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Political Economy

Long-Run Effects of Democracy on Income Inequality in Latin America. Journal of Economic Inequality, Vol. 14, No. 3, pp. 289-307.2016.
Abstract

I address the link between democracy and inequality in Latin America, analyzing whether the degree of democracy that birth cohorts experience during the course of their formative years is related to labor income dispersion later, in adulthood. For this, I measure inequality at the cohort level by using pseudo-panel data built from household surveys for fifteen Latin American countries (from circa 1995 to circa 2011) and measure democracy as the discounted cumulative value of the degree of democracy during the cohort’s formative years. I find that cohorts that have higher discounted cumulative values of the degree of democracy show lower income inequality. However, the effect of democracy on income dispersion is driven by those cohorts that benefited from the surge of democracies that came to exist during the second half of the twentieth century. I also present suggestive evidence that education is one mechanism explaining these results.

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Work in progress

Unions and robots: Technological change and the political power of organized labor. Mimeo, New York University. 2021.
with Martin Castillo.
Abstract

Automation is contributing to millions of job losses, however little is known about the political ramifications of automation. Herein we study the effect of automation on unionization and public policy responsiveness to unions. Using data for the United States (2004-2014), we show that union membership declines as a result of exposure to automation: an increase in one robot per a thousand workers is related to a 2.6 percent point reduction in the number of unionized workers and a 0.07 percentage point reduction in the share of unionized workers. We also document lower public policy responsiveness to their interests: legislators are 1.3 percentage points less likely to vote legislation in accordance to unions’ revealed preferences. We corroborate, via mediation analysis, that this effect is driven by union decline. Additionally, we argue that lower policy responsiveness is a result of lower levels of labor’s political participation as a result of weaker unions, and report evidence for this mechanism via a negative effect of automation on campaign donations from workers. We also show evidence that an increase in the share of the skilled workforce preceding automation is associated to a stronger decline in union activity, indicating the existence of a heterogeneous effect of automation on union activities. Our findings reveal implications for technological change heretofore unexplored.

 
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Economic interdependence and state consolidation. Mimeo, New York University. 2021.
Abstract

Many sovereign states fail to govern the entirety of their territory, dealing with both ungoverned spaces and secessionist pressures. Herein I study the role of economic interdependence in the process that brings about state consolidation—a relation that is often overlooked in the study of state formation. I show how both monopolistic competition and the insights from the literature on international trade and conflict can be merged to uncover the role of economic interdependence in the process of state consolidation. I find that consolidation exhibits a U-shaped pattern as a function economic interdependence. Importantly, high levels of economic interdependence create efficiency costs that reduce spatial inequality and create a more stable political environment by tying the hands of governments in the process of redistribution of resources within the state. I also show that international trade can bolster state consolidation when the local economy is internationally competitive, but it is damaging of national unity when it is not. When the latter occurs higher levels of economic interdependence are necessary to promote unity, in contrast to an internationally competitive economy. The microfoundations I provide herein also define a typology for the study of state formation.

 
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Top-down identity politics: theory and its effect on trade policy. Mimeo, New York University. 2021.
Abstract

I characterize a political entrepreneur’s incentives to influence voters’ identity by using divisive cues in a formal model of protectionist policy. I argue that cues can change the political equilibrium by affecting the payoffs associated with policy choices, increasing the likelihood of electing a divisive candidate into office. I show that increased import competition increases the incentives for using cues. Counterintuitively, I also show that cues are more likely to be used when polarization over protectionism is small , as long as the share of voters from import competition is big – otherwise the expected value from investing effort finding cues is too small to justify their use. Hence cues are used to create (new) political opportunities. The size of voting blocs shapes the incentives to target cues to narrower identity groups, revealing that when most losers from trade are an ethnic majority, the ethnic minority may be disregarded by the political entrepreneur even if they are also losers from trade. The model provides various testable implications for empirical work seeking to disentangle the mechanisms by which the relation between identity politics and protectionism takes place. My findings also complement demand-side explanations about identity politics in a globalized world, and they contribute as well to related supply-side theories based on the role of institutional constraints insofar as I show that institutions affect cues’ effectiveness but do not suppress identity politics, unless they are restrictive in the extreme.

 
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Think locally, regress globally: Promises and Pitfalls of Conventional IR Data. Forthcoming in “Handbook of Research Methods in International Relations,”" Joseph Huddleston, Tom Jamieson, and Patrick James, Eds. Edward Elgar.
with Matt Malis.
Abstract

This essay seeks to provide practical guidance for applied quantitative IR researchers regarding the steps of the research process in between theory development and statistical analysis. That is, given a clearly articulated theoretical prediction, what must be done before the researcher can run a regression? This chapter primarily addresses decisions pertaining to the selection of a sample of analysis, and the selection of variables to operationalize theoretical quantities of interests, with a focus on the implications of these decisions for internal and external validity and statistical power.

