SBE40: 40TH MEETING OF THE BRAZILIAN ECONOMETRIC SOCIETY
PROGRAM FOR THURSDAY, DECEMBER 13TH
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08:30-10:00 Session 12A: Education
Location: Capri 4
08:30
College quality signaling and individual performance: Effects on labor market outcomes after graduation

ABSTRACT. The association between college attendance and labor market premium is well-documented in existing literature. The signaling process plays a role in the explanation: college graduation serves as a signal for ability to the labor market. However, not only years of schooling but also the college quality may signal for individuals' ability. In the literature, college quality is mainly measured by the concepts of elite and selective institutions. In this paper, we propose a new measure of the signal for college quality: the performance of the previous cohort that has graduated three years before the individual in the same institution and major. We estimate the returns to college quality and to individual abilities on early career outcomes in Brazil, contributing to this literature on developing countries. Our results indicate that the percentage of the previous cohort graduates who are employed two years after their graduation is a relevant predictive variable of both employability and earnings in the formal sector up to eight years after the individual’s graduation. Specifically, we find that an increase of 1 percentage point in the signal variable is related to an increase up to 44% in the early career wage, decreasing over time. We also investigate heterogeneity returns by gender, individual’s prior working experience and field of education.

09:00
The Effects of Changes in School Entry Age and Duration on Student Performance: Evidence from Brazilian Primary Schooling Reform
SPEAKER: Hanbyul Ryu

ABSTRACT. Despite important policy implications, there is limited evidence on the impact of lowering school entry age and increasing the length of primary education on student performance. This study examines these changes in the context of Brazil’s 2006 compulsory schooling reform. We exploit differences in the years that schools adopted the policy as a plausibly exogenous source of variation and use students’ birth months to predict school entry age. The overall impact of the policy package was to increase math and Portuguese test scores by approximately 0.10 and 0.03 standard deviations in students’ fifth and ninth year of school. Among the students who entered primary school one year earlier, those without any prior education experienced larger increases in their fifth year test scores compared to students who gained an additional year of primary education at the expense of preschool. This advantage, however, disappeared by their ninth year. We discuss different mechanisms through which the policy may have influenced students’ cognitive outcomes and conduct various robustness checks to verify the paper’s interpretation.

09:30
Efeitos de Tamanho da Sala no Desempenho dos Alunos: Evidências Usando Regressões Descontínuas no Brasil

ABSTRACT. Este estudo utiliza a metodologia de regressão descontínua fuzzy, considerando o tamanho da sala predito pela função de Maimonides (Angrist e Lavy, 1999) como instrumento para o tamanho da sala observado, para avaliar o impacto de políticas públicas que estipulem um número máximo de alunos por turma no Brasil. Em particular, foram analisados os efeitos de resoluções e portarias municipal e estadual de São Paulo, Minas Gerais e Santa Catarina sobre as notas de alunos do 5º e 9º ano na Prova Brasil 2015. Os resultados mostram que não existam evidências estatisticamente significantes de que o tamanho da sala tenha impacto nas notas dos alunos. As análises de robustez performadas também concluem não haver efeito.

08:30-10:00 Session 12B: Macro 5
Location: Capri 3
08:30
Ambiguity and Economic Cycles in Brazil
SPEAKER: Michel Souza

ABSTRACT. In this paper we investigate the effects of ambiguity on the Brazilian economic cycles. Initially, we estimate the five-factors model, proposed by Fama and French (2015), and use the conditional density functions to aggregate the variance of the probabilities into a monthly ambiguity proxy. Then, we introduce the estimated proxy in VAR/SVAR models, seeking to understand the possible effects of ambiguity on economic cycles. Our results indicate that ambiguity affects economic cycles. We can expect a decrease of approximately 0.9% for industrial production and 0.3% for IBC-Br, after an ambiguity shock.

09:00
Producers’ expectation shocks and the Business cycles

ABSTRACT. This paper assesses producer-expectation-driven business cycle fluctuations. Based on theoretical predictions of a multi-sector model with market frictions and adjustment cost, and using a unique panel of producer-level data, it seeks to unravel the patterns of dynamic responses to producers’ expectation shocks. Overall, there is microevidence of co-movements among firm’s production, employment, investment intention and capacity utilization due to positive expectation shocks. Moreover, the effect seems permanent on firm’s outcomes and highly persistent on investment intentions fluctuations. Findings suggest that producers’ expectation shocks explain between 6 and 10% of output fluctuations, which is a non-negligible explanation power and may offer support to the news-driven business cycle literature. Still, the theoretical model developed illustrates how adjustment costs and labor market frictions could be dragging down the measured impact.

