THERE GOES THE ELECTORAL NEIGHBORHOOD: LOCAL NETWORKS, ATTRIBUTION OF RESPONSIBILITY, AND THE (UN) FAIRNESS OF ELECTIONS

During the last two decades there have been but a handful of recorded cases of electoral fraud in Latin America. However, survey research consistently shows that often citizens do not trust the integrity of the electoral process. This dissertation addresses the puzzle by explaining the mismatch between how elections are conducted and how the process is perceived. My theoretical contribution provides a double-folded argument. First, voters’ trust in their community members (“the local experience”) impacts their level of confidence in the electoral process. Since voters often find their peers working at polling stations, negative opinions about them translate into negative opinions about the election. Second, perceptions of unfairness of the system (“the global effect”) negatively impact the way people perceive the transparency of the electoral process. When the political system fails to account for social injustice, citizens lose faith in the mechanism designed to elect representatives -and ultimately a set of policies. The fact that certain groups are systematically disregarded by the system triggers the notion that the electoral process is flawed. This is motivated by either egotropic or sociotropic considerations. To test these hypotheses, I employ a survey conducted in Costa Rica, El Salvador, Honduras, and Guatemala during May/June 2014, which includes a population-based experiment. I show that Voters who trust their peers consistently have higher confidence in the electoral process. Whereas respondents who were primed about social unfairness (treatment) expressed less confidence in the quality of the election. Finally, I find that the local experience is predominant over the global effect. The treatment has a statistically significant effect only for respondents who trust their community. Attribution of responsibility for voters who are skeptics of their peers is clear and simple, leaving no room for a more diffuse mechanism, the unfairness of the political system. Finally, now I extend analysis to the Latin America region. Using data from LAPOP that comprises four waves of surveys in 22 countries, I confirm the influence of the “local experience” and the “global effect” as determinants of the level of confidence in the electoral process.

Trade Shocks and Local Labor Markets' Linkages: Theory and Evidence

In the past few years, there has been a concern among economists and policy makers that increased openness to international trade affects some regions in a country more than others. Recent research has found that local labor markets more exposed to import competition through their initial employment composition experience worse outcomes in several dimensions such as, employment, wages, and poverty. Although there is evidence that regions within a country exhibit variation in the intensity with which they trade with each other and with other countries, trade linkages have been ignored in empirical analyses of the regional effects of trade, which focus on differences in employment composition. In this dissertation, I investigate how local labor markets' trade linkages shape the response of wages to international trade shocks. In the second chapter, I lay out a standard multi-sector general equilibrium model of trade, where domestic regions trade with each other and with the rest of the world. Using this benchmark, I decompose a region's wage change resulting from a national import cost shock into a direct effect on prices, holding other endogenous variables constant, and a series of general equilibrium effects. I argue the direct effect provides a natural measure of exposure to import competition within the model since it summarizes the effect of the shock on a region's wage as a function of initial conditions given by its trade linkages. I call my proposed measure linkage exposure while I refer to the measures used in previous studies as employment exposure. My theoretical analysis also shows that the assumptions previous studies make on trade linkages are not consistent with the standard trade model. In the third chapter, I calibrate the model to the Brazilian economy in 1991--at the beginning of a period of trade liberalization--to perform a series of experiments. In each of them, I reduce the Brazilian import cost by 1 percent in a single sector and I calculate how much of the cross-regional variation in counterfactual wage changes is explained by exposure measures. Over this set of experiments, employment exposure explains, for the median sector, 2 percent of the variation in counterfactual wage changes while linkage exposure explains 44 percent. In addition, I propose an estimation strategy that incorporates trade linkages in the analysis of the effects of trade on observed wages. In the model, changes in wages are completely determined by changes in market access, an endogenous variable that summarizes the real demand faced by a region. I show that a linkage measure of exposure is a valid instrument for changes in market access within Brazil. By using observed wage changes in Brazil between 1991-2000, my estimates imply that a region at the 25th percentile of the change in domestic market access induced by trade liberalization, experiences a 0.6 log points larger wage decline (or smaller wage increase) than a region at the 75th percentile. The estimates from a regression of wages changes on exposure imply that a region at the 25th percentile of exposure experiences a 3 log points larger wage decline (or smaller wage increase) than a region at the 75th percentile. I conclude that estimates based on exposure overstate the negative impact of trade liberalization on wages in Brazil. In the fourth chapter, I extend the standard model to allow for two types of workers according to their education levels: skilled and unskilled. I show that there is substantial variation across Brazilian regions in the skill premium. I use the exogenous variation provided by tariff changes to estimate the impact of market access on the skill premium. I find that decreased domestic market access resulting from trade liberalization resulted in a higher skill premium. I propose a mechanism to explain this result: that the manufacturing sector is relatively more intensive in unskilled labor and I show empirical evidence that supports this hypothesis.