 
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Tariff revenues matter for democratization: Theory and evidence from the First Wave of Globalization.
with Rafael Ch.
Abstract

Is there a role for tariff revenues in democratization? We sustain that tariff revenues have two theoretically-relevant effects. First, a rapacity effect: windfalls from tariff revenues generate incentives for politically-relevant groups to control these rents by controlling government. Second, a redistributive effect: tariff revenues affect the economic power of politically-relevant groups via the effect of tariffs on the return to the factors of production they own. We develop a model of regime change to substantiate these claims and test it in the context of the First Wave of Globalization by exploiting the asymmetric change in shipping times owing to the transition from sail to steam ships, to instrument tariff revenues. We find that tariff revenues reduce democratization and domestic conflict in land abundant economies because the grow in tariff revenues bolsters the rapacity effect and strengthens landed elites via the redistributive effect, discouraging a challenge to their rule. In capital abundant economies we find no statistically significant effect of tariff revenues because landed elites weaken via the redistributive effect and as a result have incentives to share power with challengers to avoid costly conflict. Tariff revenues thus furthers our understanding of the elusive link between trade and democracy.

 

Society and the State: Political Stability in a Changing Climate.
with Amanda Kennard.
Abstract

What are the effect of climate extremes on the relation between the citizen and the state? We argue that climatic pressures reveal information to citizens about governments’ preparedness for safeguarding citizen’s well-being. When citizens’ needs are unmet, climate shocks i) Increase grievances against political institutions, ii) Erode fears of retaliation or suppression by domestic security forces, and iii) Reduce the transaction costs of organization through the strengthening of social ties. We provide causal evidence for our claims using panel data at the household level for India (2005-2012). Specifically we find that an increase in temperature in 3 Celsius reduces trust in government institutions in around 2 percentage points (PP) and increases cooperation in 3PP. The effects of climate are mostly limited to rural areas, wherein climate shocks impact some of the most vulnerable populations. We also observe stronger grievances against government institutions, lower cooperation and more communal conflict when state capacity is low. We argue that this occurs because state capacity acts as a constraint on preparedness. We find causal evidence for two mechanisms explaining these patterns: a fall in consumption and a drop in government transfers in areas with low state capacity.

 


Development and education

The Value of Redistribution: Natural Resources and the Formation of Human Capital under Weak Institutions. Journal of Development Economics, Vol. 149, 102581. 2021.
with Jorge guero, Stanislao Maldonado and Hugo Ñopo.
Abstract

We exploit time and spatial variation generated by the commodities boom to measure the effect of natural resources on human capital formation in Peru, a country with low governance indicators. Combining test scores from over two million students and district-level administrative data of mining taxes redistributed to local governments, we find sizable effects on student learning from the redistribution. However, and consistent with recent political economy models, the relationship is non-monotonic. Based on these models, we identify improvements in school expenditure and infrastructure, together with increases in health outcomes of adults and children, as key mechanisms explaining the effect we find for redistribution. Policy implications for the avoidance of the natural resource curse are discussed.

 
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Broken gears: the value added of higher education on teachers’ academic achievement. Higher Education, Vol. 72, No. 3, pp. 341-361. 2016.
with Hugo Ñopo.
Abstract

Good teachers are essential for high-quality educational systems. However, little is known about teachers’ skill formation during college. By combining two standardized tests for Colombian students, one taken at the end of senior year in high school and the other when students are near graduation from college, we test the extent to which students majoring in education relatively improve or deteriorate their skills in quantitative reasoning, native language and foreign language, in comparison with students in other programs. We find that teachers’ skills vis-à-vis those in other majors deteriorate in quantitative reasoning and foreign language, although these skills deteriorate less for those in math-oriented and foreign language-oriented programs, respectively. For native language, we do not find evidence of robust differences in relative learning mobility.

 
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Poverty and inequality analysis and measurement

Rent imputation for welfare measurement: A review of methodologies and empirical findings. Review of Income and Wealth, Vol. 63, No. 4, 881-89.2017.
with Sergio Olivieri, Lidia Ceriani and Marco Ranzani.
Abstract

Housing should always be included in the construction of the welfare aggregate for welfare analysis. However, assigning a value to the flow of services from dwellings is problematic. Many households own the dwelling in which they live, making this value unobserved; others receive free housing or face prices lower than those at the market. Over the last decades, several estimation techniques have been proposed and implemented by practitioners to overcome this issue. This paper provides a review of methods commonly used to impute rent and discusses the relative advantages and disadvantages of each. We find no consensus on which imputation method is the most appropriate for welfare analysis, as well as a lack of evidence regarding the distributional impact of including rents in the welfare aggregate, particularly in developing countries. Moreover, practices for imputing rents vary across countries, calling for the future development of a unified framework.

 
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Lower Bounds on Inequality of Opportunity and Measurement Error. Economics Letters, Vol. 137, pp. 102-105. 2015.
Abstract

I show that lower bound estimates of inequality of opportunity can have substantial measurement error, and that measurement error can vary considerably across samples. As a consequence, the traditional cross-country comparisons researchers make can be misleading.

 
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