The Impact of Migration on Foreign Trade: A Developing Country Approach

While the causal relationship between migration and trade has not been studied thoroughly, estimation results of gravity model approach suggest that important aspects determining trade volumes can be missed if additional factors, including migration, are not considered. The current paper aims at testing the impact of migration on foreign trade in a relatively closed small economy. We use the data of Bolivia, for the years 1990–2003. We apply gravity model, adding a migration variable to the explanatory variables. We test the impact of both, immigration and emigration on exports and imports and also on intra-industry trade. We use panel estimation including data of 30 trade partners (selected according to higher trade intensity with Bolivia). We control for the economic size and geographical location of trade partners, and for changes in terms of trade. Previous studies show an increasing effect of immigration on both exports and imports elasticities. Some studies find larger exports elasticity compared to imports elasticity, some vice versa. We could not find any studies on emigration impact on trade. Our results show relatively similar impact of both immigration and emigration on foreign trade. Positive significant effect of immigration on exports and imports is confirmed also in Bolivia, even when the migration flows in Bolivia are not as high as in the case of most countries analyzed previously. We can conclude positive effect of migration flows also on intra-industry trade. In the following analysis, we intend to control for the impact of trade agreements and openness of trade partners. We will also try to broaden the sample of trade partners used in the current estimation and to test the hypotheses on other developing countries.migration; trade; gravity model; Bolivia

Financial Development and the Distribution of Income in Latin America and the Caribbean

One of the central concerns in Latin America and the Caribbean (LAC) has been the reduction of poverty and inequality so prevalent in the continent. Using large world samples, the literature has found that financial development increases economic growth, increases the income of the poor, and reduces inequality. This paper studies the effects of financial development on the whole distribution of income in LAC. We find that the income of the poorest quintile has not been affected by expansion in the financial system. However, we do find that financial development has had a disproportionate positive effect on the incomes of the second, third and fourth quintiles. We also find some evidence for the Greenwood-Jovanovic (1991) hypothesis that this positive effect only begins after a country crosses a certain economic development threshold.distribution of income, financial development, inequality

Assessing the allocation of aid : developmental concerns and the self-interest of donors.

In this paper, we perform a Tobit analysis of aid allocations, covering the period 1999-2002 and accounting for both altruistic and selfish donor motives. We first compare the allocative behavior of all bilateral donors taken together with that of multilateral aid agencies, and then look at nine major bilateral donors individually. It turns out that poorer countries get clearly more aid from both bilateral and multilateral donors, with the possible exception of France and Japan. Most bilateral donors and the multilateral agencies are also found to direct significantly more aid to well governed recipients if governance is measured by the World Bank?s CPIA. If the CPIA is replaced by the Kaufmann index, however, the policy orientation of aid becomes extremely weak. In contrast to a recent paper by Dollar and Levin (2004), our estimates do neither suggest that multilateral aid is more poverty and policy oriented than bilateral aid, nor that IDA performs particularly well within the group of multilateral donors. Post-conflict resolution, the third altruistic motive considered in the paper, emerges as a significant determinant of aid allocations in 2002. The importance of selfish aid motives clearly differs between bilateral and multilateral donors. We find no evidence that donor countries were able to push through their individual trade and political interests at the multilateral level. By contrast, the export-related self interest of DAC countries provided a fairly strong incentive to grant bilateral aid, as did colonial ties.Entwicklungshilfe; Geberländer; Motivation; Internationale Wirtschaftsbeziehungen; Schätzung; Welt; Entwicklungsländer;Foreign Aid Allocations , Donor Motives , Tobit Analysis;

Domestic Violence and Labor Market Outcomes: Evidence from a Mixed-Race Developing Country

This study investigates the heterogeneous effects of domestic violence over labor markets in an ethnically fragmented country such as Bolivia. Among developing countries, Bolivia “excels” in having one of the highest levels of domestic violence in the region. Anecdotal evidence and empirical evidence suggest that response to domestic violence is not homogeneous across different ethnic groups. Using information from the Demographic and Health Survey (DHS) for Bolivia, we examine the heterogeneous impacts of domestic violence over one of the key labor market outcomes such as employment. We employ a probabilistic decision model and treatment regression techniques to examine this effect. We claim that the impact of domestic violence on labor markets is limited among indigenous people, given that violence is, to some extent, socially recognized and accepted. We find that for most of the cases, indigenous women are less responsive to domestic violence than non-indigenous ones, except for groups with a high income level. Our results are robust for alternative methodologies to address possible endogeneity problems.labor markets, domestic violence, Bolivia, indigenous

