Papers by Sebastian Galiani
Galiani, S., & Schargrodsky, E. (2002). Evaluating the Impact of School Decentralization on Educational Quality. Economía 2(2), 275-314. doi:10.1353/eco.2002.0004., 2002
The decentralization of education services from the federal government to the provincial governme... more The decentralization of education services from the federal government to the provincial governments was an important component of the major fiscal and structural reforms undertaken in Argentina in the early 1990's. The theoretical literature is not conclusive about the absolute superiority of either centralization or decentralization in the provision of public services. In this paper, we evaluate empirically the effect of the decentralization of secondary schools on education quality. Our results suggest that, on average, decentralization improved the performance of public school students in test scores. We also assess whether the effect of decentralization depends on province characteristics. We find that the higher the provincial fiscal deficits, the smaller the positive impact of decentralization.
Sebastian Galiani, Eduardo Levy Yeyati, Ernesto Schargrodsky, Financial dollarization and debt deflation under a currency board, Emerging Markets Review, Volume 4, Issue 4, 2003, Pages 340-367, ISSN 1566-0141, https://doi.org/10.1016/S1566-0141(03)00060-8., 2003
In the late currency board years, Argentina faced a real exchange rate adjustment through price d... more In the late currency board years, Argentina faced a real exchange rate adjustment through price deflation amidst growing devaluation expectations. Using a firm-level panel database to analyze the incidence of these factors on the currency composition of private debt and on firms’ performance, we find that widespread debt dollarization showed no relationship with the firms’ production mix or the ever-changing probability of a nominal devaluation. While relative price changes favored export-oriented firms with the expected impact on sales, earnings and investment, increases in devaluation expectations elicited only a marginal differential response in investment from more financially dollarized firms. Our findings provide support to two criticisms faced by the Argentine currency board in recent years, namely, that by fueling beliefs in an implicit guarantee it stimulated across-the-board debt dollarization and that it could not fully isolate the economy from real shocks, as the feared balance sheet effect was replaced by a gradual but equally deleterious debt deflation effect.
Galiani, Sebastián, et al. "Great Expectations and Hard Times: The Argentine Convertibility Plan." Economía, vol. 3 no. 2, 2003, p. 109-147. Project MUSE, doi:10.1353/eco.2003.0005., 2003
This paper studies the process that led to the Argentine crisis. The crisis is understood as a ma... more This paper studies the process that led to the Argentine crisis. The crisis is understood as a major disappointment of previous expectations, indicated by widespread insolvencies and abrupt declines in consumption. The analysis concentrates on the sequence of public and private decisions, and the varying perceptions and policy incentives that motivated them. In the nineties Argentina searched for a new growth trend. During much of the period, the behavior of agents seemed to be based on the anticipation that current and future incomes could sustain a value of domestic spending much higher than in the past. The government was motivated to reinforce those expectations, for signaling and political economy reasons. The convertibility monetary regime not only provided a very visible nominal anchor, but also operated as a basic framework for financial contracts, mostly denominated in dollars. Dollar contracting implicitly presumed that the dollar value of incomes would support the servicing of debts. Despite precautionary measures, the reliance on the sustainability of the real exchange rate increased over time. In the late nineties exports stopped rising and the foreign supply of credit tightened. Facing these contraints, the economy contracted and the solvency of the government was put into question. The financial system was vulnerable both in the event of devaluation and that of a (large) deflation-cum-adjustment. As was implicit in its design and management, convertibility proved to have very large exit costs.
Sebastian Galiani, Hugo A Hopenhayn, Duration and risk of unemployment in Argentina, Journal of Development Economics, Volume 71, Issue 1, 2003, Pages 199-212, ISSN 0304-3878, https://doi.org/10.1016/S0304-3878(02)00138-4., 2003
After a decade of structural reforms, unemployment rates have tripled in Argentina. This paper is... more After a decade of structural reforms, unemployment rates have tripled in Argentina. This paper is concerned with the measurement of unemployment risk and its distribution. We show the importance of considering re-incidence in the measurement of unemployment risk and develop a methodology to do that. Our estimates for Argentina show that, though the typical unemployment spell is short, once re-incidence is taken into account, unemployment risk is high, has risen substantially in the last decade and is shared very unequally in the labor force. This counters the established view that unemployment is a small risk, short-duration phenomenon, which arises when re-incidence is not considered.
