A1: COVID 19
Building resilience during the pandemic: Evidence from a cash transfer program in Bolivia
Nicolas Bottan, Cornell University
Bridget Hoffmann, Inter American Development Bank
Diego A. Vera Cossio, Inter American Development Bank
Exploiting the context of a large scale, untargeted, non contributory pension program in Bolivia, we study the short term effects of cash transfers on household resilience during the onset of the COVID 19 pandemic. We compare households that became eligible during the early stages of the pandemic to marginally ineligible households using a regression discontinuity design. We utilize a novel dataset collecting information in near real time to unravel a 25% increase in the probability that households have enough food to cover a week of necessities, and a 50% decline in the probability of going hungry due to lack of food during the first month of the pandemic. We find that the program acts as insurance for households that lost their livelihood during the pandemic. This insurance feature explains 60% of the reduction in the probability of going hungry. The results suggest that pre existing untargeted cash transfer programs in developing countries could be effective both at assisting poor households in meeting their consumption needs and at providing insurance in case of labor market shocks to non poor households.
Construyendo Resiliencia: Índice de vulnerabilidad del sector salud en Bolivia
Alethea Candia, FLACSO
Iván Égido, Inter Alia
Marcelo Olivera Villarroel, UAM, México
El COVID19, al presionar diferentes aristas de la estructura social, está mostrando de manera enfática las desigualdades de la distribución económica y la precariedad de la infraestructura en salud a nivel municipal. Esta mala distribución de recursos amplifica la vulnerabilidad de los municipios ante esta amenaza de la pandemia en la salud. El presente artículo busca identificar a los principales municipios del país que presentan los índices más elevados de vulnerabilidad de salud (IVS). En el IVS se distinguen tres componentes principales: 1) cobertura hospitalaria, que mide el nivel de capacidad del sistema de salud en lo que respecta al personal y a la infraestructura; 2) demanda sanitaria, que mide el grado de presión que realiza la población a sus respectivos sistemas de salud; 3) presupuesto gubernamental, que mide el presupuesto que cuentan los gobiernos municipales para afrontar la crisis. Además, en el artículo se propone un Índice de Amenazas y Riesgos (IAR), para analizar a los municipios que tienen casos COVID positivos y caracterizar su grado de riesgo, con el fin de identificar medidas de mitigación que se podrían emplear para absorber los impactos de esta contingencia; y ayudar a los municipios a fortalecer sus niveles de resiliencia sanitaria. Para el efecto, se utilizó como principal método de análisis la técnica de descomposición de Shapley, que nos ayudó a construir los índices antes mencionados
COVID 19, Domestic Violence, and Alcohol Consumption
Jose Roberto Balmori de la Miyar, Universidad Anahuac
Adan Silverio Murillo, School of Government, Tecnológico de Monterrey
Evidence suggests that during the COVID 19 lockdown, alcohol consumption has increased and income has gone down among several households in Mexico City. The existing literature relates alcohol consumption and negative income shocks to a greater number of occurrences of intimate partner violence. This paper estimates the effect of the COVID 19 lockdown on call center services for domestic violence in Mexico City, and documents the impact of alcohol consumption on these types of calls by exploiting exogenous variation in municipalities that prohibited alcohol sales during the lockdown. Using an event study design, our results show that during the lockdown: (1) calls of intimate partner violence asking for psychological services increased, (2) calls of intimate partner violence requesting legal aid decreased, and (3) alcohol prohibition did not impact the number of calls reporting domestic violence.
A2: Development I
Is network heterogeneity enhancing consumption inequality?
Ingrid Vargas Yañez, University of Geneva
“I study the implications of network connectedness for aggregated economic inequality when connectedness is the only source of heterogeneity. The analysis is carried out using a static general equilibrium model with a production sector that uses labor as its sole input. In this model, individuals perceive utility from leisure and have relative concerns preferences for good consumption. Networks are considered exogenous and simulated using a preferential attachment algorithm. Using Gini indices to measure inequality and eigenvector centrality for network connectedness, I find that there is a significant link between network heterogeneity and inequality. This relation implies that higher relative concerns lead to higher leisure inequality and lower consumption inequality, where higher leisure preferences can dial down the implications of the relative concerns. Additionally, I study the case where relative concerns vary in magnitude when individuals consume relative more or less. The setting with differentiated relative concerns responses shows that utility levels are higher on average as one of the groups (high or low consuming) reacts with less intensity to the comparisons. Finally, I explore the inequality implications of wealth heterogeneity. While the addition of heterogeneous wealth in the set brings the expected expansion of consumption and leisure levels and inequality; the actual increment in consumption is not proportional to the added wealth magnitudes. The quantification of the increment in inequality due to the added wealth heterogeneity is a relevant contribution of this paper given that inequality in this setting is embedded in a network.”
