Francisco Parro

International Evidence on the Gender Gap in Education over the Past Six Decades: A Puzzle and an Answer to It

This paper presents novel worldwide evidence on the evolution of the gender gap in education over the past six decades. In every region of the world, I find that the gender gap increases from 1950 to 1975 and then decreases from 1975 to 2005. This path creates a puzzle since the existing explanations for the post-1975 boom in the higher education of women are not fully consistent with this evidence. To solve this puzzle, I highlight the missing element in the literature: the different nature of the forces behind the increases in the demand for education in the two periods.

Self-selection in the market of teachers

Public school teachers are usually paid according to centralized earning schedules, in which their income depends mainly on experience. By contrast, in private schools, there is high wage dispersion, and salaries correspond mainly to teachers’ performance. That dichotomous labour regulation encourages teachers with better unobservable skills to self-select into private schools because the likelihood of earning higher wages is higher than in public schools. The other side of the coin is the self-selection of ‘bad’ teachers into public schools. Using a representative sample of Chilean teachers, we estimate a two-sector Roy model to test self-selection. We find evidence of negative self-selection of teachers into public schools.

The Effects of Vouchers on School Results: Evidence from Chile's Targeted Voucher Program

We use data from Chile’s targeted voucher program to test the effects of vouchers on school results. Targeted vouchers have delivered extra resources to low-income, vulnerable students since 2008. Moreover, under this scheme, additional resources are contingent on the completion of specific education reforms. Using a difference-in-differences approach and a market-level empirical analysis, we find a positive and significant effect of vouchers on standardized test scores. Additionally, our results highlight the importance of conditioning the delivery of resources to some specific academic goals in markets with institutional characteristics that prevent public schools from behaving as profit-maximizing firms.

Effects of fiscal policy on private consumption: evidence from structural-balance fiscal rule deviations

We use a new narrative measure of fiscal shocks to study how private consumption reacts to government spending increases. Our fiscal shocks arise from three announcements of expansionary fiscal rule deviations in a small and open economy where fiscal policy follows a structural-balance fiscal rule. All those deviations were announced to be mainly on the spending side. We find a negative response of private consumption in the face of those announcements. Our findings are consistent with the existence of consumers expecting some irreversibility in government spending increases and, as a consequence, a rise in future taxes to make the newly announced fiscal spending path consistent with the intertemporal government budget constraint.

DOES FINANCE ALTER THE RELATION BETWEEN INEQUALITY AND GROWTH?: FINANCE, INEQUALITY, AND GROWTH

This paper introduces a model in which greater inequality reduces growth in economies with low levels of financial development but that this effect is attenuated in economies with more developed systems. The model also predicts that individuals in economies with developed financial markets have a higher tolerance to inequality. Using a panel dataset that covers a large number of countries, this paper shows empirical evidence that is consistent with the main predictions of the model. Overall, this papers major findings highlight that some of the pernicious effects of inequality can be attenuated by improving access to credit. (JEL D3, E6, P1, O4, I2)

THE FUNDAMENTAL CONTRADICTION OF CAPITALISM REVISITED: The Fundamental Contradiction of Capitalism Revisited

We build an overlapping generations model to analyse the evolution of inequality as an economy develops. Our model economy resembles a ‘very capitalist society’. Initially, wealth is exclusively concentrated in a rich dynasty. We ask whether or not this type of capitalist economy contains a fundamental contradiction, as claimed by Piketty in his recent book. We derive a condition under which the economy is driven to a state of perpetual inequality. However, we also show that an economy where capital deepening triggers the development process is very unlikely to be absorbed in that state.

Capital-Skill Complementarity: Does Capital Composition Matter?

We estimate the effect of capital composition on the size of capital–skill complementarity and the skill wage premium. Disaggregating the capital stock into different types according to technological content, we find that: capital is more of a q‐complement to skilled labor than to unskilled labor; the higher the technological component of capital, the larger the size of the relative q‐complementarity between capital and skilled labor; and replacing non‐technological with technological capital might increase the skill wage premium by about 9 percent. Our results highlight that changes in capital composition matter for understanding changes in the skill wage premium.