Sebastian Galiani, Pablo Sanguinetti, The impact of trade liberalization on wage inequality: evidence from Argentina, Journal of Development Economics, Volume 72, Issue 2, 2003, Pages 497-513, ISSN 0304-3878, https://doi.org/10.1016/S0304-3878(03)00117-2., 2003
Wage inequality in Argentina greatly increased during the nineties. During this period, a rapid a... more Wage inequality in Argentina greatly increased during the nineties. During this period, a rapid and deep process of trade liberalization was implemented. In this paper we study whether trade liberalization played any role in shaping the Argentine wage structure during the nineties. Specifically, we test whether those sectors where import penetration deepened are also the sectors where, ceteris paribus, a higher increase in wage inequality is observed. Even though we find some evidence that supports this hypothesis, as has been found for some developed economies, trade deepening can only explain a relatively small proportion of the observed rise in wage inequality.
Galiani, Sebastian & Lamarche, Carlos & Porto, Alberto & Sosa-Escudero, Walter, 2005. "Persistence and regional disparities in unemployment (Argentina 1980-1997)," Regional Science and Urban Economics, Elsevier, vol. 35(4), pages 375-394, July., 2005
We study the regional evolution of unemployment in Argentina for the period 1980-1997. First, we ... more We study the regional evolution of unemployment in Argentina for the period 1980-1997. First, we show that the Argentine regional unemployment structure is not very persistent. We find less persistence in Argentina than in the US. Second, we model the conditional means of regional unemployment and measure the persistence of unemployment to shocks based on our conditional model. We find a low degree of unemployment persistence to shocks. Finally, we identify regional factors that explain regional unemployment differences and whose changes account for the low persistence of the regional unemployment structure.
De Wachter, S., Galiani, S. Optimal income support targeting. Int Tax Public Finan 13, 661–684 (2006). https://doi.org/10.1007/s10797-006-6552-z, 2005
who provided expert information on water-related diseases in Argentina, and to Matias Cattaneo an... more who provided expert information on water-related diseases in Argentina, and to Matias Cattaneo and Juan Pantano who provided excellent research assistance.
De Wachter, S., Galiani, S. Optimal income support targeting. Int Tax Public Finan 13, 661–684 (2006). https://doi.org/10.1007/s10797-006-6552-z, 2006
This paper considers the practical problem of distributing a fixed budget for poverty alleviation... more This paper considers the practical problem of distributing a fixed budget for poverty alleviation to a population whose poverty status is not directly observable. The solution we propose improves on the techniques that are commonly used in practice by taking both the concavity of the social welfare function and the entire conditional distribution of poverty status into account, and by endogenously determining the optimal transfer levels. We provide an algorithm to calculate the optimal transfers for any population of benefit applicants. Finally, we explain how our method is a generalization of statistical classification techniques and thus provide an intuitive discussion of the defects of currently operational methods.
Guillermo Cruces, Sebastian Galiani, Fertility and female labor supply in Latin America: New causal evidence, Labour Economics, Volume 14, Issue 3, 2007, Pages 565-573, ISSN 0927-5371, https://doi.org/10.1016/j.labeco.2005.10.006., 2007
We study the effect of fertility on maternal labor supply in Argentina and Mexico exploiting a so... more We study the effect of fertility on maternal labor supply in Argentina and Mexico exploiting a source of exogenous variability in family size first introduced by Angrist and Evans (1998) for the United States. We find that the estimates for the US can be generalized both qualitatively and quantitatively to the populations of two developing countries where, compared to the US, fertility is known to be higher, female education levels are much lower and there are fewer formal facilities for childcare.
