Essays in Economic Development
Claudio Mora G.
Tesis, Doctorado en Economía, IE-PUC, 2015
Abstract: Two important areas of government intervention are health and labor market programs. This thesis evaluates two public policies whose aim was to change the welfare of the most vulnerable. It particularly studies the existence of heterogeneous effects in public policies. On the one hand I study the consequences of eradicating malaria, and its heterogeneous effects between regions; and on the other I study the decision to take up a social program, and its heterogeneous peer effects among different groups.
Studying this heterogeneity is relevant because it allows to better understand the mechanisms by which the programs reached their consequences. In the case of malaria the estimated benefits of growing in a cohort with much decreased exposure to malaria has been very different in terms of human capital accumulation. While Bleakley (2010b), Cutler et al. (2010), and Lucas (2010) have found benefits to being born in an environment free of malaria, their estimates in terms of educational gains have been very different. Heterogeneity allows to study the interaction between the programs effectiveness and other measures prevalent before the intervention. In the case of the SEJ, heterogeneity allows to explain the mechanisms that helped the peer effects to become relevant.
In the first chapter, I analyze a malaria eradication campaign in Costa Rica that took place around 1940s and successfully lowered malaria rates around the country. I first study the impact of malaria eradication over children born during the eradication campaign and in high malaria regions over years of education, literacy rates, hours worked and wages. But the estimates of malaria eradication over human capital has been very different in similar literature. This is why the most important contribution of this chapter is to analyze heterogeneous effects in both schooling and children labor market conditions. I empirically test if the average marginal increase in the outcomes due to malaria eradication depend on the fraction of children employed and the number of students per school in each region. The second contribution of this chapter is to study the resurgence of malaria during 1967 due to a funding slowdown in the budget to combat mosquitoes, and its heterogeneous effects.
In the second chapter, I analyze the take up decision of a newly introduced Chilean social program called the Youth Employment Subsidy (SEJ) aimed to vulnerable youths. Using a rich and unique dataset, I study a causal endogenous peer effect in the decision to adopt SEJ at the level of the classmates and coworkers. Instrumental variables are used in order to identify causality. The IV exploit one of the eligibility rules, that admissible youths must have a vulnerability score below 11,734 points; the main assumption is that admissibility in a small window around this cut-off was as good as randomly assigned; I then average the fraction of peers at the left of this small window.
The results show important peer effects at the classmates network, that decay six months afterwards and become non-significant. Peer effects are stronger among younger youths inside small groups that graduated from Técnico Profesional high schools. These two studies thus help us understand how learning about heterogeneous effects of government programs is relevant for public policy, as it provides new ways to increase the effectiveness of malaria eradication, and the effectiveness of informational externalities introduced by classmates.