Economic growth does not necessarily improve the welfare of all workers. In Colombia, for in-stance, total hours worked, and labor income increased much faster for salaried workers than for non-salaried workers following the recovery from the pandemic-induced recession of 2020. An estimated Vector Error Correction model suggests that economic growth increases the total hours worked by salaried workers and the labor income of non-salaried workers in the short term. In the long term, however, estimates indicate a strong, inelastic relationship between eco-nomic growth and the total hours worked and labor income of salaried and non-salaried work-ers, with the former experiencing much larger increases. In other words, economic growth seems to benefit salaried workers much more than non-salaried workers.
"Informal Employment Dynamics in Paraguay: An Application of Survival Models" March 2019
I characterize informal-formal employment transitions in Paraguay. Results indicate that some factors, such as education and firms size, improve workers’ movement between informal and formal employment, and wage gains from moving into formality are modest. Workers who tend to stay indefinitely informal are more likely to become unemployed or inactive. Estimates, based on a survival model, indicate that education and firm size highly increase informal-to-formal transitions, especially if workers have stayed informal for a long time. Older women have lower formal-to-informal transitions and, surprisingly, education plays no significant role. Mincer estimates point to high wages for formal workers, compared with informal, but that individual workers’ wage gains from moving into formality are small.
"Urban wage gaps in Colombia and the impact of a national payroll tax policy" (2021), with Herrera-Idárraga, Paula and Torres-Alarcón, Juan David, Regional Studies
In this paper we analyze the unintended effects of a national policy. We explore how national payroll taxes policies can explain changes in wage gaps between cities. To do so, we exploit a payroll tax reform implemented in 2012 in Colombia. Using monthly data between 2011 and 2014, we estimate the effect of this policy in the lower part of the income distribution, and in particular at a window around the minimum wage, relying on a triple-difference estimation. Our results suggest that national policies aimed at reducing informality can have important effects in reducing wage gaps across cities.
"Payroll Taxes, Social Security and Informal Employees in Colombia. The 2012 Tax Reform" (2020), Polachek, S.W. and Tatsiramos, K. (Ed.) Change at Home, in the Labor Market, and On the Job (Research in Labor Economics, Vol. 48), Emerald Publishing Limited, pp. 153-193.
I evaluate how the tax reform of 2012 reduced informality in Colombia both theoretically and empirically. Theoretically, I develop a labor market model and obtain simulations indicating that the reform should reduce informality significantly. Empirically, I obtain difference-in-difference estimates from two household surveys. Estimates from the repeated cross-sections data indicate small, short-term effects and large long-term effects. Estimates from the household survey panel data are in line with these results. I also simulate difference-in-difference estimates with different combinations of changes in payroll taxes and enforcement indicating that large improvements would have been needed to obtain the corresponding econometric estimates.
“Duopoly, Differentiation and Scale: A study of the cost structures of the Pension Fund Administrators in Bolivia”; with Daniel Maceira; Latin American Journal of Economic Development; 2014.
Private pension systems exist in Latin America since the 80´s. The regulatory framework improved its instruments of intervention specially focused on enhancing competitiveness and reducing potential market failures. A key tool is to identify market concentration and cost behaviors is to determine if Pension Funds Administrators (AFPs) are absorbing monopolic rents or if they are characterized by decreasing costs. Using data of the private pension system in Bolivia during the period 1996-2004, we estimated the AFPs cost functions using parametric and semi-parametric methods. A significant and negative relationship was founded between average costs and the number of affiliates; and a small effect of funds profit rates on the systems´ average costs. Also, regulations do not seem to be affecting firms´ costs directly but through the number of affiliates.
"Extractive Industries Sector Framework Document", Document of the Inter-American Development Bank, Fiscal Management Division, February 2021
The Sector Framework Documents are knowledge documents that provide guidance in responding to the diversity of challenges and institutional contexts to which the IDB Group's borrowing member countries are exposed, as well as significant orientation for IDB Group specialists and a clear idea of the challenges that the IDB Group seeks to address in the sector. Supporting development of the extractive industries and the implementation of good practices in producer countries involves solving a variety of challenges. This includes (i) closing gaps in terms of good policy, governance, and institutional capacity in the extractive industries in Latin America and the Caribbean; (ii) designing government institutions and policies that support socioenvironmental sustainability, integration, and economic diversification; (iii) preparing decarbonization plans and strategies to manage the transition to low-carbon economies; (iv) supporting efforts to strengthen fiscal institutions in order to manage volatility; and (v) improving transparency and integrity in the extractive industries.