Essays on Labor Economics and Fiscal Decentralization

This dissertation comprises two essays. While the topics of both essays are different both are interrelated on the base of economic development. The first essay examines ethnic wage gaps on segmented labor markets with evidence from Latin American countries. The second essay revisits the determinants of fiscal decentralization with an emphasis on the role that geography plays in determining fiscal decentralization. The first essay contributes to limited literature on ethnic wage gaps in Latin America. It examines ethnic wage gaps for workers in formal and informal labor markets. Using data from Latin American countries we estimate and examine across-ethnic wage gaps for informal and formal markets, their changes over time, factors that explain their differences, and the wage gap distribution. More specifically, we verify that different ethnic wage gaps do exist across formal and informal markets; they behave differently not only at their means but also along the wage distribution. The results indicate that higher ethnic wage gaps in informal sectors exist not only on average but also throughout the distribution. In addition, we find that wage gaps have declined significantly over the last 10 years. we explain this by examining changes in the prices of institutional factors and changes in human capital endowments. The distributional analysis shows a decrease in the unexplained component, especially in the top part of the distribution. The second essay contributes to the existing literature on the determinants of fiscal decentralization by motivating theoretically and exploiting in depth the empirical relevance that geography has as a determinant of fiscal decentralization. The relationship between decentralization and geography is based on the logic that more geographically diverse countries show greater heterogeneity among their citizens, including their preferences and needs for public goods and services provisions. Communications and physical distance are also a very important issue and play a key role on the effect of geography over time. (Lora et. al., 2003) argue geography plays a key role in economic and social development, as well as in the institutional design of the countries; yet, this effect could be enhanced (or diminished) in the presence of better physical infrastructure or communications. The theoretical model in this paper builds on the work by Arzaghi and Henderson (2002) and Panizza (1999). For the empirical estimation, we use a panel data set for approximately 91 countries for the period 1960-2005. Physical geography is measured along several dimensions, including elevation, land area and climate. We construct a geographical fragmentation index and test its effect on fiscal decentralization. In addition, we interact the geographical fragmentation index with time-variant infrastructure variables in order to test the effect that infrastructure and communications have on the relationship between geography and fiscal decentralization. For robustness, we construct Gini coefficients for in-country elevation and climate. We find a positive and strong correlation between geographical factors and fiscal decentralization. We also find that while the development of infrastructure (in transportation, communications, etc.) tends to reduce the effect of geography on decentralization, this effect is rather small and mostly statistically insignificant, meaning that the impact of geography survives over time. The strategy has additional value because geography may be used as an instrument for decentralization in future econometric estimations where decentralization is used as an explanatory variable, but may be suspected to be endogenous to the economic process being studied (economic growth, political instability, macroeconomic stability, income distribution, etc.)

Low Test Scores in Latin America: Poor Schools, Poor Families, or Something Else?

Latin American students consistently score low on international tests of cognitive skills. In the PISA 2012 results, students in seven Latin American countries had an average score of 395, or about 100 points lower than the average score of 497 in four Scandinavian countries. We examine why Latin American scores are lower and conclude that 50 points are explained by Latin American families’ lower average educational and socioeconomic characteristics, 25 points are explained by Latin America’s weak cultural orientation toward reading books, and the remaining 25 points are explained by the lower effectiveness of educational systems in teaching cognitive skills

