Three essays on applied economics



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In this study, three areas of development economics are examined. The first essay is public policy evaluation and addresses the following questions: Do cash transfers discourage work and incentivize leisure? Or do cash transfers help beneficiaries to get out of the poverty trap, acquire more capital and raise their income in the future? We run a difference-in-difference analysis for a panel data from 2018 and 2019 for Ecuador's cash transfer program, Bono de Desarrollo Humano (BDH). The estimated effects on earnings and hours worked are mostly negative. In addition, we use propensity score matching and exact matching to create the control group for the difference-in-difference. We find that negative effects but the statistical significance varies depending on the specification. On balance, the BDH program has discouraged work in Ecuador. The second essay (with Dr. Kevin Grier) is related to growth economics. It contrast the theoretical implications of the standard growth model with real data. Particularly, Grier and Grier (2007) showed a puzzle that output per capita was diverging while the main determinants of the steady-state from the orthodox neoclassical model were converging. They called this phenomenon a neo-classical anomaly. This paper revisits Grier and Grier (2007) results by expanding and updating the original data, including more years and more countries. We test for structural breaks and non-linear fits that indicate the years where a shift towards output convergence or divergence occurred. We find a change of tendency towards income convergence in the last two decades. Simultaneously, some inputs start to show signs of divergence. Thus, we do not resolve the neo-classical anomaly! The third and final essay explores the deep historical roots and long run consequences of Latin American political institutions and their effect in social and economics outcomes. Specifically, Latin American countries followed two different paths after their independence. The Empire of Brazil remained a coherent political entity during the nineteenth century, whereas Continental Spanish America seceded into 16 new polities. By comparing these two regions, this paper studies the effects of political fragmentation by using fatalities data and applying a difference-in-difference technique. We found that Continental Spanish America suffered 103 times more fatalities from internal violence than the Empire of Brazil. Additionally, the Empire of Brazil outperformed Continental Spanish America regarding height, population growth, and income per capita.

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Development Economics