"Stubborn Gender Gaps in Paraguay’s Labor Market", with Ruppert Bulmer, Elizabeth N. and Scarpari, Raquel, Jobs Working Paper; issue no. 28. Washington, D.C. : World Bank Group; 2019
This note analyzes household survey data and firm-level data to measure gender gaps in employment outcomes over the past 15 years and shed light on the degree to which economic growth has translated into more and better jobs for men and women, and the relative impact on each group. The analysis relies primarily on micro-level data from the annual Encuesta Permanente de Hogares for 2001 through 2016, the Encuesta Continua de Empleo for 2010-2014, the Censo Economico 2011, a census of firms, and the 2015-16 Encuesta de Empresas, a follow-up firm survey. Patterns in labor supply and its correlates will be examined using household-level data, and the analysis will consider how gender and other worker characteristics are related to labor market outcomes. In addition, this note explores the degree to which private sector labor demand and firm productivity differ by gender; this is done using firm-level data to examine the drivers of firm performance and employment growth.
"Essays on Informal Labor Markets in Developing Countries", PhD in Economics Dissertation; Michigan State University; 2018
This paper studies the informal labor markets of Colombia and Paraguay. Colombia has been found to show a significant reduction in informal employment due to the reduction in payroll taxes. Conversely, Paraguay shows highly isolated informal/formal labor markets with few factors improving movements between these.
Chapter 1 evaluates how the drastic reduction in payroll taxes in 2012 reduced informality in Colombia. By the end of 2012 the Colombian government implemented a tax reform that, among other things, substantially reduced payroll taxes. I evaluate the effect of this reform on informality both theoretically and empirically.
Theoretically, I develop a labor market model incorporating the changes introduced by the reform. As the reduction in payroll taxes was accompanied by a change in social transfers’ funding, which led to uncertain changes in profits and social benefits, straightforward predictions on informality are not possible.
Empirically, I obtain difference-in-difference (DID) estimates from two household surveys—one composed by many repeated cross sections across many years and the other a much shorter panel dataset. Estimates from the repeated cross sections data indicate small, short-term effects and large long-term effects. Industry was the first sector to enjoy a reduction in informality, followed by services and agriculture. For workers earning around one minimum wage, I find large point estimates. Estimates from the household survey panel data are in line with these results.
Chapter 2 characterizes informal-formal employment transitions in Paraguay. Results indicate that some factors, such as education and firms size, improve workers’ movement between informal and formal employment, and wage gains from moving into formality are modest. Workers who tend to stay indefinitely informal are more likely to become unemployed or inactive.
Estimates, based on a survival model, indicate that education and firm size highly increase informal-to-formal transitions, especially if workers have stayed informal for a long time. Older women have lower formal-to-informal transitions and, surprisingly, education plays no significant role. Mincer estimates point to high wages for formal workers, compared with informal, but that individual workers’ wage gains from moving into formality are small.
"Welfare Implications of Employment Transitions in Uganda (English)" with Mejía-Mantilla, Carolina, Merotto, Dino L. and Weber, Michael; 2018
Understanding employment transitions and their implications in terms of welfare and labor outcomes is key for countries to design labor market policies aimed at inclusive growth, particularly in developing countries. Using panel data, this note characterizes the magnitude and nature of the main employment transitions in Uganda between 2009 and 2016 and explores how these transitions correlate with measures of well being (mainly per capita consumption) and employment outcomes.
"Paraguay jobs diagnostic : the dynamic transformation of employment"; Ruppert Bulmer, Elizabeth N.; Watson, Samantha Maria; De Padua, David Keith Santos; The World Bank; 2017.
Paraguay in the last decade and a half not only experienced robust economic growth and improved labor outcomes across sectors, it also saw marked improvements in job quality and the creation of many new jobs that are good for development. Good jobs for development, the focus of this analysis, are those that boost living standards, have higher levels of productivity, and enhance social cohesion through positive social externalities. The analysis in this report describes the ways in which employment outcomes have improved for a majority of Paraguayans, the degree to which certain types of workers have not benefited from ongoing dynamic transformations, and the challenges for sustaining and enhancing labor market gains in the future.
“Climate Change and Extreme Weather Events in Latin America: An Exposure Index”; Technical note; Inter-American Development Bank; 2013.
Climate change is changing the frequency and intensity of Extreme Weather Events (EWEs), particularly in poor developing countries, and the international community is increasingly suggesting the design of adaptation funds to resolve this situation. Measures of vulnerability and exposure to EWEs are a critical instrument in guaranteeing a transparent, efficient and equitable allocation process in these funds. Latin American countries, which contribute little to climate change but are hard-hit by EWEs, urgently need new indicators to back up their claims for financial and technical assistance. Using DesInventar data, the paper develops an innovative Disaster Exposure Index (DEI) that encompasses many disasters’ impacts. DEI calculations indicate an unexpected scenario where some regions usually considered resilient are found to be exposed. The results call for further development of regional indicators to facilitate the international, national and sub- national allocation of adaptation funds.
