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No. 250   (Download full text)
Luis Omar Herrera-Prada
The Economic Consequences of Setting Foot in a College in Colombia
Using administrative data, I track the path of all the secondary school graduates in Colombia from 2002 to 2012 that enter higher education and/or the formal labor market (5.4 million graduates). I compare graduates within the same secondary school and cohorts to estimate the premium of higher education. I estimate the sheepskin effect by exploiting the phenomenum of students who enrolled in the labor market after finished 90% or more of the college course-work but did not graduate and comparing them against workers that did earn a bachelors degree. Using a modified Mincer equation, I find that the Colombian labor market values a college graduate at the time of graduation the same as a secondary school graduate with five years of formal labor market experience. I also find high positive correlations between the quality of higher education institutions and students’ skills and earnings, and between on-time graduation and earnings. High-quality higher education institutions boost the entry-level salary for their graduates, but this boost fades over time as others gain experience and the graduates’ skills as workers are revealed. I find evidence that higher education is slowly reducing the gender income gap and improving income distribution in Colombia. Finally, the sheepskin effect is about 12.6% on average and the returns for bachelors, diplomas, and masters are 15.1%, 33.6%, and 53.2%, respectively.
JEL-Codes: I23, I24, I26, J24, J31
Keywords: Returns to education, Sheepskin effect, Higher Education, Education, Graduation, Gradiation on time
No. 249   (Download full text)
Laura Barros and Manuel Santos Silva
Between sticky floors and glass ceilings: the effect of trade liberalization on double discrimination in Brazil
This article investigates how trade liberalization affects gender and racial pay inequalities in the short run. Guided by an intersectional perspective, we consider overlapping effects across gender, race, and wage levels. We exploit Brazil’s trade liberalization process (1988–95) as a natural experiment. On average, liberalization increased wages of nonwhite women relative to men and white women. However, this average effect masks substantial heterogeneity. When we decompose pay gaps along the wage distribution, we find that liberalization reduced racial and gender discrimination at low wages, which mitigated preexisting ‘sticky floors’ by gender. In contrast, at the top of the distribution, liberalization increased racial discrimination, which reinforced existing ‘glass ceilings’ by race.
JEL-Codes: F13, F14, J15, J71
Keywords: trade liberalization, wage inequality, intersectionality, gender, race
No. 248   (Download full text)
Felicitas Nowak-Lehmann D., Adriana Cardozo and Inmaculada Martínez-Zarzoso
Migration and asylum flows to Germany: From facts to analysis
This study aims at analyzing the determinants of both general migration and asylum migration from less developed countries to Germany. To this end, a comprehensive migration model is set up that includes climate change, economic opportunities, links to Germany, home country characteristics (such as per capita income, population growth, poverty, consumer confidence, unemployment), the political and institutional situation in the sending countries (measured by internal and external conflict, ethnic and religious tensions, government stability, law and order, military in politics) and changes in German migration law. Panel data techniques (Pseudo Poisson Maximum Likelihood (PPML)) for the estimation of the parameters of interest are employed using a panel of 131 origin/sending countries over the period of 1996-2017. The analysis reveals that political factors, institutional risk, and economic factors determine both overall migration and asylum migration. Economic factors are also determinants of asylum applications as asylum seekers most often come for a several reasons. Moreover, economic factors seem to have a disproportionately large impact on asylum requests in general. Climate change impacts migration in the expected direction, thus, increasing migration but only to a very small extent. However, the most interesting findings are revealed when considering important country groupings (main migration countries, major asylum countries, countries whose asylum applicants enjoy high, intermediate or low recognition rates).
