Intergenerational income mobility may be affected by a plethora of factors; however, much recent literature has focused on the environmental impact of the local neighborhood. Given the focus on the U.S., that literature is unable to distinguish the effect of neighborhoods from that of the schools, since US students are usually tied to their neighborhood schools. Distinguishing between the impact of neighborhoods and of schools is crucial for policy debates on school choice and housing policy. I rely on a quasi-experiment in Chile to measure the impact of education outside of the neighborhood of origin. In Chile, a country with a voucher school system where parents can choose schools in any neighborhood, a new subway line in Santiago provided access to educational opportunities for low-income students by reducing their transport time to schools outside of their neighborhood (Asahi, 2014). Using an enormous, novel, student-level data set and a DID approach, this paper shows that the expansion of educational opportunities promoted intergenerational income mobility, with students’ future income increasing by 1.8 percental points above that of their parents’
The phenomena of wealthy elites taking steps to influence regulatory and fiscal policies, using their disproportionate economic and political leverage, is important as it affects the basis of democratic societies, governance and state building. This paper examines the political influence of wealthy elite groups in Chile as one explanation for the variation in taxation level. This analysis is of interest as it may test theories of intra-elite competition and capture and provide insights for policymakers. While previous literature has tried to analyze the effect or influence of wealthy groups on taxation, usually, these analyses focus on one specific event (Griffin & Anewalt-Remsburg, 2013; Mares & Queralt, 2015) or use rough approximations of wealthy elite groups (Beramendi, Dincecco, & Rogers, 2018). This paper contributes to the literature by using a novel data set created with extensive biographical analysis of over two thousand politicians in Chile to identify and generate measures of wealthy elites – landowners and capitalists - over several decades. The results of this paper show that this electoral reform reduced the proportion of landowners in Congress, and subsequently allowed an increase in the taxation level in the country. These findings would support the two theories examined, showing how wealthy elites coordinate in a late industrialized country and how shocks- economic or institutional- that affect the de facto power of the elites, also undermines their hold on political power and public policies.
Although literature on education economic returns is not un- common, research focusing in vocational students is quite scarce. This paper addresses labor market outcomes of vocational high schools’ students and their trajectories in the two possible paths in the Chilean higher education system: college education or vocational higher education. Using OLS regressions, we find that vocational high school education is associated with higher relative wages compared with students from regular or aca- demic high schools. Moreover, when students follow tertiary education, higher relative wages are expected both for students from vocational and general high schools, specially for the lat- ter. Using a regression discontinuity design (RDD) on two dif- ferent discontinuity rules in the allocation of financial aid, we found that vocational high school students that continue in vo- cational higher education have neutral to positive wage impact of pursuing higher education. However, these students face a negative wage impact when they are induced to follow college higher education.
This paper studies the design of monitoring policies in dynamic settings with moral hazard. The firm benefits from having a reputation for quality, and the principal can learn the firm's quality by conducting costly inspections. Monitoring plays two roles: An incentive role, because the outcome of inspections affects the firm's reputation, and an informational role because the principal values the information about the firm's quality. We characterize the optimal monitoring policy inducing full effort. It can be implemented by dividing firms into two types of lists: recently inspected and not, with random inspections of firms in the latter.
Tobacco-use–related diseases are the main cause of mortality in Moldova, where tobacco consumption is widely spread, especially among men. Besides the health concerns, tobacco consumption has economic consequences because households spend substantial resources on tobacco and related out-of-pocket medical costs. Tobacco tax increases are seen as one of the most effective measures to reduce tobacco consumption, but are usually believed to be regressive, taxing the poor proportionally more than the rich. The study estimates the tobacco price elasticity of demand for the population of Moldova, and the price elasticity for 10 income groups is obtained. This appears to be the first tobacco price elasticity estimation for income groups in Moldova. The study undertakes an extended cost-benefit analysis to estimate the distributional effect of a rise in tobacco taxes on income distribution. As inputs, it uses tobacco price elasticity, mortality attributed to tobacco, and the medical costs of tobacco-attributed diseases. Using three elasticity scenarios, the study finds that a tobacco price increase would generate a rise in expenditure deriving from direct tobacco price increases, but would reduce the costs of out-of-pocket medical expenses. Based on these two factors, the net effect of a tobacco tax increase would be progressive in all of the analyzed cases, and the upper-bound scenario would benefit, in absolute terms, the incomes of the lower-income groups in the population. The results support the use of a tobacco tax as an effective means to reduce tobacco use, raise government revenue, increase public health, and promote income equality.
This paper describes and quantifies the effects of tobacco tax increases on aggregate household welfare through three channels. Channel (1) implies that higher tobacco prices due to higher taxes induce behavioral response in the means of a reduction on tobacco consumption.3 The reduction in consumption is then associated with (2) a reduction in medical expenses, and (3) a rise in income because of the gain in years of employment. To assess the impact of these effects, this paper estimates the price elastic- ity of tobacco, simulates upper- and lower-bound scenarios, and calculates the welfare gains among various population income groups.
Tobacco Taxes are deemed regressive as poorest families tend to allocate larger shares of their budget to purchase tobacco. However, as taxes also discourage tobacco use, some of the most adverse effects, including higher medical expenses, lower life expectancy at birth, added years of disability among smokers, and reductions in the quality of life, among other, would be reduced. This paper describes and simulates the effects of the tobacco tax on incomes in Chile assuming three different price-elasticity scenarios for different income deciles of the population. Results show that although price increase for tobacco through higher taxes generates negative income variations across all groups in a population, under a more comprehensive scenario that includes benefits through lower medical expenses and an increase in working years, the results invert, and the overall monetary effect of the taxation policy becomes positive. Moreover, the reduction in medical expenses seems to be the main driver of the increase in net incomes because of the reduction in tobacco-related problems that require expensive treatments. Lastly, as the distributional effects of tobacco taxes are directly related to the long-term price elasticities of tobacco consumption, it would be advisable a coordination between taxation and behavioral change policies across income groups.
The present work describes la rate of change of students between schools in Chile during the years 2013 and 2014, and analyses the geographical factors of this change in the metropolitan Region of Chile. The rate of change between schools was of 15,7%, with a similar volume of students moving out and into the public schools. There are important variations in the rate of change at municipality level. The results show that the rates of change are affected by academic performance, SIMCE tests scores, grade, administrative type of school and geographic distribution of schools. The last point suggests that the geographic supply of education has important implications to understand school changes. We see that students increase travel distances with their age and those students that switch schools usually are the ones already traveling longer distances.
We aimed to evaluate the impact of governmental financial aid in vocational and college enrollment, solving the endogenous process in the application to benefits. Using a two-step instrumental varia- bles procedure, we found that college financial aid increases college enrollment by 30%. Being se- lected to college financial aid reduces the probability of vocational enrollment, although only voca- tional financial aid does increases this probability, which may be understood as a substitution effect..