09:30
Os custos parciais de bem-estar associados à incerteza macroeconômica e aos ciclos de negócios

ABSTRACT. A maior parte da literatura sobre os custos de bem-estar da incerteza macroeconômica assume, implicitamente, que as políticas de estabilização são capazes de eliminar todas as fontes de incerteza com as quais o consumidor se depara. Para contornar tal característica, construímos uma versão parcialmente suavizada do consumo composta pelo processo de consumo original e por sua versão perfeitamente suavizada. Assim, quanto menor o peso deste último, menor a efetividade das políticas de estabilização. Esta abordagem nos permite calcular o custo parcial de bem-estar da incerteza macroeconômica. Assumindo que o consumo é composto por choques transitórios e permanentes, estendemos esta abordagem para o caso em que as políticas de estabilização seriam capazes de afetar somente os choques transitórios (ciclos de negócios).

08:30-10:00 Session 12C: Labor Economics
Location: Capri 5
08:30
The Soup and the Gumbo: Determinants of Creativity and Impact in Popular Music

ABSTRACT. What are the determinants of creativity, innovation and impact? In this paper I explore this question through an analysis of data from the Song Explorer podcast, where composers describe how they created a single specific song. I mine their accounts to classify their processes into seven different, but not mutually exclusive, theories of the creative process. The result of this exercise suggests that the recombination of existing songs is a major process for the creation of new successful songs. The second step considers what kind of recombinations are associated with high impact. For each song in the sample I have one or more other songs which were explicitly indicated as an influence or inspiration. I use the music genre classification system Every Noise at Once, that provides a map of over 1,800 genres and millions of songs to create a set of descriptive statistics of the similarity of each song to their inspiration-songs. These statistics are then used as explanatory variables in a regression that seeks to explain impact (YouTube views per day since the songs` video release), while controlling for other determinants of song impact, such as the artists’ established level of popularity. The results confirm the optimal differentiation hypothesis that the simultaneous presence of conventionality together with novelty, and not just one or the other, is a major determinant of creativity and impact.

09:00
Firm location: an approach using spatial point process

ABSTRACT. We propose an application of spatial statistics to model the location patterns of new services firms in the city of São Paulo. In this paper, we assume that the spatial location of these firms was generated through a two-dimensional point process and thus we applied two distinct models: one based on non-stochastic intensity based on the Poisson process, and a stochastic intensity model based on the Log Gaussian Cox process (LGCP). The results show the usefulness of these models the construction of spatial location models, combining different data sources and introducing new perspectives on the empirical study of location economics.

09:30
Assortative Matching or Exclusionary Hiring? The Impact of Hiring and Pay Policies on Racial Wage Differences in Brazil

ABSTRACT. A growing body of research shows that firms’ hiring and wage-setting policies contribute to wage inequality and pay disparities between groups. We measure the effects of these policies on racial pay differences in Brazil. We find that nonwhites are less likely to work at establishments that pay more to all race groups, a pattern that explains about 20% of the white/nonwhite wage gap for both genders. The pay premiums offered by different employers are also compressed for nonwhites relative to whites, contributing another 5% of the overall gap. We then ask how much of the under-representation of non-whites at higher-paying workplaces is due to the selective skill mix at these establishments. Using a counterfactual based on the observed skill distribution at each establishment and the nonwhite shares in different skill groups in the local labor market, we conclude that assortative hiring accounts for about two-thirds of the under-representation gap for both men and women. The remainder reflects an unexplained preference for white workers at higher-paying establishments. The wage losses associated with unexplained sorting and differential wage setting are largest for nonwhites with the highest levels of general skills, suggesting that the allocative costs of race-based preferences may be relatively large.

08:30-10:00 Session 12D: Finance 3
Location: Capri 3
08:30
Profit Status of Microfinance Institutions and Incentives for Earnings Management
SPEAKER: Layla Mendes

ABSTRACT. We theorize that for-profit microfinance institutions (MFIs) tend to have higher incentives to use earnings management techniques when compared to their not-for-profit counterparts. We show empirically that, when facing a distress period, for-profit MFIs recognize more impairment losses provisions then not-for-profit ones in about 0.8% of its assets. This is consistent with the idea that those institutions are using “big bath” accounting practices. We also address a possible alternative explanation, since we present evidence that distress levels do not differently affect the ability of loan repayment depending on the profit status of the MFI. Finally, using the 2008 crisis as an exogenous shock, we replicate our results.

