Research Round-Up

a couple of working papers:

1. Disease and Development: A Reply to Bloom, Canning, and Fink by Daron Acemoglu & Simon Johnson
“Bloom, Canning, and Fink (2014) argue that the results in Acemoglu and Johnson (2006, 2007) are not robust because initial level of life expectancy (in 1940) should be included in our regressions of changes in GDP per capita on changes in life expectancy. We assess their claims controlling for potential lagged effects of initial life expectancy using data from 1900, employing a nonlinear estimator suggested by their framework, and using information from microeconomic estimates on the effects of improving health. There is no evidence for a positive effect of life expectancy on GDP per capita in this important historical episode.”

2. The colonial legacy: Income inequality in former British African colonies by A.B. Atkinson
“This paper examines the distribution of top incomes in 15 former British colonies in Africa, drawing on evidence available from income tax records. It seeks to throw light on the position of colonial elites during the period of British rule. Just how unequal were incomes? How did the position of the rich in the colonies compare with that of the rich in the United Kingdom? It investigates how income concentration evolved in the last years of colonial rule, as the British government became more concerned with development, and establishes the degree of inequality at the time of independence in the late 1950s and early 1960s. What was the colonial legacy? How far did colonial inequality persist post-independence?”


and a couple of papers in the May issue of the Journal of Development Economics:

1. Do high-income or low-income immigrants leave faster? by Govert E. Bijwaarda and Jackline Wahbab

“We estimate the impact of the income earned in the host country on return migration of labor migrants from developing countries. We use a three-state correlated competing risks model to account for the strong dependence of labor market status and the income earned. Our analysis is based on administrative panel data of recent labor immigrants from developing countries to The Netherlands. The empirical results show that intensities of return migration are U-shaped with respect to migrants’ income, implying a higher intensity in low- and high- income groups. Indeed, the lowest-income group has the highest probability of return. We also find that ignoring the interdependence of labor market status and the income earned leads to an overestimating the income effect on departure.”

2. The efficiency of human capital allocations in developing countries by Dietrich Vollrath

“For a set of 14 developing countries I evaluate whether differences in wage gaps between sectors – estimated from individual-level wage data – have meaningful effects on aggregate productivity. Under the most generous assumptions regarding the homogeneity of human capital, my analysis shows that eliminating wedges between wages in different sectors leads to gains in output of less than 5% for most countries. These estimated gains of reallocation represent an upper bound as some of the observed differences in wages are due to unmeasured human capital. Under reasonable assumptions on the amount of unmeasured human capital the gains from reallocation fall well below 3%. Compared to similar estimates made using data from the U.S., developing countries would gain more from a reallocation of human capital, but the differences are too small to account for a meaningful portion of the gap in income per capita with the United States.”

3. The minimal impact of a large-scale financial education program in Mexico City by Miriam Bruhn, Gabriel Lara Ibarra, and David McKenzie

“We conduct randomized experiments around a large-scale financial literacy course in Mexico City to understand the reasons for low take-up among a general population, and to measure the impact of this financial education course. Our results suggest that reputational, logistical, and specific forms of behavioral constraints are not the main reasons for limited participation, and that people do respond to higher benefits from attending in the form of monetary incentives. Attending training results in a 9 percentage point increase in financial knowledge, and a 9 percentage point increase in some self-reported measures of saving, but in no impact on borrowing behavior. Administrative data suggests that any savings impact may be short-lived. Our findings indicate that this course which has served over 300,000 people and has expanded throughout Latin America has minimal impact on marginal participants, and that people are likely making optimal choices not to attend this financial education course.”  [The part about people making optimal choices by not attending cracked me up–kudos to the authors for such a great abstract]


New and interesting working papers

I just came across several new working papers that look checking out.

