance affects tax collection and that institutions that foster representation and accountability link taxes and services. These propositions have yet to be tested with a causal research design and disaggregated data. In this paper, we use a quasi-experimental research design with randomized audits from Brazil to assess whether revealed corruption and other metrics of government performance affect municipal property tax collection. We find that revealed corruption robustly reduces property tax revenue; revealed performance on many other dimensions does not. We also find that while the structure of fiscal institutions (participatory budgeting versus budgeting via elected representatives) has no effect on the amount of corruption revealed or the quality of performance, revealed corruption increases the probability that a municipality will adopt participatory budgeting in the future.
In this paper, we examine SMEs in Argentina in search for a measurement of those who are credit constrained. We also estimate a model for the determinants of credit rejection taking into account those that are self-excluded. In addition to the 7 percent of SMEs that request credit from banks and face rejection, we find that there is at least a percentage of nearly 37 percent of SMEs that are self-excluded from the credit market, although they seem to be in need of external financing (by several indicators); while having profitable investment projects. We find that the size of firms, low levels of leverage, and an exporting condition, all increase the probability of being granted a bank credit. Surprisingly, we do not find a role for other financial statements based variables such as collaterals or cash flow in the explanation of bank’s approval/rejection decision. Even more surprising is the fact that neither of the balance sheet based variables help to explain the self-exclusion from bank credit. The self-exclusion from the credit market is strongly related with firms’ private expectations on the existence of profitable opportunities, and their needs/desire for external financing.
Using a survey of firms in 61 countries around the world (WBES) and econometric techniques that allow us to deal with observed and unobserved country specific components as well as with partial endogeneity, we explore the role of the development of credit information mechanisms such as private credit bureaus or public credit registries on small and medium-size enterprises' access to bank credit. We find that the development of information sharing mechanisms reduces significantly the financing gap between small and large firms.
Este trabajo estudia el impacto de la explotación de hidrocarburos y minerales sobre el desarrollo regional y local reciente en Colombia. Examina si los departamentos y municipios productores de hidrocarburos y carbón, y receptores de regalías, han crecido más o presentan mayores niveles de PIB per cápita en comparación con los departamentos que no se han beneficiado de éstos recursos. Asimismo, explora si hay diferencias en el comportamiento fiscal entre las regiones receptoras y no receptoras de regalías. Por otro lado, analiza si la disponibilidad de regalías tiene efectos sobre el crecimiento y el comportamiento fiscal diferentes a los que presenta la disponibilidad de transferencias de recursos nacionales del Sistema General de Participaciones, que constituye otra fuente exógena de recursos para los entes territoriales. Por último, el trabajo presenta alguna evidencia parcial, con estudios de casos, del impacto de la producción minera y las regalías sobre otras variables claves tales como la educación, la salud y la infraestructura pública.
Why does a certain metropolitan area grow more than another? The answer to this question has evaded much of the considerable body of scholarship on the topic. One problem may be that some of the frameworks that drive empirical research in this field tend be based on ad hoc combinations of explanatory factors, ranging from natural climate to business climate to land and labor costs. Theoretical approaches emphasize differences in economic specialization: some activities have higher rates of growth than others, and this translates into divergence in medium-term rates of inter-urban growth and income. But specialization itself needs to be explained. International economics has adopted theoretical frameworks for explaining different growth rates and income levels among countries involving multiple causes and their potentially recursive interactions. Three main forces are at the heart of this literature: specialization, labor force and human capital issues, and institutions. This framework can be fruitfully adapted to the analysis of metropolitan growth and change. The thorniest aspect of doing so is to consider recursive relationships among the three in a dynamic model, where specialization, human capital and institutions are endogenous to the explanation, and where causality can reverse over time in complex sequences. In this paper, we lay out the elements of such an approach and conclude that while explaining the origins of specialization remains beyond our grasp, many of the most important adjustments of regional economies can be explained. The most important force in adjustment is local institutions, but these must be understood in a non-conventional way, mostly as informal actor-networks. Policy for local economic development needs to address the ways it can nurture and support those actor-networks that play a constructive role in local economic development, by affecting patterns of specialization and development of human capital; and how it can replace or eliminate actor-networks that obstruct economic development.