The Impact of Trade on Technology and Skill Upgrading Evidence from Argentina

In the last 20 years, wage inequality has increased in many developing countries. Most research on this topic focuses on two alternative causes: trade or skill-biased technical change. Several empirical studies in both developed and developing countries document increases in skill intensity within all sectors, favoring the technological change explanation over trade. Instead, I present and test a model where bilateral trade liberalization increases exporting revenues inducing more firms to enter the export market and to adopt skilled-biased new technologies. I find that the increase in the relative demand of skilled labor does not come from labor reallocation across sectors or firms but from skill upgrading within firms. Firms that upgrade technology faster also upgrade skill faster. Finally, firms entering the export market after liberalization become more skill and technology-intensive than non exporters.

The short arm of the law: judicial institutions and local governance in Brazil

This paper estimates the effect of judicial institutions on governance at the local level in Brazil. Our estimation strategy exploits a unique institutional feature of state judiciary branches which assigns prosecutors and judges to the most populous among contiguous counties forming a judiciary district. As a result of this assignment mechanism there are counties with nearly identical populations, some with and some without local judicial presence, which we exploit to impute counterfactual outcomes. Conditional on observable county characteristics, offenses per civil servant are about 35% lower in counties that have a local seat of the state judiciary. The lower incidence of infractions stems mostly from fewer violations of financial management regulations by local administrators, fewer instances of problems in project execution and project managment, fewer cases of non-existent or ineffective civil society oversight and fewer cases of improper handling of remittances to local residents.

Growth, Democracy, and Civil War

Does economic growth affect the likelihood of civil war? Answering this question requires dealing with reverse causation. Our approach exploits that international commodity prices have a significant effect on the income growth of Sub-Saharan African countries. We show that lower income growth makes civil war more likely in non-democracies. This effect is significantly weaker in democracies; as a result, we find no link between growth and civil war in these countries. Our reducedform results also indicate that lower international commodity price growth has no effect on civil war in democracies, but raises the likelihood of civil war incidence and onset in nondemocracies.

The Ins and Outs of Unemployment: A Conditional Analysis

We analyze how unemployment, job finding and job separation rates react to neutral and investment-specific technology shocks. Neutral shocks increase unemployment and explain a substantial portion of unemployment volatility; investment-specific shocks expand employment and hours worked and mostly contribute to hours worked volatility. Movements in the job separation rates are responsible for the impact response of unemployment while job finding rates for movements along its adjustment path. Our evidence qualifies the conclusions by Hall (2005) and Shimer (2007) and warns against using search models with exogenous separation rates to analyze the effects of technology shocks.

The Law of Impersonal Transactions: Meaning and Difficulties

Most economic interactions happen in a context of sequential exchange in which innocent third parties suffer information asymmetry with respect to previous "originative" contracts. The law reduces transaction costs by protecting these third parties but preserves some element of consent by property right holders to avoid damaging property enforcement-e.g., it is they as principals who authorize agents in originative contracts. Judicial verifiability of these originative contracts is obtained either as an automatic byproduct of transactions or, when these would have remained private, by requiring them to be made public. Protecting third parties produces a sort of legal commodity which is easy to trade impersonally, improving the allocation and specialization of resources. Historical delay in generalizing this legal commoditization paradigm is attributed to path dependency-the law first developed for personal trade-and an unbalance in vested interests, as luddite legal professionals face weak public bureaucracies.

Motivation, Test Scores, and Economic Success

This paper argues that low-stakes test scores, available in surveys, may be partially determined by test-taking motivation, which is associated with personality traits but not with cognitive ability. Therefore, such test score distributions may not be informative regarding cognitive ability distributions. Moreover, correlations, found in survey data, between high test scores and economic success may be partially caused by favorable personality traits. To demonstrate these points, I use the coding speed test that was administered without incentives to National Longitudinal Survey of Youth 1979 (NLSY) participants. I suggest that due to its simplicity its scores may especially depend on individuals' test-taking motivation. I show that controlling for conventional measures of cognitive skills, the coding speed scores are correlated with future earnings of male NLSY participants. Moreover, the coding speed scores of highly motivated, though less educated, population (potential enlists to the armed forces) are higher than NLSY participants' scores. I then use controlled experiments to show that when no performance-based incentives are provided, participants' characteristics, but not their cognitive skills, affect effort invested in the coding speed test. Thus, participants with the same ability (measured by their scores on an incentivized test) have significantly different scores on tests without performance- based incentives.

Prime Property Institutions for a Subprime Era: Exploring Innovative Models of Residential Development and Finance

This paper breaks new ground toward contractual and institutional innovation in models of homeownership, equity building, and mortgage enforcement. Inspired by recent developments in the affordable housing sector and in other types of public financing schemes, this paper suggests extending institutional and financial strategies such as timeand place-based division of property rights, conditional subsidies, and credit mediation to alleviate the systemic risks of mortgage foreclosure. Alongside a for-profit shared equity scheme that would be led by local governments, we also outline a private market shared equity model, one of bootstrapping home buying with purchase options.

Free Flows, Limited Diversification: Explaining the Fall and Rise of Stock Market Correlations, 1890-2001

Using a new dataset on capital account openness, we investigate why equity return correlations changed over the last century. Based on a new, long-run dataset on capital account regulations in a group of 16 countries over the period 1890-2001, we show that correlations increase as financial markets are liberalized. These findings are robust to controlling for both the Forbes-Rigobon bias and global averages in equity return correlations. We test the robustness of our conclusions, and show that greater synchronization of fundamentals is not the main cause of increasing correlations. These results imply that the home bias puzzle may be smaller than traditionally claimed.