1. The untold story of the Mexican debt crisis: Domestic banks and external debt, 1977-1989 by Sebastian Alvarez
Scholars have thus far neglected the role played by Mexican banks in international capital markets and in the country’s external indebtedness process. This paper argues that the imbalances which Mexican banks incurred in running their international operations eventually brought them to the brink of bankruptcy once the crisis began. Given that the banks that were at risk represented a large share of the domestic market, this paper argues the whole Mexican banking system was threatened with collapse. The improved understanding of the banking system’s exposure to and dependence on foreign finance provides new insights into Mexico’s debt renegotiation outcomes and the nationalization of the banking system in the aftermath of the crisis. —

2. Two Centuries of International Migration by Tim Hatton
We focus principally on long-distance migration to rich destination countries, the settler economies in the nineteenth century and later the OECD. The chapter describes the structure, direction and determinants of migration flows and the assimilation experience of migrants. It also examines the impact of migration on destination and source countries, and explores the political economy behind the evolution of immigration policy. We provide an historical context for current debates on immigration and immigration policy and we conclude by speculating on future trends.

3. The Long-Term Effects of Protestant Activities in China by Yuyu Chen
Combining county-level data on Protestant presence in 1920 and socioeconomic indicators in 2000, we find that the spread of Protestantism has generated significant positive effects in long-term economic growth, educational development, and health care outcomes. To better understand whether the relationship is causal, we exploit the fact that missionaries purposefully undertook disaster relief work to gain the trust of the local people. Thus, we use the frequency of historical disasters as an instrument for Protestant distribution. When we further investigate the transmission channels over the long historical period between 1920 and 2000, we find that although improvements in education and health care outcomes account for a sizable portion of the total effects of missionaries’ past activities on today’s economic outcomes, Protestant activities may have also contributed to long-term economic growth through other channels, such as through transformed social values. If so, then a significant amount of China’s growth since 1978 is the result not just of sudden institutional changes but of human capital and social values acquired over a longer historical period.

4. Why didn’t economists predict the Great Depression? by Leon Taylor

I’m sure this paper is worth checking out too, but I included it because my first thought was that you could replace the words “Great Depression” with almost anything else and still be accurate.  It would have been way more surprising if economists actually did predict something that actually happened (we’re good at predicting things that don’t happen or things that happened in the past!).

Latin American News Round-Up

1. Mexico’s main opposition party quits energy talks amid graft scandal

2. Yelp launches in Mexico to Extend Latin American Footprint

3. Is Latin America’s IT Startup Scene Stuck in Neutral?

4. San Hugo Chavez and San Naza Moreno: Latin America’s Newest Saints

5. Soaring Prices Fuel Frustrations Among Weary Argentines


Latin American News Round-Up

1. Impressions from Venezuela Institutional Deterioration, Violence and Social Unrest

2. Authorities hope drug lord’s arrest will expose corruption (well, maybe some authorities hope that…)

3. Political hatred in Argentina

4. In Struggles of Artist With His Work, Hints of Mexico’s Own

5. The Kingpin at Rest (by Alma Guillermoprieto, self-recommending)

Latin American News Round Up

1. From tragedy to defending champs, Juarez Football team makes a comeback  Three years ago, “gunmen killed two players and injured several more as they celebrated a birthday in a notorious attack in Ciudad Juarez.”

2. A button in Brazil may change a culture. “The electronic devices use GPS technology to quickly signal that a woman needs help, and they transmit images that help police track down the attacker.”

3. As a Boom Slows, Peru Grows Uneasy.  “Hey, wait a minute, we were going to be the next Inca tiger, what a disappointment.”

4. Mexico Chamber of Deputies Approves Professional Teaching Service Act. “Lawmakers from the opposition parties argued that this is a “legislative albazo” [“strike at dawn”], given the conditions that Congress finds itself surrounded by demonstrations against the education reform in the context of Enrique Peña Nieto’s first government report.”

5. Which is scarier – Brazil’s taxman or a murderous husband?  “Tax code on your receipt, madam?” Customer: “On a bill this size? God forbid, my husband would kill me!”

Developing country news round up

1. The plight of Latin America’s teachers.  “Japan: take our soccer, give us your education.” 

2. Nicaragua canal a big dig — or big scam? “There are many reasons to think it may be the latter.” Indeed!

3. Mexico City launches trash-for-food clean-up program. “Recyclable materials are exchanged for points then used to buy organic food and product.”

4. Bhutan Is No Shangri-La.  “Bhutan conducted a special census in the south and then proceeded to cast out nearly 100,000 people — about one-sixth of its population, nearly all of them of Nepalese origin.”

5. Afghanistan’s new rich – in pictures.