No. 247   (Download full text)
Adriana Cardozo, Inmaculada Martínez-Zarzoso and Luis R. Díaz Pavez
The Impact of Migration on Wages in Costa Rica
In recent years, Costa Rica has experienced greater international migration from neighboring countries due to political, economic, and social reasons, raising discussions on the impact of migration on wages of native Costa Rican workers. This paper is the first attempt to disentangle the impact of migration on wages for native Costa Ricans from the impact for migrants. We analyze the effect within groups of education, experience and regions as suggested by the so-called spatial correlation approach. Furthermore, we address endogeneity by constructing a shift-share instrument, and heterogeneity by using different sets of fixed effects. Our results show that on average, immigration has no effect on the wages of both natives and migrant workers with comparable skills for the period 2011 to 2019. The outcomes hold when using the national labor market approach as well as when changing the panel data estimation strategy. We also find that the effects vary by education level, in particular for high skilled workers a negative and significant effect is shown
JEL-Codes: F22, F66, J61, J31
Keywords: immigration, wages, labor markets, Costa Rica
No. 246   (Download full text)
Juan Armando Torres Munguía and Inmaculada Martínez-Zarzoso
What Determines Poverty in Mexico? A Quantile Regression Approach
According to official poverty estimates in Mexico, more than 50 percent of the population was poor in 2016, half of which could not even afford the basic food basket. Whereas most of the existing research analyses poverty focusing exclusively on average income or on the expected probability of being poor, this paper departs from this approach by analyzing income differences between households in rural and urban settlements using boosting additive quantile models. The models are estimated using a cross-sectional dataset containing information of more that 50 thousand households for the year 2015. The main results highlight the importance of analyzing poverty from an individual, household, community and regional perspectives and the relevance of accounting for heterogeneity of the effects on female- and male-headed households. The results point towards the existence of a life-income cycle and the relevance of education, social networks, income equality and quality of government to fight poverty. The findings also indicate that economic empowerment of women matters for pro-poor income policies to be effective and point towards the need of introducing a gender approach in the study on poverty.
JEL-Codes: C21, O10, O54
Keywords: Extreme poverty; Mexico; Quantile regression; Spatial effects; Boosting; Gender
No. 245   (Download full text)
Inmaculada Martínez-Zarzoso and Santiago Chelala
The Impact of Single Windows on Trade
This article is the first that quantifies the impact of single windows (SWs) on international trade globally. SWs function as a single point of entry and exit of the goods traded internationally and are therefore intended to facilitate trade. Using a structural gravity model for a panel of 176 countries from 1995 to 2017, we apply a log-log and a Poisson pseudo-maximum likelihood estimator (PPML) will multi-dimensional fixed effects to evaluate the extent to which export and import flows vary depending on whether or not countries have operational SWs. The main results from the linearized gravity model suggest that total trade between two countries with functioning SWs increases by about 37 percent, of which 23 corresponds to exports and 14 to imports. The result from the PPML estimation also indicate a positive and significant effect, which is however much smaller in magnitude.
JEL-Codes: F13; O33
Keywords: International trade, single window, technology
No. 244   (Download full text)
Adriana Cardozo, Felicitas Nowak-Lehmann D. and Calvin Zebaze Djiofack
Migration and Remittances in Haiti: Their Welfare Impact on Poor and Non-Poor Households
The purpose of this study is to identify a person’s likelihood of emigrating to another country and to identify a household’s likelihood of receiving remittances. We also compute average treatment effects as well as the marginal impact of receiving remittances on household welfare, across welfare quantiles. The novelty of our approach is to control for omitted variable bias by including the difference between individual and average propensity scores obtained in an auxiliary regression. The fact that an individual or household is above or below the average propensity score can thus be considered as a proxy of being different from the average for a variety of characteristics that might also be unobservable or unquantifiable. Based on Haitian household survey data from 2012, we find that non-poor individuals are more likely to emigrate but the welfare level of a household per se does not trigger the receipt of remittances. The receipt of remittances favors non-poor households in absolute terms but not in relative terms. While remittances can help overcome extreme poverty (for the poorest 10% but not for the poorest 1%), they do not help people escape moderate poverty.