The economics of the public option: Evidence from local pharmaceutical markets
Juan Pablo Atal, University of Pennsylvania
José Ignacio Cuesta, University of Chicago
Felipe Gonzalez, PUC Chile
Cristóbal Otero, UC Berkeley
Policies to decrease the price of pharmaceuticals are highly debated but evidence about their effectiveness is scarce. We provide an empirical analysis of the impact of public pharmacies selling pharmaceuticals at reduced prices in local markets in Chile. Using experimental and quasi experimental methods, we present three main findings. First, we show experimental evidence that the knowledge of a public pharmacy changes shopping behavior. Second, the opening of a public pharmacy is associated with reduced sales and higher prices in nearby private pharmacies. Finally, an analysis of voting decisions for the mayors who opened these pharmacies reveals a positive evaluation of this policy. We calculate that mayors get one extra vote every US\$ 22 of consumer savings in the market.
The impact of rural public school infrastructure on the Peruvian schooling gap and youth labor
Jorge Dávalos, Universidad del Pacífico
Brian Daza, Universidad del Pacífico
Las tasas elevadas rezago escolar y empleo juvenil que caracterizaron al Perú en las últimas décadas han motivado importantes inversiones en el sistema de educación pública. Así, en los últimos 12 años el Perú ha incrementado su infraestructura de servicios educativos de nivel secundario en el area rural en más del 40%. Este artículo busca identificar los efectos de dicha expansión tanto en el rezago escolar como en la participación laboral adolescente en el área rural. El análisis empírico se basa en la información empalmada de la Encuesta Nacional de Hogares (ENAHO) y del Padrón de Instituciones Educativas del Ministerio de Educación (PIME). La estrategia de identificación del efecto causal consiste en explotar la variación temporal y distrital del número de nuevas unidades educativas, controlando además por la heterogeneidad no observable invariante en el tiempo a nivel distrital mediante una especificación de diferencias en diferencias. Dada la potencial endogeneidad entre la infraestructura educativa y los objetivos de política educativa, se emplea un enfoque relativamente nuevo de variables instrumentales que explota la heterocedasticidad condicional como fuente de variabilidad exógena (Lewbel, 2012). Entre los principales hallazgos, encontramos que existe una brecha de género en el efecto del aumento de los servicios educativos en el área rural sobre el rezago escolar y el empleo adolescente.
A3: Methods and Theory
A matching model with heterogeneity in commuting and relocation costs
Anne Bucher, IDT BETA
Paola Montero, UPB
This paper studies the effect of individuals’ residential and job search decisions on labor market outcomes in a duocentric closed economy. We build a theoretical urban search matching model putting forward workers’ ability to commute and to relocate between job centers. Conditional on individuals’ abilities, we identify three different types of behaviors: stayers, commuters, and relocated workers. We show that in equilibrium, if the expected return from job search is higher in a given job center, all workers born in this job center are stayers, while some workers who initially reside in the other job center optimally decide either to commute or to relocate. Relocation and commuting decisions affect the composition of the population and hence, unemployment rates. We find that, under certain conditions, unemployment disparities arise and an increase in commuting or relocation costs, that reduces workers’ mobility, reinforces those disparities. Changes in the cost of opening a vacancy modify the composition of the population in the affected job center, but the effects on unemployment rates are ambiguous. When workers have an ability only to commute efficiency is achieved under the Hosios condition. This is not the case when workers have an ability only to relocate.