Government Spending and Re-election

Does additional government spending improve the electoral chances of incumbent political parties? This paper provides the first quasi-experimental evidence on this question. Our research design exploits discontinuities in federal funding to local governments in Brazil around several population cutoffs over the period 1982-1985. We find that extra fiscal transfers resulted in a 20% increase in local government spending per capita, and an increase of about 10 percentage points in the re-election probability of local incumbent parties. We also find positive effects of the government spending on education outcomes and earnings, which we interpret as indirect evidence of public service improvements. Together, our results provide evidence that electoral rewards encourage incumbents to spend part of additional revenues on public services valued by voters, a finding in line with agency models of electoral accountability.

The emergence of biofuels and the co-movement between crude oil and agricultural prices

Biofuels are becoming an alternative to non-renewable energy sources but we know little about the economic mechanisms influencing their prices. This paper studies the interrelationships between the spot prices of oil and those of agricultural commodities used as biofuel feedstocks. Using daily data since 1988, we identify a co-movement after 2005 that does not appear for other food-related commodities and is not due to general economic variables. We also find traces of the co-movement in the prices of a large biofuel stock. The results amount to the first systematic piece of empirical evidence linking spot oil and agricultural markets via the emergence of biofuels.

What do women do? World population growth and fertility patterns, 1960-2000

In this paper we attempt to describe the general picture reasons behind the world population explosion during the 20th century. In general we comment that if, according to some, at the end of the 20th century there were too many people, this was has a consequence of scientific innovation, circulation of information, and economic growth, leading to a dramatic improvement in life expectancies. Nevertheless, a crucial variable shaping differences in demographic growth is fertility. In this paper we identify as important exogenous variables affecting fertility female education levels, infant mortality, and racial identity and diversity. It is estimated that three additional years of schooling for mothers leads on average (at the world level ) to one child less per couple. Even if we can identify a worldwide trend towards convergence in demographic trends, the African case needs to be given more attention, not only because of its different demographic patterns, but also because this is the continent where the worldwide movement towards a higher quality of life has not yet been achieved for an important share of the world's population.

Intergovernmental Transfers and Elementary Education: Quasi-Experimental Evidence from Brazil

Whether providing additional resources to local communities leads to improved public services and better outcomes more generally, given existing management capacity and incentive and accountability structures, is an unresolved yet important question for public policy. This paper uses a regression-discontinuity design to evaluate the effect of unrestricted fiscal transfers on local spending (including on education), schooling and learning in Brazil. Results show that transfers increase local public spending almost one for one with no evidence of crowding out own revenue or other revenue sources. Extra per capita transfers of 1000 Reais lead to about 0.42 additional years of elementary schooling and student literacy rates increase by about 5.6 percentage points on average. Part of this effect arises through higher teacher-student ratios in municipal elementary school systems. Results also suggest that additional resources have stronger effects in more rural and less developed parts of Brazil.

Measures of fit in multiple correspondence analysis of crisp and fuzzy coded data

When continuous data are coded to categorical variables, two types of coding are possible: crisp coding in the form of indicator, or dummy, variables with values either 0 or 1; or fuzzy coding where each observation is transformed to a set of "degrees of membership" between 0 and 1, using co-called membership functions. It is well known that the correspondence analysis of crisp coded data, namely multiple correspondence analysis, yields principal inertias (eigenvalues) that considerably underestimate the quality of the solution in a low-dimensional space. Since the crisp data only code the categories to which each individual case belongs, an alternative measure of fit is simply to count how well these categories are predicted by the solution. Another approach is to consider multiple correspondence analysis equivalently as the analysis of the Burt matrix (i.e., the matrix of all two-way cross-tabulations of the categorical variables), and then perform a joint correspondence analysis to fit just the off-diagonal tables of the Burt matrix - the measure of fit is then computed as the quality of explaining these tables only. The correspondence analysis of fuzzy coded data, called "fuzzy multiple correspondence analysis", suffers from the same problem, albeit attenuated. Again, one can count how many correct predictions are made of the categories which have highest degree of membership. But here one can also defuzzify the results of the analysis to obtain estimated values of the original data, and then calculate a measure of fit in the familiar percentage form, thanks to the resultant orthogonal decomposition of variance. Furthermore, if one thinks of fuzzy multiple correspondence analysis as explaining the two-way associations between variables, a fuzzy Burt matrix can be computed and the same strategy as in the crisp case can be applied to analyse the off-diagonal part of this matrix. In this paper these alternative measures of fit are defined and applied to a data set of continuous meteorological variables, which are coded crisply and fuzzily into three categories. Measuring the fit is further discussed when the data set consists of a mixture of discrete and continuous variables.

Poor, Hungry and Stupid: Numeracy and the Impact of High Food Prices in Industrializing Britain, 1780-1850

This paper argues that low levels of nutrition impaired cognitive development in industrializing England, and that welfare transfers mitigated the adverse effects of high food prices. Age heaping is used as an indicator of numeracy, as derived from census data. For the cohorts from 1780-1850, we analyse the effect of high grain prices during the Napoleonic Wars. We show that numeracy declined markedly for those born during the war years, especially when wheat was dear. Crucially, where the Old Poor Law provided for generous relief payments, the adverse impact of high prices for foodstuffs was mitigated. Finally, we show some tentative evidence that Englishmen born in areas with low income support selected into occupations with lower cognitive requirements.

Incorporating waiting time in competitive location models: formulations and heuristics

In this paper we propose a metaheuristic to solve a new version of the Maximum Capture Problem. In the original MCP, market capture is obtained by lower traveling distances or lower traveling time, in this new version not only the traveling time but also the waiting time will affect the market share. This problem is hard to solve using standard optimization techniques. Metaheuristics are shown to offer accurate results within acceptable computing times.