JEL-Codes: C 18; C 21; D19; F22; F24
Keywords: Migration; Remittances; Household Welfare; Average Treatment Effect; Omitted Variable Bias
No. 243   (Download full text)
Carlos Villalobos Barría, Carlos Chávez and Adolfo Uribe
Energy poverty measures and the identification of the energy poor: A comparison between the utilitarian and multidimensional approaches in Chile
This work explores the consequences that different energy poverty definitions might have in the energy policy debate. We estimate the ten percent rule index (TPRI) while proposing and measuring a multidimensional energy poverty index (PMEPI). Both indices uses the 2017 National Survey of Public Perception on Energy applied to a sample of 3,500 households in Chile. Although both measures find that the energy poor represents about 15% of the population, energy poverty levels vary differently across the population depending on the employed measure. Moreover, the indices produce different energy poverty rankings across the territory, and most energy poor households are either TPRI poor or PMEPI poor. We found that this discrepancy between both energy poverty measures is mostly explained by territorylinked factors such as public lighting, service quality, service reliability, and thermal comfort. Consequently, an energy poverty analysis based solely on income or energy expenditure information (TPRI) is likely to neglect supply side constraints that are captured by the PMEPI. When identifying and targeting the energy deprived, the conclusion is that both energy poverty measures should not be used as substitutes but as complements.
Keywords: Energy Poverty; Poverty; Multidimensional Energy Poverty Index, Ten Percent Rules Energy Poverty Index, Affordability, Reliability of Energy Services, Quality of Energy Services
No. 242   (Download full text)
Laura Barros and Manuel Santos Silva
#EleNão: Economic crisis, the political gender gap, and the election of Bolsonaro
After more than one decade of sustained economic growth, accompanied by falling poverty and inequality, Brazil has been hit by an economic recession starting in 2014. This paper investigates the consequences of this labor market shock for the victory of far-right Jair Bolsonaro in the 2018 presidential election. Using a shiftshare approach and exploring the differential effects of the recession by gender and race, we show that heterogeneity in exposure to the labor demand shock by the different groups is a key factor explaining the victory of Bolsonaro. Our results show that male-specific labor market shocks increase support for Bolsonaro, while female-specific shocks have the opposite effect. Interestingly, we do not find any effect by race. We hypothesize that, once facing economic insecurities, men feel more compelled to vote for a figure that exacerbates masculine stereotypes, as a way of compensating for the loss in economic status. Women, on the other hand, when confronted with economic shocks and the prospect of Bolsonaro’s election, respond by rejecting his political agenda in favor of a more pro-social platform.
JEL-Codes: D72, J16, J23, P16, R23
Keywords: economic shocks, populism, gender, voter participation
No. 241   (Download full text)
Stephan Klasen and Carlos Villalobos
Diverging Identification of the Poor: A non-random process. Chile 1992–2017
This paper explores and compares how two different approaches identify the poor. We investigated the degree of association in the identification of the poor between the utilitarian approach, implemented through the standard monetary FGT measure, and the capability approach, implemented through the Alkire-Foster method. The correlation between socioeconomic characteristics and demographics with a measure of the association in the identification of the poor is investigated at the province level by using a panel fixed-effects model. In addition, using different cross-sections of the data, we study the issue at the household level by means of a logit model. In both cases, household non-eligibility across some of the indicators of the multidimensional poverty index is a relevant empirical issue that needs to be considered. In Chile, we find that in the past 25 years, the level of association between the two poverty measures has declined at a rate of 1.5% per year, being robust in alternative measures of association in the identification of the poor. The decline is unimportant during the 1990s, a decade of rapid economic growth, while it is notable thereafter, in a period characterized by modest economic growth and the progressive introduction and deepening of social policies. We find that a rural location of residence and demographic changes can explain the reduction. Income-poor households are more likely to be multidimensionally poor if their stock of education is lower, if their size is larger, and if they are located in rural areas. Consequently, the poverty overlap decline is a real process, in which the inconsistent of the poor is not randomly distributed across the population. On the basis of our results, we hypothesize that the reduction in the overlap between these two poverty measures is a general phenomenon that tends to occur in countries undergoing demographic transition, urbanization, and progress in education. If so, and given the fact that poverty alleviation strategies are adopted partly on the basis of poverty statistics, in the developing world, the diverging identification of the poor might have distributive consequences for the poor themselves.
JEL-Codes: D63, I32
Keywords: Multidimensional Poverty; Monetary Poverty; Poor Identification, Measures of association.
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