“Equity in education quality. Argentina and the world” (Equidad en calidad educativa. Argentina y el mundo); Master’s in Economics Thesis; UNLP; 2011.
I construct an educational equity index of my own using data from the International Assessment Program (PISA) of 2000 and 2006 and examine Argentina's equity in educational quality relative to other countries. For most countries, the quality of education is pro-rich and progressive while for a smaller portion of countries there are differences in favor of women and immigrants. In Argentina, the effect of socioeconomic status on educational quality is greater than in other countries, there are no differences between sexes and immigrant students receive a higher educational quality; also had a good level of progressivity in 2000 but deteriorated in 2006 due to a lack of adjustment of the educational policy to the distributive improvement of income.
“Cost structure of the Pension Funds firms in Latin-America” (Estructuras de Costos en Administradoras de Fondos de Pensiones en América Latina), with Daniel Maceira and Mercedes Kweitel; International Association of Supervisory Agencies of Pension Funds (AIOS); 2010.
Private pension systems exist in Latin America since the 80´s. The regulatory framework improved its instruments of intervention specially focused on enhancing competitiveness and reducing potential market failures. A key tool to identify market concentration and cost behaviors is to determine if Pension Funds Administrators (AFPs) are absorbing monopolic rents or if they are characterized by decreasing costs. Using data of the private pension system in Latin-America we estimate the AFPs cost functions using parametric and semi-parametric methods.
“Incidence of Argentinian public expenditure on education. Before and after the Federal Education Law” (Incidencia del gasto público argentino en educación. Antes y después de la Ley Federal de Educación), Argentine Association of Political Economy (AAEP); 2009.
One of the objectives of the Federal Law of Education was to achieve a better distribution of government expenditure in public education. This paper compares the behavior of government expenditure in public education between 1996, the beginning of the educational reforms, and 2006, ten years after its implementation. Using the benefit incidence technique there is evidence that the distribution of expenditure in public education improved, still considering regional experiences. But this analysis it’s partial as is does not incorporates financing of public education, among other factors.
“Analysis on the concentration of the sugar industry” (Análisis del nivel de concentración de la Industria Azucarera), with José Antonio Lopez; AAEP; 2007.
This work tries to measure the level of concentration of the sugar industry in Argentina. We use the survivor technique, designed by Stigler; whose hypothesis is: "If the refineries in his range of size "X" survive or increase his participation of market across the time it is because they are "efficient" in a comprehensive sense of his activities". The data includes 110 years of activity, allowing to observe the evolution throughout time of the level of concentration and understand the economic forces that explain these changes.
“Equity in tertiary education in Central America: an overview”; Bashir, Sajitha and Luque, Javier; The World Bank; 2012.
This paper analyzes the evolution in socio-economic and ethnic disparities in tertiary education attainment, participation, and completion and labor market outcomes in the six countries of Central America. There is evidence of differential progress, with Costa Rica, a middle-income country, and Nicaragua, a low-income country, having improved participation of low-income students in tertiary education, while this continues to be negligible in Guatemala, El Salvador, and Honduras. Wide differentials in salaries linked to socio-economic background can signal differences in the quality of tertiary education or prior educational experiences. The analysis distinguishes between long-term and short-term constraints and the key transitions in the education cycle that impede access to tertiary education. The main obstacle to accessing tertiary education for poor students is the failure to either start or complete secondary education, suggesting different priorities for different countries in addressing long-term constraints. However, problems also arise within tertiary education, as in all countries the average tertiary education completion rate is below 50 percent, with even lower rates for students from low-income families and indigenous backgrounds. The paper uses an OECD framework for public policies for promoting equity in tertiary education to assess policies in Central American countries and concludes that many of them currently lack the policies, instruments, and institutional mechanisms to promote greater equity in tertiary education. The paper highlights how valuable insights can be obtained from analysis of household survey data in the absence of comprehensive data on tertiary education which is typical of many developing countries.
“Disconnected: Skills, Education and Employment in Latin America”; Busso, Matías; Bassi, Marina; Urzúa, Sergio and Vargas, Jaime; Inter-American Development Bank; 2011.
Disconnected is a path-breaking analysis of the relationship between schooling and employers in Latin America. It is sophisticated in its design, using multiple surveys and multiple methods. It distinguishes carefully among different types of skills and the relationship of each type to employment outcomes and employer needs. It examines both the demand and the supply side of the labor market. And it provides guidance for further work. We commend this book to all readers, scholars, and practitioners concerned with schooling and job markets in Latin America.