Productivity, demand and the home market effect

The causality between international trade and industrialization is still ambiguous. We consider a model of international trade with the Home Market Effect - with differences in income and productivity between sectors and between countries - in order to identify additional channels for determining the effects of international trade on industrialization. Introducing non-homothetic preferences and differences in productivity aids in the interpretation of any apparent paradoxes within international trade, such as the commercial relations between more populated countries like China and India and large economies such as the U.S. Population size, demand composition and productivity levels constitute the three main channels for determining the effects of international trade. Interactions among these channels define the results obtained in terms of industrialization, while welfare levels are always higher in relation to autarky.

The effect of financial leverage on real and accrual-based earnings management

Past research has documented a substitution effect between real earnings management (RM) and accrual-based earnings management (AM), depending on relative costs. This study contributes to this research by examining whether levels of (and changes in) financial leverage have an impact on this empirically documented trade-off. We hypothesise that in the presence of high leverage, firms that engage in earnings manipulation tactics will exhibit a preference for RM due to a lower possibility—and subsequent costs—of getting caught. We show that leverage levels and increases positively and significantly affect upward RM, with no significant effect on income-increasing AM, while our findings point towards a complementarity effect between unexpected levels of RM and AM for firms with very high leverage levels and changes. This is interpreted as an indication that high leverage could attract heavy outsider scrutiny, making it necessary for firms to use both forms of earnings management in order to achieve earnings targets. Furthermore, we document that equity investors exhibit a significantly stronger penalising reaction to AM vs. RM, indicating that leverage-induced RM is not as easily detectable by market participants as debt-induced AM, despite the fact that the former could imply deviation from optimal business practices.

High-School Students´ Summer Jobs and their Ensuing Labor Market Achievement : the Long Term Effect

In part because of high and persistent youth unemployment, adolescent students’ transition from school to work is an important policy and research topic. Many countries have implemented public programs offering summer jobs or work while in high-school as measures to smooth the transition. While the immediate effect of the programs on school attendance, school grades, and disposable income is well documented, their effect on the transition to the labor market remains an open question. Observational studies have shown strong positive effects of summer jobs, but also that the estimated effect is highly vulnerable to selection bias. In this paper, some 3700 high-school students applying for summer jobs in the period 1995-2003,via a program, are followed to 30 years of age. A quarter of the applicants were randomly offered a summer job each year. Among the remaining students, 50% had a (non-program related) summer job while in high-school. We find the income, post high-school, for the offered and non-offered groups to be similar and conclude that the effect of summer jobs on the transition to the labor market is inconsequential.

The program and treatment effect of summer jobs on girls’ post-schooling incomes

Public programs (of disputed effect) offering summer jobs or work while in high school to smooth the transition from school to work is commonplace. In this paper, 1447 girls in their first grade of high school between 1997-2003 and randomly allotted summer jobs via a program in Falun (Sweden) are followed 5-12 years after graduation. The program led to a substantially larger accumulation of income while in high school. The causal effect of the high school income on post-schooling incomes was substantial and statistically significant. The implied elasticity of 0.4 is however potentially inflated dueto heterogeneous effects.

How does corruption hurt growth? Evidences about the effects of corruption on factors productivity and per capita income

Corruption is a phenomenon that plagues many countries and, mostly, walks hand in hand with inefficient institutional structures, which reduce the effectiveness of public and private investment. In countries with widespread corruption, for each monetary unit invested, a sizable share is wasted, implying less investment. Corruption can also be a burden on a nation’s wealth and economic growth, by driving away new investment and creating uncertainties regarding private and social rights. Thus, corruption can affect not only factors productivity, but also their accumulation, with detrimental consequences on a society’s social development. This article aims to analyze and measure the influence of corruption on a country’s wealth. It is implicitly admitted that the degree of institutional development has an adverse effect on the productivity of production factors, which implies in reduced per capita income. It is assumed that the level of wealth and economic growth depends on domestic savings, foster technological progress and a proper educational system. Corruption, within this framework, is not unlike an additional cost, which stifles the “effectiveness” of the investment. This article first discusses the key theories evaluating corruption’s economic consequences. Later, it analyzes the relation between institutional development, factor productivity and per capita income, based on the neoclassical approach to economic growth. Finally, it brings some empirical evidence regarding the effects of corruption on factor productivity, in a sample of 81 countries studied in 1998. The chief conclusion is that corruption negatively affects the wealth of a nation by reducing capital productivity, or its effectiveness.