A Simple Test for Prejudice in Decision Processes: The Prediction Based Outcome Test
Nicolás Grau, Universidad de Chile
Damián Vergara, UC Berkeley
“We propose a novel implementation of the outcome test for diagnosing prejudice in decision processes, the Prediction Based Outcome Test (P BOT). We motivate our approach with a model of prejudice in pretrial detention decisions. The main empirical challenge when implementing outcome tests is the identification of marginal individuals. Our method uses the predicted release status to identify marginally released defendants. Concretely, we provide sufficient conditions under which a ranking of the propensity score among released defendants identifies those who are more likely to be at the margin given their observables, and propose a set of diagnostics to empirically assess the plausibility of the identification assumptions. Some appealing features of the P BOT are that (i) it does not require instruments nor random assignment of judges, (ii) it is robust to standard omitted variable bias, and (iii) it is very easy to implement. However, its performance depends on the availability of good predictors, something that can be assessed by the econometrician. We use the P BOT to test for prejudice in pretrial detentions against the main ethnic group in Chile, the Mapuche, using nationwide administrative data. We find strong evidence of prejudice against Mapuche defendants and show that the discrimination patterns are likely to be non binary. We assess the relative performance of the P BOT and alternative approaches to test for prejudice, and discuss the test’s interpretation in more general versions of the model, sketching a new taxonomy of prejudice.
Predicting Local State Capacity in Sub Saharan Africa: A Machine Learning Approach
Gustav Agneman, University of Copenhagen
Kasper Brandt, University of Copenhagen
Christoffer Cappelen, University of Copenhagen
David Sjöberg, University of Copenhagen
Despite the need to measure state capacity at a sub national level, most studies still use country level indicators as rough approximations of the local counterpart. We estimate a measure of state capacity at the 2:5 2:5 arc minutes grid cell level (5 kilometers) for Sub Saharan Africa. The measure builds on geocoded survey based data on local state capacity which we predict and extrapolate using an ensemble of regression trees. We demonstrate the usefulness of measuring state capacity at a disaggregated level by including our local state capacity index as a moderating factor in the relationship between oil wealth and armed conflict. The findings suggest that cells with higher local state capacity face lower risks of conflicts caused by oil price hikes.
A4: Pensions and Education
An Application of the Characteristics Approach to Pension Systems with Automatic Adjustment Mechanisms
Jorge Onrubia Fernández, Complutense Institute for International Studies, Complutense University of Madrid
Diego Wachs, Complutense University of Madrid
In response to population ageing, many countries have adopted automatic adjustment mechanism reforms that link retirement to life expectancy. In this study, we used an overlapping generations model to analyse the effects of such reforms over fiscal sustainability, adequacy, and fairness of public pension systems. We looked at three scenarios defined by the mechanisms indexing retirement age: a constant pensions fiscal balance, constant life expectancy after retirement, and constant disability free life expectancy after retirement. Growth is exogenous in our standard model; however, we explore an alternative model with endogenous productivity partially determined by ageing. We applied our model to Argentina’s public pension system as an example. Our results show that an automatic adjustment mechanism based either on increases in life expectancy or disability free life expectancy would not be enough to restrict the projected growth in the pension system’s deficit. We also find that changes in productivity have limited effect on pension indicators, although the indexation system can amplify or reduce such effects.
Impacto del Programa Social Pensión 65 sobre el gasto en alimentos de los adultos mayores en el Perú: Un análisis de la ENAHO 2018
Luis Laurente Blanco, Universidad Nacional del Altiplano, Perú
El Perú se encuentra en proceso de transición demográfica y en la actualidad la población adulta mayor de 65 años representa el 9% de la población y con proyecciones de crecimiento para los próximos años. La pobreza monetaria en el Perú para el 2018 representa el 21.7% y en particular la pobreza en los adultos mayores de 65 años es de 18.1%. La preocupación en este grupo se da desde el sector gubernamental, debido que por décadas no contaban con seguro de salud ni pensión de jubilación. En respuesta a este problema el Gobierno del Perú crea en 2011 el Programa Social “Pensión 65” buscando que los adultos mayores cuenten con seguridad económica que contribuya a mejorar su bienestar. El objetivo del presente estudio es hallar el impacto del programa Pensión 65 sobre el gasto en alimentos en los adultos mayores en el Perú. El estudio considera las estadísticas de la ENAHO de 2018 con un total de 10,354 observaciones que representa a los adultos mayores de 65 años. Utilizando el modelo probit binomial se tuvo como resultados que el programa Pensión 65 tiene un impacto negativo sobre el gasto per cápita en alimentos de los hogares de los adultos mayores. Las otras variables que explican de manera significativa a la probabilidad de gasto fueron tamaño del hogar, material del piso de la vivienda, acceso al servicio de agua potable dentro de la vivienda y acceso al servicio de desagüe
Wasted years: Informality and returns to education in Bolivia
Pablo Mendieta, Santa Cruz Chamber of Industry and Commerce
During the last years some estimates deliver a low average return on schooling. With the use of two databases, the standard annual household survey and the novel demand for skills survey, I found a non linear shape of schooling returns. Even more, I improved the estimation with the use of a segmented labor market approach. Joint a matching technique, I estimated models that support the hypothesis that this pattern is due to a widespread informality issue. I explore the ways this result could be enhanced with a skill connection and a segmented search labor model.