Can Licensing Induce Productivity? Exploring the IPR Effect

La licencia es uno de los principales canales de transferencia de tecnología de empresas multinacionales (EMN) de propietarios extranjeros a las plantas nacionales. Esta transferencia ocurre dentro de las industrias y en todas las industrias, lo cual provoca derrames tecnológicos que puede afectar tanto la productividad intra e interindustrial. Proponemos un modelo teórico que predice que este efecto se puede mejorar mediante la implementación de derechos de propiedad intelectual más fuertes (DPI). Usando datos de nivel de planta chilenos para el período 2001-2007 y la variación exógena de una reforma en 2005, probamos nuestras predicciones teóricas y encontrar efectos positivos inter-industriales, que resultan en mayor productividad para las plantas domésticas. Sin embargo, hay efectos indirectos negativos cuando la licencia se implementa dentro de la misma industria. También probamos para el efecto de un IPR más fuerte y encontrar que un IPR más fuerte reduce los derrames intrasectoriales pero aumenta los derrames entre industrias. Además, el efecto de IPR es más fuerte en empresas que son, en promedio, más pequeñas y tienen baja productividad. Nuestros resultados son robustos no solo a una serie de definiciones de DPI, licencias y productividad, sino también a un conjunto de diferentes especificaciones.Licensing is one of the main channels for technology transfer from foreignowned multinational enterprises (MNEs) to domestic plants. This transfer occurs within industries and across industries, which results in technology spillovers that can affect both intra- and inter-industry productivity. We propose a theoretical model that predicts that this effect can be enhanced by the implementation of stronger intelectual property rights (IPR). Using Chilean plant-level data for the 2001–2007 period and exogenous variation from a reform in 2005, we test our theoretical predictions and find positive inter-industry effects, which result in higher productivity for domestic plants. However, there are negative spillovers when licensing is implemented within the same industry. We also test for the effect of stronger IPR and find that stronger IPR reduces intra-sector spillovers but increases inter-industry spillovers. Moreover, the IPR effect is stronger on firms that are, on average, smaller and have low productivity. Our results are robust not only to a series of definitions of IPR, licensing and productivity but also to a set of different specifications

Can IPR Affect MNE’s Entry Modes? The Chilean Case

Este documento analiza el efecto de unos derechos de propiedad intelectual (DPI) más sólidos en los modos de entrada elegidos por las EMN en el mercado chileno. Las EMN pueden elegir entre la exportación, la introducción de la Inversión Extranjera Directa (IED) y la concesión de licencias a una firma nacional en Chile. Utilizamos datos a nivel de planta para el 2001-2007 y explotamos la reforma exógena de los derechos de propiedad intelectual en Chile en 2005 para examinar el efecto del cambio en IPR sobre la presencia extranjera general en Chile, controlando las actividades de industrias donde los altos niveles de transferencia de tecnología e imitación son importantes factores. Los principales resultados muestran que un IPR más fuerte cambia el modo de entrada elegido por las EMN. En este caso, la IED se reemplaza por una licencia. Esto se explica por la alta capacidad de absorción de Chile durante este período. Además, probamos si este efecto difiere en las industrias de alta tecnología y baja tecnología y concluyen que el el desplazamiento de la IED es menos severo en las industrias de alta tecnología.This paper analyzes the effect of stronger Intellectual Property Rights (IPR) on the entry modes chosen by MNEs in the Chilean market. MNEs can choose between exporting, introducing Foreign Direct Investment (FDI) and licensing to a domestic firm in Chile. We use plant-level data for the 2001–2007 and exploite the exogenous reform of IPR in Chile in 2005 to examine the effect of the change in IPR on the overall foreign presence in Chile, controlling for the activities of industries where high levels of technology transfer and imitation are important factors. The main results show that stronger IPR change the mode of entry chosen by MNEs. In this case, FDI is replaced by licensing. This is explained by Chile’s high absorptive capacity during this period. Moreover, we test whether this effect differs across high-tech and low-tech industries and conclude that the displacement of FDI is less severe in high-tech industries

Unemployed, Now What? The Effect of Immigration on Unemployment Transitions of Native-born Workers in the United States

Although one would expect the unemployed to be the population most likely affected by immigration, most of the studies have concentrated on investigating the effects immigration has on the employed population. Little is known of the effects of immigration on labor market transitions out of unemployment. Using the basic monthly Current Population Survey from 2001 and 2013 we match data for individuals who were interviewed in two consecutive months and identify workers who transition out of unemployment. We employ a multinomial model to examine the effects of immigration on the transition out of unemployment, using state-level immigration statistics. The results suggest that immigration does not affect the probabilities of native-born workers finding a job. Instead, we find that immigration is associated with smaller probabilities of remaining unemployed, but it is also associated with higher probabilities of workers leaving the labor force. This effect impacts mostly young and less educated people