Income composition, endogenous fertility and schooling investments in children

This paper studies how the eomposition of ineome between mothers and fathers affeets fertility and sehooling investments in ehildren, using data from the 1976 and 1996 PNAD, a Brazilian household survey. Ineome composition affeets the time eost of fertility because mothers and fathers alloeate different amounts of time to child-rearing. These effects are in turn transmitted to investments in ehildren through a tradeoffbetween quantity and quality of ehildren. The main contribution of this paper is twofold. First, it derives new implications about the relationship between household ineome composition and schooling investments in ehildren. Seeond, this paper devises and implements an empirieal approaeh to assess these implieations, using two eross-seetions of fertility and schooling data from Brazil. The main empirical findings of the paper ean be summarized as follows. First, the empirical analysis shows that a larger negative effect of the mother's labor in come on fertility in 1996 is associated with a larger positive effect on the adult child's schooling, refleeting the interaction between quantity and quality of children. Second, the larger negative effect of the mother's labor income on fertility in 1996 is associated with a reduction in the effect of other determinants of number of children. This suggests that an increase in the relative importanee of time costs of fertility may be an important determinant of variations in fertility over time in Brazil and other developing countries .

Wealth composition, endogenous fertility and the dynamics of income inequality

This paper analyzes how differences in the composition of wealth between human and physical capital among families affect fertility choices. These in tum influence the dynamics of wealth and income inequality across generations through a tradeoffbetween quantity and quality of children. Wealth composition affects fertility because physical capital has only a wealth effect on number of children, whereas human capital increases the time cost of child-rearing in addition to the wealth effect. I construct a model combining endogenous fertility with borrowing constraints in human capital investments, in which weaIth composition is determined endogenously. The model is calibrated to the PNAD, a Brazilian household survey, and the main findings of the paper can be summarized as follows. First, the model implies that the crosssection relationship between fertility and wealth typically displays a U-shaped pattem, reflecting differences in wealth composition between poor and rich families. Also, the quantity-quality tradeoff implies a concave cross-section relationship between investments per child and wealth. Second, as the economy develops and families overcome their bOlTowing constraints, the negative effect of weaIth on fertility becomes smaller, and persistence of inequality declines accordingly. The empirical evidence presented in this paper is consistent with both implications .

Power law distribution in education: Effect of economical, teaching, and study conditions in university entrance examination

We studied the statistical distribution of student's performance, which is measured through their marks, in university entrance examination (Vestibular) of UNESP (Universidade Estadual Paulista) with respect to (i) period of study - day versus night period (ii) teaching conditions - private versus public school (iii) economical conditions - high versus low family income. We observed long ubiquitous power law tails in physical and biological sciences in all cases. The mean value increases with better study conditions followed by better teaching and economical conditions. In humanities, the distribution is close to normal distribution with very small tail. This indicates that these power law tails in science subjects axe due to the nature of the subjects themselves. Further and better study, teaching and economical conditions axe more important for physical and biological sciences in comparison to humanities at this level of study. We explain these statistical distributions through Gradually Truncated Power law distributions. We discuss the possible reason for this peculiar behavior.

The income distribution problem in Latin America and the Caribbean

Includes bibliography

Poverty and income distribution in Latin America: on the complementarities between trade policy and social public spending

Includes bibliography

Structural reforms, macroeconomic fluctuations and income distribution in Brazil

Includes bibliography

The effects of growth and economic reform on income distribution in Latin America

Includes bibliography

Education and income distribution in urban Brazil, 1976-1996

Includes bibliography

Distributional effects of eliminating the differential tax treatment of business and personal income in Chile

Includes bibliography

Income inequality in Brazil: What has changed in recent years?

Includes bibliography.