The impact of Inequality on Economic Growth: Evidence for Mexico 1895-1994

The aim of the paper is to explore the influences of initial inequality on the long run distribution of wealth. The paper presents two mathematical models that analyse the occupational choice of individuals in the presence of capital constraints and risk in entrepreneurial activities. The models show that inequality and particularly polarization hinder economic growth. The higher the initial level of polarization is, the lower the long run aggregate wealth of the economy and the higher the long run polarization will be. The models are calibrated using numerical simulations. The implications of the models are assessed empirically using data on economic growth, and income distribution in Mexico, during the period 1895-1994, as well as the "Doing Business" databases of the World Bank. Policy-wise it is found that a more egalitarian wealth distribution and less poverty can be achieved through wealth redistribution policies and by improving the business climate. This can be done by reducing the cost of setting-up firms (technology,bureaucratic and administrative costs), introducing labour-market reforms encouraging the hiring of those typically excluded such as the poor, improving the access to credit markets by reducing the costs of creating and/or registering collateral and broadening the credit bureau coverage. --

The Role of Ethnic Identity and Economic Issues in the 2007 Kenyan Elections

This paper investigates the factors that shaped Kenyan’s voting intentions in the 2007 presidential election. Using data from a public opinion survey conducted two weeks before the election we are able to evaluate the relative importance of what shaped voting behavior comprehensively, taking into account factors such as ethnicity, access to public services, incidence of poverty and wealth differences across ethnic groups and across generations. We find strong evidence that ethnic identity was the main factor determining voting intentions and to a lesser extent grievances, economic well-being, and access to public and private goods. However, the relative importance of these factors depends on whether Kenyan voters identify themselves first and foremost in terms of their ethnicity, occupation or nationality. Those who identify themselves in terms of their ethnicity were influenced the most by access to public services. This evidence supports theories that suggest ethnic identity is a proxy used by voters to assess which candidate will give them greater access to public goods.Voting behavior, ethnic identity, Kenya

Decentralization, Accountability and the 2007 MPs Elections in Kenya

The Kenyan Constituency Development Fund (CDF) aims to alleviate poverty by allocating resources to constituencies which MPs and residents decide how to spend. In this paper we assess whether MPs’ re-election chances were affected by their management of the CDF. For this purpose we analyse the type of projects implemented by the CDF and residents’ opinion about their MP and the CDF. We find that MPs’ re-election chances were influenced by MPs’ ethnicity and by the way MPs allocated the CDF. MPs who run the most projects on education and the least on other projects such as health or water were less likely to be re-elected.Decentralization, Accountability, Elections, Africa, Kenya

Triggers and Characteristics of the 2007 Kenyan Electoral Violence

Following the 2007 disputed Kenyan Presidential election unprecedented levels of violence erupted across the country adding to the history of troubled elections in Africa. This paper offers quantitative and qualitative evidence on the incidence, impacts and issues that triggered electoral violence. Using two surveys conducted before and after the election we find that one out of three Kenyans were affected by the violence regardless of their ethnicity and wealth. The chances of being a victim of violence were higher in areas with land conflicts and where politically-connected gangs operated. Violence, which was mainly triggered by the perception that the election had been rigged, reduced trust and social capital among communities making violence more likely to reoccur.Voting, Electoral Violence, Rule of Law, Institutions, Africa, Kenya

Violence in Guatemala pushes adults and children to seek work in Mexico

This article estimates the impact of violence on emigration crossings from Guatemala to Mexico as final destination during 2009-2017. To identify causal effects, we use as instruments the variation in deforestation in Guatemala, and the seizing of cocaine in Colombia. We argue that criminal organizations deforest land in Guatemala, fueling violence and leading to emigration, particularly during exogenous supply shocks to cocaine. A one-point increase in the homicide rate differential between Guatemalan municipalities and Mexico, leads to 211 additional emigration crossings made by male adults. This rise in violence, also leads to 20 extra emigration crossings made by children

New trends in South-South migration: The economic impact of COVID-19 and immigration enforcement

This paper evaluates the impact of the pandemic and enforcement at the US and Mexican borders on the emigration of Guatemalans during 2017-2020. During this period, the number of crossings from Guatemala fell by 10%, according to the Survey of Migration to the Southern Border of Mexico. Yet, there was a rise of nearly 30% in the number of emigration crossings of male adults travelling with their children. This new trend was partly driven by the recent reduction in the number of children deported from the US. For a one-point reduction in the number of children deported from the US to Guatemalan municipalities, there was an increase of nearly 14 in the number of crossings made by adult males leaving from Guatemala for Mexico; and nearly 0.5 additional crossings made by male adults travelling with their children. However, the surge of emigrants travelling with their children was also driven by the acute economic shock that Guatemala experienced during the pandemic. During this period, air pollution in the analysed Guatemalan municipalities fell by 4%, night light per capita fell by 15%, and homicide rates fell by 40%. Unlike in previous years, emigrants are fleeing poverty rather than violence. Our findings suggest that a reduction in violence alone will not be sufficient to reduce emigration flows from Central America, but that economic recovery is needed

An Inquiry into the use of illegal electoral practices and effects of political violence

This article investigates whether vote-buying and the instigation of violence in the disputed 2007 Kenyan elections were strategically motivated, and whether those affected by electoral violence changed their views towards ethno-politics and the use of violence. To answer these questions, a panel survey conducted before and after the elections is combined with external indicators of electoral violence. We find that political parties targeted vote-buying towards specific groups to weaken the support of their political rivals and to mobilize their own supporters. Furthermore, parties instigated violence strategically in areas where they were less likely to win. Although the victims of violence would prefer that parties are no longer allowed to organize in ethnic or religious lines, they are more likely to identify in ethnic terms, support the use of violence and avoid relying on the police to resolve disputes. The overall findings suggest an increased risk of electoral-violence reoccurring

Determinants of Spanish firms' life cycle and job

This paper examines the role of human capital, individual entrepreneurial traits and the business environment on firms' life cycle and on job creation in Spain. For this purpose, we have constructed a pseudo-panel, by using the Global Entrepreneurship Monitor survey over the period 2001-2008. We have found that the creation, maturity and survival of firms were aided by the availability of bank credit and the large immigration inflows that Spain received over this period. However, of these two factors, only bank credit had a positive effect on the creation of jobs and on improving expectations of job expansion. The relatively high levels of youth unemployment experienced even before the crises of 2008 hurt the firm's chances of maturity and survival. The results also suggested that the gender gap in entrepreneurial activities had narrowed. In relative terms, women with higher levels of education were more likely to create mature firms than men. Based on the empirical findings and those of related literature, the paper offers policy recommendations to foster a sustainable entrepreneurial sector capable of contributing to the recovery of the Spanish economy

The good, the bad and the ugly : the socio-economic impact of drug cartels and their violence in Mexico

This paper assesses the impact that drug cartels and their associated violence have had on development in Mexico. For this purpose, we monitor official and media reports to identify where cartels have operated with and without drug related homicides. Using the difference-in-difference kernel matching method, we find that on the one hand, inequality declined to a large extent in areas where cartels were active without incidents of drug related homicides. On the other, poverty increased in areas that had both the lowest and the highest rates of drug related homicides. Two reasons could explain this increase in poverty. In the most violent areas the number of employers and remunerations declined in key industries, such as manufacturing. In the least violent areas poverty increased possibly due to people migrating from the more violent places