Research by topic:
Female Labour Market Access, Divorce, and Intra-Domestic Violence: Evidence from Mexico
This paper studies the causal effect of improvements to female labour market conditions on divorce and domestic violence. A newly constructed dataset comprising administrative records of all major labour markets, domestic violence offences, and divorces in Mexico between 1997 and 2006 enables the study of market-level gender violence. The paper leverages local variation in female employment from changes in labour demand at the industry level in female-intensive manufacturing industries that shelter the operation of US companies exclusively. Increases in the population share of employed women lead to reductions in the male-female earnings gap while increasing the female-instigated divorce rate on the grounds of domestic violence, consistent with an “empowerment” effect. However, the study also finds an increase in the homicide rate of married women, consistent with a “backlash” effect.
Optimal Property Taxation in Developing Countries: Theory and Evidence from Mexico
(draft available upon request)
We study the design and effectiveness of property taxation in Mexico City -- a context with household credit constraints and limited government enforcement capacity. We first evaluate the effects of three policy levers used by the government to increase tax revenues: tax rates, late fees, and enforcement. Using regression discontinuity and difference-in-differences research designs, we show that tax rate increases raise revenue but also result in non-compliance. We estimate revenue elasticities of 0.3-0.7, suggesting that the current tax rate is below the revenue-maximizing rate. We then use time variation in late fees to estimate the likelihood that households pay on time. Households are very responsive to late fees, with a payment elasticity of 1. Finally, we use a field experiment that delivered an enforcement message to show that households are also very responsive to enforcement efforts. Indeed, the share of households paying their outstanding liability increases by 7-10 percentage points. We then provide guidance on how to best make use of these policy levers. From a revenue-maximizing perspective, all tools are underutilized and the optimal policy mix would ensure the revenue elasticities of these policy instruments are equal to each other. In contrast, under a welfare-maximizing perspective, which takes into account households' credit constraints, enforcement efforts and excessive late fees reduce welfare relative to gains in revenue. This is because credit-constrained households comply with the property tax by reducing consumption. The welfare-maximizing perspective suggests that tax rates should be used to collect revenue from non-constrained households and that late fees can be used to provide liquidity to credit-constrained households. These results show that governments in developing countries can raise substantial revenues using property taxes. In addition, improving the design of property taxes can make these taxes a more effective source of revenue.
Optimal Public Investments in Schooling: A Structural Approach
Does generalized human capital accumulation have positive returns for the economy as a whole? If so, what is the optimal level of public investment in schooling? How important are supply and demand factors in determining the returns to schooling? This paper adopts a structural approach to study the general equilibrium effects of public investments in schooling on the labour market. Schooling decisions are modelled as individual choices that are costly to undertake but are also subsidized by the government in an overlapping generations model. Social returns of human capital accumulation in the economy depend on the productivity of different schooling levels as production inputs across different employment sectors. Estimation of the theoretical model using Mexican data on schooling and earnings reveals that investments in human capital in developing countries have an important role in increasing average real wages and reducing education-related wage premia. The paper then presents a policy experiment and shows that increasing cash transfers conditional on college attendance is the policy with the greatest positive impact on average wages, as well as with the highest associated reduction in earnings inequality, due to the higher productivity gains experienced when individuals complete this schooling level and to the current relative scarcity of college graduates in the economy.
Poverty and income dynamics
Income Dynamics and the Probability of Leaving Income Poverty for Families in the UK
The aim of this paper is to study relative income poverty and its persistency for families in the United Kingdom. A number of important questions are addressed. How has the poverty rate evolved over the last 20 years? What are the characteristics of poor families? Is poverty a permanent or a transitory condition? What are the factors lifting families out of poverty? These questions are investigated using data from 1991 to 2008 from the British Household Panel Survey (BHPS), a nationally representative panel of households in the UK. The empirical analysis consists of three parts. First, frequency estimation is used to study (1) the probability of income poverty for families in the UK and (2) the probability of staying in income poverty for several periods, conditional on a set of observable characteristics of the family. In the second part, a canonical income process specification with an added normality assumption is adjusted to the data, and its implications regarding probabilities (1) and (2) are studied. Third, the importance of college attendance in determining the probabilities of poverty relative to other factors is studied, also using frequency methods. Findings from this paper include: the unconditional probability of poverty has remained stable around 0.15 and has steadily decreased over the last 20 years; families in which the head is a female, is not married, did not attend college, or lives outside of England face higher poverty probabilities; poverty is a persistent condition in the sense that, for any given family, poverty in previous periods serves as a predictor for poverty in future periods; as compared to the results obtained using frequency estimation, the income dynamics model together with the normality assumption overestimate the probabilities of interest; and college attendance is less important than marital status and the gender of the head in determining poverty. Given the shortcomings of the normality assumption to estimate the probabilities of interest, non-parametric methods are explored as an alternative to estimate the distribution of shocks to income after the empirical analysis is carried out.
Supply and Demand Shocks in Mexico
Gaceta de Economía (ITAM), 33, 59-76, 2014
(latest version here)
I use the Blanchard & Quah (1989) decomposition to identify the permanent and transitory components of Mexican GDP and unemployment rates between 1985 and 2011. The main findings of this exercise are: (1) the transitory, or so-called “demand shocks”, explain the majority of fluctuations in unemployment, and (2) the permanent, or so-called “supply shocks”, explain the majority of fluctuations in GDP. The first finding corresponds closely to the conventional viewpoint that unemployment in Mexico is structural, while the second finding corresponds to the idea that negative fluctuations in production are caused by severe economic crises that impact the long-run performance of the Mexican economy. I use these results to make two policy recommendations: (1) trade, fiscal, and monetary policy must be designed to generate financial stability, and (2) changes in labor legislation must be made in order to reduce unemployment permanently.
Selected work in progress
Job Opportunities and their Effects on Crime: Evidence from Mexico”
with Riccardo Ciacci
How Do Land Registration Schemes Affect Customary Rights Systems? A Game Theoretical Perspective
Game theory modeling of the evolution of property rights has paid little attention to the issues of land registration. In the third-world contexts defined by customary legal arrangements, land registration can play a crucial step in transitioning to a system of private property capable of unlocking the growth potential of the local economy (De Soto 2000). Successfulness of registration depends on the cost of gathering communal consent by the possessor (Arruñada 2003) and overall state legitimacy (Fitzpatrick 2006). The inability of registration to provide accessible and secure property protection for the possessors can lead to a rise of conflict among multiple enforcement capacities, legal institution shopping and capture attempts by diverse interest groups (Knetch & Trebilcock 1984, Firmin-Sellers & Sellers 1999, Platteau 1992, Lastarria-Cornhiel 1997, Toulmin & Quan 2000, Deininger 2003). We develop an extensive game to inquire how the availability of formal registration of private property affects equilibrium in situations where customary rights systems are the initial equilibrium of an infinitely repeated game played among land possessors. We start by laying out a setting similar to the hawk-dove game (Sugden 1986, Wood 2015) in which customary rights define the Nash equilibrium. We then introduce the possibility of land registration and analyze under which conditions the new equilibrium implies a fully registered system, a resilient customary system, or a disharmonious system with predatory behavior. Our main takeaway is that the extent to which formal registration is successful crucially depends on the size of the cost of registration relative to the cost of deflecting from the customary system, and the potential payoff from engaging in predatory behaviour.