09:00
Mobile Money Use and SME Financial Inclusion in East Africa

ABSTRACT. Inclusive financial systems in Africa are likely to benefit small and medium-sized enterprises (SMEs) that are usually excluded from banking services. Mobile money technology may facilitate access to financial services for SMEs by reducing risks and transaction costs for financial service providers. As a result, the purpose of this study was to investigate the relationship between mobile money use and SME access to financial inclusion using access to bank accounts, overdraft facility and bank loans or lines of credit as the three main indicators of financial inclusion. In order to evaluate the impact of both access and use of mobile money technology on financial inclusion, we performed both logit and Tobit estimations with maximum likelihood estimators. Our findings indicate that both the purpose and the intensity of mobile money use have a positive impact on financial inclusion. The results of this study reveal a greater significant impact of mobile money use on the likelihood of access to bank loans and lines of credit. Understanding the relationship between mobile money technology and financial inclusion in Africa is critical, as its banking system remains underdeveloped and less inclusive than other developing economies. Consequently, innovation and technology are pivotal in the creation of new financial services that facilitate financial inclusion in Africa.

10:15-11:45 Session 13A: Special Session - Fundação Itaú Social: Desigualdades na Educação Brasileira
Location: Capri 1
10:15
Medida do Hiato e de Desigualdades nos Escores dos Estudantes da Educação Básica Brasileira
10:45
Efeitos Heterogêneos de frequentar a Creche sobre os Resultados Educacionais
11:15
Desigualdades no desempenho dos alunos brasileiros ao longo da prova do PISA
10:15-11:45 Session 13B: SBE Prize Session - Applied Micro
Location: Capri 5
10:15
Money and Politics: The Effects of Campaign Spending Limits on Political Entry and Competition

ABSTRACT. This paper examines the effects of campaign spending limits on political entry and competition. We study a reform in Brazil that imposed limits on campaign spending for mayoral elections. These limits were implemented with a discontinuous kink which we exploit for causal identification. We find that stricter limits increase political competition by creating a larger pool of candidates that is on average less wealthy. Stricter spending limits also reduce the likelihood that mayors are reelected. We interpret our reduced-form findings using a contest model with endogenous entry of candidates.

11:00
Can Better Peers Signal Less Success? The Disruptive Effect of Perceived Rank on Career Investment

ABSTRACT. Is being among the best always the best? We separate the effects of perceived rank from peer quality in college and show that having better classmates increases the willingness to switch careers and reduces the likelihood of having a prestigious occupation. The effects are identified by a discontinuity in the class assignment of a flagship university in Brazil, along with the variation in peer skills across program cohorts. Our findings imply that the perceived rank sends a misleading signal, making similar students take distinct decisions. Higher parental education and stronger convictions about future earnings reduce the influence of this signal.

10:15-11:45 Session 13C: SBE Prize Session - Applied Macro
Location: Capri 3
10:15
On the implications of strategic uncertainty for expectation formation in macroeconomics

ABSTRACT. This paper study the implications of the strategic uncertainty for expectation formation in macroeconomic models. I compare the learning process under two assumptions. Under imperfect information, agents solve a standard signal extraction problem given their observables. Under imperfect common knowledge, agents observe the same variables but also noisy private signals about the shocks.

I show that whenever agents extract information from endogenous variables that depend on the underlying unobserved shock, the signal extractions from those variables under imperfect information and imperfect common knowledge are different. This difference in learning about unobserved shocks does not vanish even in the limiting case when the variance of the private signal goes to infinity. Intuitively, strategic uncertainty prevents agents from knowing other agents' decision, despite that those actions are the same in equilibrium. Therefore, agents are unable to infer aggregate outcomes from their own choices, which affects their ability to extract information from those endogenous variables.

This discontinuity result challenges the benchmark assumption by showing the substantial knowledge about endogenous variables implicitly assumed available to agents in imperfect information models. The results imply that one should assume that agents cannot infer aggregate outcomes from individual decisions whenever individuals acquire information from endogenous variables.

11:00
INTERNATIONAL RESERVES MANAGEMENT IN A MODEL OF PARTIAL SOVEREIGN DEFAULT

ABSTRACT. Despite the cost imposed by the interest rate spread between sovereign debt and international reserves, emerging countries’ governments maintain stocks of both. I investigate the optimality of this joint accumulation of assets and liabilities using a quantitative model of sovereign debt, in which: i) international reserves only function to smooth consumption, before or after a default; ii) the sovereign’s decision to repudiate debt determine the spread; iii) lenders are risk-averse; and iv) default is partial. Simulated statistics from the benchmark model match their observed counterparts for average debt and spread, consumption volatility, and the main correlations among the relevant variables. Due to the presence of partial default and risk-averse lenders, the model also produces a mean reserve level of 7.7% of GDP, indicating that the optimal policy is to hold positive amounts of reserves.