A5: Markets and Institutions
Bono Malum Superate: Long Run Effects of Radical Institutional Change
Federico Asta, University of Siena
Lela Melon, Universitat Pompeu Fabra
Rok Spruk, University of Ljubljana
We examine the effects of radical institutional change on long run growth. To this end, we exploit the partition of Friuli Venezia Giulia in 1947 between Italy and Yugoslavia and the subsequent Italian unification. By using a novel dataset, we match Friuli Venezia Giulia’s long run development trajectory with other countries on pre 1947 growth and development characteristics to produce a plausibly exogenous source of variation. Our identification strategy is to use the parallel long run growth and development paths of other countries for the period 1871–2016 to construct a valid synthetic control group for Friuli Venezia Giulia. Our results indicative pervasive and substantial long run growth benefits of Italian unification. The synthetic control estimates imply that in the absence of unification with Italy in 1947, Friuli Venezia Giulia’s per capita income would be 41 percent lower. The underlying estimates are robust to numerous specification checks, covariate selection tests as well as to the composition of synthetic control group. A battery of large sample placebo distributions and permutation tests confirm the significance of the 1947 unification on long run growth and development.
Desenchufándonos del Subsidio a los Carburantes
Diego Vacaflores Rivero, Texas State University
La subvención a los combustibles que tenemos en el país desde el 2004 ha creado fuertes distorsiones e inequidades que ha afectado negativamente a nuestra economía. Esta subvención fue capturada desproporcionalmente por el segmento más pudiente de la población, retardó la implementación de tecnologías más amigables con el medio ambiente y afectó la estabilidad financiera del gobierno. Aunque la coyuntura política no es de las mejores para tratar el tema, los precios internacionales son ideales para buscar una nivelación de precios que estén de acuerdo con los vigentes en los países vecinos. El nivelar el precio de los combustibles ahora nos permitiría comenzar a operar con valores de acuerdo con el mercado, pero si esperamos a que el precio internacional retome su trayectoria pre Covid 19, entonces tendremos que nivelar los precios cuando el costo sea más alto. Por ejemplo, el desfase en marzo del 2020 fue tan grande que deberíamos haber subido el precio de la gasolina en un 70 por ciento (a $ 6,40 bolivianos por litro). Las reformas que permiten llevar a cabo estos reajustes de manera rápida, justa, y efectiva siempre incluyen transferencias monetarias a la población que protejan su poder adquisitivo durante la transición, neutralizando la oposición social y política que generalmente se da en estos casos. De no alinear nuestros precios con los del mercado, estaremos comprometiendo el futuro económico del país al seguir utilizando ineficientemente los escasos recursos públicos que tenemos.
Does Education Make You “Progre”?: Education and Attitudes Toward the Market Economy in Latin America
Andrés Marroquín, Mercer University
Antonio Saravia, Mercer University
Is education associated with progressive beliefs? We examine this question using the 2017 Latinobarómetro survey. After controlling for various socioeconomic characteristics, ideology and country effects, we find a robust and significant negative relationship between the number of years of education received and positive opinions of the market economy. Therefore, yes, education in Latin America tends to make you progre. We also find that being older, Catholic, male or a person who ideologically self classifies to the right of the political spectrum, has a robust, significant and positive relationship with positive views of the market economy. When we break down the analysis by generations we find that Millennials are the only generation for which years of education are significant and negatively related to positive opinions of the market economy. This relationship is not significant for other generations.