We study the evolution of trade liberalization’s effects on Brazilian local labor markets. Regions facing larger tariff cuts experienced prolonged declines in formal sector employment and earnings relative to other regions. The impact of tariff changes on regional earnings 20 years after liberalization was three times the effect after 10 years. These increasing effects on regional earnings are inconsistent with conventional spatial equilibrium models, which predict declining effects due to spatial arbitrage. We investigate potential mechanisms, finding empirical support for a mechanism involving imperfect interregional labor mobility and dynamics in labor demand, driven by slow capital adjustment and agglomeration economies. This mechanism gradually amplifies the effects of liberalization, explaining the slow adjustment path of regional earnings and quantitatively accounting for the magnitude of the long-run effects.
We provide evidence on the effect of market illegality on violence. Brazil was historically the main exporter of mahogany. Starting in the 1990s, trade was restricted and eventually prohibited. We build on previous evidence that mahogany trade persisted after prohibition and document relative increases in violence in areas with natural occurrence of mahogany. We show that as illegal activity receded in the late 2000s so did the relative increase in violence. We describe an experience of increase in violence following the transition of a market from legal to illegal and contribute to the evaluation of prohibition policies under limited enforcement.
This paper documents the persistence of human capital over time and its association with long-term development. We exploit variation induced by a state-sponsored settlement policy that attracted immigrants with higher levels of schooling to particular regions of Brazil in the late nineteenth and early twentieth century. We show that one century after the policy, municipalities that received settlements had higher levels of schooling and higher income per capita. We provide evidence that long-run effects worked through higher supply of educational inputs and shifts in the structure of occupations toward skill-intensive sectors.
We study the persuasive impacts of non-informative communication on the short-run beliefs and long-run behavior of individuals. We do so in the context of the Papal visit to Brazil in October 1991, in which persuasive messages related to fertility were salient in Papal speeches during the visit. We use individual’s exposure to such messages to measure how persuasion shifts short-run beliefs such as intentions to contracept and long-term fertility outcomes such as the timing and total number of births. To measure the short-run causal impact of persuasion, we exploit the fact the Brazil 1991 DHS was fielded in the weeks before, during, and after the Papal visit. We use this fortuitous timing to identify that persuasion significantly reduced individual intentions to contracept by more than 40 percent relative to pre-visit levels, and increased the frequency of unprotected sex by 30 percent. We measure the long-run causal impacts of persuasion on fertility outcomes using later DHS surveys to conduct an event study analysis on births in a five-year window on either side of the 1991 Papal visit. Estimating a hazard model of fertility, we find a significant change in births 9 months post-visit, corresponding to a 1.6 percent increase in the aggregate birth cohort. Our final set of results examine the very long-run impact of persuasion and document the impacts to be on the timing of births rather than on total fertility.
In America and Japan not burdening families with the costs of care was the highest-ranked priority, cited as extremely important by 54% and 59% respectively. (The Japanese may be worrying about the cost of funerals, which can easily reach ¥3m, or $27,000.) A third of Italians emphasised having loved ones around them. Brazil was the only country where more people said they would put extending life ahead of reducing pain and stress than the other way around.
Japan: where people live the most and do not really care about it. Brazil is the opposite.
It actually makes sense. Japanese people take a long life for granted.
It is a post-financial-crisis myth that austerity-minded conservative governments always favor fiscal prudence, while redistribution-oriented progressives view large deficits as the world’s biggest free lunch. This simplistic perspective, while perhaps containing a grain of truth, badly misses the true underlying political economy of deficits.
The fact is that whenever one party has firm control of government, it has a powerful incentive to borrow to finance its priorities, knowing that it won’t necessarily be the one to foot the bill. So expect US President-elect Donald Trump’s administration, conservative or not, to make aggressive use of budget deficits to fund its priorities for taxes and spending.
The most accurate framework for thinking about government budget deficits in democracies was proposed in the late 1980s by the Italian scholars Alberto Alesina and Guido Tabellini, more or less simultaneously with two Swedes, Torsten Persson and Lars Svensson. While their approaches differ slightly in detail, the basic idea is the same: You give money to your friends while you can. If there is less money to go around later, when the opposition party gets its turn in power, well, that’s just too bad.
One only has to recall recent US economic history to confirm the insight of the Italian/Swedish model – and to see the absurdity of claims that Republicans always aim to balance the budget while Democrats always try to spend beyond the country’s means.
Brazil’s prison gangs wield immense power on the streets, and driving the violence is a dynamic of competitive expansion. After dominating and transforming the criminal underworlds of their respective home states in the 1990s, the PCC and the CV are now colonizing prisons, urban peripheries and trafficking corridors throughout the country. The scramble for Brazil’s criminal markets is on.
Street criminals can have many reasons to obey prison-gang rules. The most important is probably the one a Rio trafficker gave me: “Whatever you do on the outside, you have to answer for on the inside.” Moreover, the likelier you are to go to prison, the stronger your incentives to stay friendly with the gang that runs the place. This means that higher incarceration rates and anti-gang crackdowns can actually increase prison gangs’ influence over street-level actors (as I argue in this Monkey Cage post and a forthcoming paper).
This influence, David Skarbek shows, allows prison gangs in Southern California to govern otherwise unruly and violent urban drug markets, increasing overall profits and taxing the surplus. Indeed, from Los Angeles to Rio, prison gangs’ projection of power has transformed retail drug markets. These are usually fragmented, because it is difficult for one organization to control much turf. Mass incarceration solves this elegantly, arresting street criminals and physically confining them where prison gangs can easily reward obedience and punish defection.
The CV originally spread when officials unwisely dispersed its leaders among Rio’s prisons. PCC leaders have also been transferred to or arrested in other states, where they invariably founded local chapters. Conversely, some local copycat prison gangs were founded by inmates who spent time in PCC-controlled prisons in São Paulo.
It is probably better than most articles published about the massacres in Brazilian media. (I say “probably” because I admit I have not been following the coverage thoroughly.)
Edmund Burke famously cautioned that “the only thing necessary for the triumph of evil is for good men to do nothing.” I have been reminded of Burke’s words as I have observed the behavior of US business leaders in Davos over the last few days. They know better but in their public rhetoric they have embraced and enabled our new President and his policies.