11:45-13:30Lunch
13:30-15:00 Session 14: Keynote Lecture SBE - Nathan Nunn
Location: Capri 1
13:30
Conferência SBE: Keynote Lecture - On the Economic Consequences of Culture and Tradition
15:00-15:15Coffee Break
15:15-16:45 Session 15A: Macro 6
Location: Capri 6
15:15
The colonial exports pattern, institutions and current economic performance

ABSTRACT. This paper explores the role of colonial heritage on long-term economic development, from a resource-curse perspective. We investigate the impact of exports of primary goods from the colonies to the metropolis on long-term economic development through two channels: (i) a direct impact related to the resources curse; (ii) and an indirect one through its effect on colonial institutions, which persisted over time and influenced current economic development. To address this issue, we use an original data set on French bilateral trade from 1880 to 1912, which is divided into three sectors: agricultural goods, raw material for industry and manufactured goods. We use the Partial Least Square Structural Equation Modeling in our empirical investigation, so that we are able to construct latent variables for variables that are not directly observable, such as the quality of institutions. We find that, for French colonies, exports of primary goods to France during the colonial period have no direct impact on economic development today, but it has a negative and significant impact on institutions, which on their turn persisted and affected current income. We also find that, for non-French and non-British colonies as well as former colonies, exports of both primary and manufactured goods have a positive indirect impact on current economic development through better institutions.

15:45
Self-employment in the United Kingdom: The role of frictions and labor market institutions

ABSTRACT. We develop a job search model with self-employment and savings to understand oc- cupation choice in the United Kingdom (UK). In the UK, self-employment has steadily grown from the beginning of the 2000s and comprised more than 14% of the workforce in 2015. We estimated the model using the method of moments and data from two lon- gitudinal surveys, the Wealth and Assets Survey and the Understanding Society for the period 2010-12. We then use the model to simulate counterfactual policies to promote employment via entrepreneurship such as lower prot taxation and entry barriers into self-employment, or through changes in wage taxes and unemployment benets. The results show that a rise in self-employment can be mostly associated with an increase in the payroll tax or a reduction on the self-employment income tax.

16:15
Dispersion in Financing Costs and Development
SPEAKER: Cezar Santos

ABSTRACT. We study how dispersion in financing cost and financial contract enforcement affect entrepreneurship, firm dynamics and productivity. We use employee-employer administrative linked data combined with data on financial transactions of all formal firms in Brazil to show how interest rate spreads vary with firm size, age, among other characteristics. We present a general equilibrium model with endogenous occupational choice based on a modified version of Buera, Kaboski, and Shin (2011), which are consistent with those facts of the the credit market. We then provide evidence on the allocative effects of financial reforms. Eliminating dispersion in financing cost leads to more credit and higher output due to cheaper credit for productive agents with low assets. In addition, abstracting from heterogeneity in interest rate spreads understates the impacts of financial reforms that improve the enforcement of credit contracts.

15:15-16:45 Session 15B: Labor Market Effects
Location: Capri 5
15:15
Housing programs and labor supply: Evidence from lotteries in Brazil

ABSTRACT. This paper assesses how a large public housing program in Brazil affected short and medium-run labor supply and other labor market outcomes. We use lotteries in Rio de Janeiro to identify these impacts. We concluded that the program increased formal employment by about 2%. We also find evidence that receiving a house increased wages for treated individuals and reduced participation in other social programs. Additionally, we used reduced-form models to test the mechanisms that might explain the observed increase in the labor supply. We found no support for the existence of a disruption effect caused by the relocation of households or the existence of neighborhood effects.

15:45
The Effect of Job Referrals on Labor Market Outcomes in Brazil

ABSTRACT. This paper uses for the first time program administrative data from Brazil’s National Employment System (SINE) to assess the impact of SINE job interview referrals on labor market outcomes. Data for the five-year period 2012-2016 is used to evaluate the impact of SINE on employment probability, wage rates, time until reemployment and job tenure. Difference-in-differences estimates suggest that a SINE job interview referral increases the probability of finding a job within three months of the referral, and reduces the number of months to find reemployment, the average job tenure of the next job and the reemployment wage. Subgroup analysis suggests that compared to more educated workers, SINE is more effective in helping less educated workers by increasing their probability of finding a job and reducing time until reemployment. Finally, the evidence suggests that online labor exchange is less effective than the service provided in person at SINE offices.

