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

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

Abstract

Do tariff revenues affect democratization? We argue that tariff revenues have two theoretically-relevant effects: i) A rapacity effect: they generate incentives to control government, ii) A redistributive effect: they impact the returns to the factors of production changing the distribution of power between politically-relevant groups. If ruling elites benefit from redistribution, this discourages a challenge to their rule. If elites lose from redistribution, they may share power to avoid expropriation. We test these claims during the First Wave of Globalization, where ruling elites were often landed. We find causal evidence that tariff revenues reduce democratization in land-abundant economies because ruling elites strengthen via the redistributive effect, as the return to land increases, and the windfalls bolster the rapacity effect. In contrast, in capital-abundant economies the return to land falls, thus the redistributive effect offsets the rapacity effect. Congruently, we find no effect for tariff revenues in this case.

  Manuscript

Top-down identity politics in a globalized world: Elite cues, identity and their effects on protectionism. Mimeo, New York University. 2021.

Abstract

I characterize a political entrepreneur’s incentives to influence voters’ identity by using divisive cues. 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 assess these claims in a game theoretic model about protectionism. Counterintuitively, I show that cues are likely to be used when polarization over protectionism is small, otherwise the expected value from investing effort finding cues is too small to justify their use. I find that increased import competition provides incentives for using cues, however the size of voting blocs shapes the incentives to target cues to narrower 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 also lose from trade. This paper thus proposes a theory that explains why, how and when should we observe top-down identity politics in response to globalization.

  Manuscript

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.

  Manuscript

Does economic interdependence lead to state consolidation? Mimeo, New York University. 2021.

Abstract

States can deal with both ungoverned spaces and secessionist pressures, failing to govern the entirety of their territory. I develop a game-theoretic model to explain how can economic interdependence within states address these two key issues of state formation. The model reveals that economic interdependence has a non-monotonic effect on unity in the state, first reducing unity as interdependence increases and then promoting it for high levels of interdependence. I find that the latter case promotes stable unity because interdependence generates efficiency costs that tie the hands of governments towards redistributing more resources towards a territory that can dislodge, discouraging secession and the creation of ungoverned spaces. For low levels of interdependence, unity is achieved through coercion, but it is less stable. I also consider the role of international economic interdependence in the model, and show that if the state's economy becomes less competitive, international trade bolsters secessionism by reducing the efficiency costs of interdependence. In this case, higher economic interdependence is needed to promote unity. My model rationalizes some mechanisms that promote peace and integration in the literature about international trade and conflict but in the context of state consolidation, and in doing so it opens new lessons for the study of state formation.

  Manuscript

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.

  Manuscript

Implications of Climate Change for Political (In)Stability.
with Amanda Kennard.

Abstract

What are the effect of climate extremes on the relation between the citizen and their government? 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 leaders, ii) Erode fears of retaliation or suppression by domestic security forces, and iii) Increase cooperation through the strengthening of social ties. We provide causal evidence for our claims using panel data at the household level for India (2005-2012). We find that an increase in temperature of 3 Celsius reduces trust in political leadership by around 2 percentage points (PP) and increases cooperation by 3PP. These effects are driven predominantly by rural areas, wherein climate shocks impact some of the most vulnerable populations. We find causal evidence for two mechanisms explaining these patterns: a fall in consumption and a drop in government transfers in rural areas with low preparedness.

 


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.

  Article Preprint Online appendix

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.

  Article Preprint

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.

  Article Preprint Replication Archive Online appendix