16:15
Labor Market Effects of Public Housing: Evidence from Large-Scale Lotteries

ABSTRACT. We exploit housing lotteries in Brazil to study the impacts of a large-size housing program on labor market outcomes. Combining data from several administrative registries, we track monthly outcomes for 700,000 lottery applicants, 35,000 of whom won a housing lottery. We assess the effects of winning a lottery on labor supply and entrepreneurship. We find a small, negative impact on formal employment. The effects are stronger for male lottery winners living in smaller cities. We do not find any impact on the likelihood of formalizing small-size firms. The results suggest that the thicker labor markets of larger cities may work as a buffer to mitigate the network disruption of living in remotely located housing projects. Wealth and income effects from the housing program allowed winners of remote projects to buy motorcycles to reduce transportation time costs to formal job opportunities.

15:15-16:45 Session 15C: Public Economics
Location: Capri 3
15:15
Judicial Efficiency and Corporate Bankruptcy Resolutions: Evidence from Brazil
SPEAKER: Flavio Moraes

ABSTRACT. How does the efficiency of judicial institutions affect the resolution of bankruptcy cases? We exploit the large variation in the efficiency of the judiciary across Brazilian municipalities, together with the legal restriction that bankruptcy cases must be filed where the debtor's headquarters are located, to estimate the effect of efficiency on case resolution and firm exit. We find that firms operating in municipalities with less efficient courts are less likely to be liquidated in a reorganization case and to exit the market. This evidence suggests that creditors are less prone to liquidate the firms when the quality of the local judicial institutions is low. Additionally we find that, for firms that exit the market during a reorganization or liquidation procedure, the time between case filing and firm exit is higher in less efficient municipalities.

15:45
Revenue Shocks and Fiscal Capacity: Evidence from Brazil
SPEAKER: Juan Santini

ABSTRACT. This paper contributes to the literature on fiscal capacity building. We analyze the adjustment to an exogenous revenue shock in formula transfers to Brazilian municipalities. Given the well-established stylized fact that the ability to collect taxes varies substantially between developed and developing countries, we are the first to analyze how local governments in a middle-income country react to these shocks. The main difference to high income countries is that institutions related to tax collection in developed countries are already advanced, and the only margin at which a reaction of local governments is possible is changing tax rates or local expenditures. In middle and low-income countries, however, institutions and infrastructure related to tax collection are less developed. We find that positive shocks translate into additional spending, but the adjustment after a negative shock depends on the local characteristics. On average, municipalities increase fiscal capacity and tax collection, but this effect disappears in jurisdictions with low-educated mayors, which rather tend to cut expenditures.

16:15
The elasticity of population reporting in Brazilian municipalities: 1991–2010.
SPEAKER: Jevuks Araujo

ABSTRACT. This paper investigates whether and the size of population distortion in Brazilian municipalities from 1991 to 2010. We follow Foremny, Jofre-Monseny and Solé-Ollé (2018) and exploit population notches to study the response of local governments to the incentives introduced by intergovernmental grants in Brazil. We find significant reactions in the responsiveness of municipalities to grants, with the elasticity of population over-reporting as high as 0.36. We find that the extent of over-reporting is higher in the last census, but it is prevalent also in 1991 for the second and third thresholds and that decreases with respect to population thresholds. Surprisingly we do not find bunching for non-census years

15:15-16:45 Session 15D: Special Session - Fundação Lemann: Como desenvolver e mensurar altas expectativas e mentalidade de crescimento no ambiente escolar
Location: Capri 1
15:15
Experiências nacionais e internacionais de implementação de práticas de altas expectativas e mentalidade de crescimento
15:40
A experiência do Colégio Sidarta na implementação de práticas para o desenvolvimento de altas expectativas e mentalidade de crescimento
16:05
Mentalidade no contexto internancional: Como a mentalidade influencia a trajetória acadêmica
16:30
Os desafios de medir mindset e expectativas no ambiente escolar
15:15-16:45 Session 15E: Sessão Especial IPEA: Catálogo de parâmetros para análises custo-benefício de projetos, programas e políticas públicas no Brasil
Location: Capri 4
15:15
Catálogo de Parâmetros para Análises Custo-Benefício de projetos, programas e políticas públicas no Brasil
16:00
Catálogo de Parâmetros para Análises Custo-Benefício de projetos, programas e políticas públicas no Brasil
17:00-18:30 Session 16A: Invited Session - Crime
Location: Capri 1
17:00
Police Patrols and Crime
17:30
The Minimum Wage, EITC, and Criminal Recidivism
18:00
Reclaiming the Monopoly of Violence? Evidence from the Pacification of Rio's Favelas