Samuel Berlinski, Sebastian Galiani, The effect of a large expansion of pre-primary school facilities on preschool attendance and maternal employment, Labour Economics, Volume 14, Issue 3, 2007, Pages 665-680, ISSN 0927-5371, https://doi.org/10.1016/j.labeco.2007.01.003., 2007
We provide evidence on the impact of a large construction of pre-primary school facilities in Arg... more We provide evidence on the impact of a large construction of pre-primary school facilities in Argentina. We estimate the causal impact of the program on pre-primary school attendance and maternal labor supply. Identification relies on a differences-indifferences strategy where we combine differences across regions in the number of facilities built with differences in exposure across cohorts induced by the timing of the program. We find a sizeable impact of the program on pre-primary school participation among children aged between 3 and 5. In fact, we cannot reject the null hypothesis of a full take-up of newly constructed places. In addition, we find that the childcare subsidy induced by the program increases maternal employment and that this effect is in line with the one previously found for the US.
Rafael Di Tella and others, The Formation of Beliefs: Evidence from the Allocation of Land Titles to Squatters, The Quarterly Journal of Economics, Volume 122, Issue 1, February 2007, Pages 209–241, https://doi.org/10.1162/qjec.122.1.209, 2007
We study the formation of beliefs in a squatter settlement in the outskirts of Buenos Aires explo... more We study the formation of beliefs in a squatter settlement in the outskirts of Buenos Aires exploiting a natural experiment that induced an allocation of property rights that is exogenous to the characteristics of the squatters. There are significant differences in the beliefs that squatters with and without land titles declare to hold. Lucky squatters who end up with legal titles report beliefs closer to those that favor the workings of a free market. Examples include materialist and individualist beliefs (such as the belief that money is important for happiness or the belief that one can be successful without the support of a large group). The effects appear large. The value of a (generated) index of "market" beliefs is 20% higher for titled squatters than for untitled squatters, in spite of leading otherwise similar lives. Moreover, the effect is sufficiently large so as to make the beliefs of the squatters with legal titles broadly comparable to those of the general Buenos Aires population, in spite of the large differences in the lives they lead. JEL: P16, E62.
Galiani, S., Sturzenegger, F. The Impact of Privatization on the Earnings of Restructured Workers: Evidence From the Oil Industry. J Labor Res 29, 162–176 (2008). https://doi.org/10.1007/s12122-007-9029-7, 2008
We study the long-term impact of job displacement from a big state owned enterprise as a result o... more We study the long-term impact of job displacement from a big state owned enterprise as a result of its privatization in a developing country. Our results suggest large reductions in earnings, which persist throughout the years. However, we also find that the displaced worker's post-displacement earnings are in line with competitive market wages, and unrelated to sector of employment or to tenure losses, indicating that the long-term reduction in earnings as a result of displacement because of privatization can be traced to the loss of wage rents. Our results indicate that job displacement in SOEs may have very large redistributive implications for the workers involved but that this loss does not necessarily reflect the loss of specific human capital associated to these jobs.
Banerjee, A., Galiani, S., Levinsohn, J., McLaren, Z. and Woolard, I. (2008), Why has unemployment risen in the New South Africa?. Economics of Transition, 16: 715-740. https://doi.org/10.1111/j.1468-0351.2008.00340.x, 2008
We document the rise in unemployment in South Africa since the transition in 1994. We describe th... more We document the rise in unemployment in South Africa since the transition in 1994. We describe the likely causes of this increase and analyze whether the increase in unemployment is due to structural changes in the economy (resulting in a new equilibrium unemployment rate) or to negative shocks (that temporarily have increased unemployment). We conclude the former are more important. Our analysis includes a multinomial logit approach to understanding transitions in individual-level changes in labor market status using the first nationally representative panel in South Africa. Our analysis highlights several key constraints to addressing unemployment in South Africa.
Samuel Berlinski, Sebastian Galiani, Marco Manacorda, Giving children a better start: Preschool attendance and school-age profiles, Journal of Public Economics, Volume 92, Issues 5–6, 2008, Pages 1416-1440, ISSN 0047-2727, https://doi.org/10.1016/j.jpubeco.2007.10.007., 2008
We study the effect of pre-primary education on children's subsequent school outcomes by exploiti... more We study the effect of pre-primary education on children's subsequent school outcomes by exploiting a unique feature of the Uruguayan household survey (ECH) that collects retrospective information on preschool attendance in the context of a rapid expansion in the supply of preprimary places. Using a within household estimator, we find small gains from preschool attendance at early ages that magnify as children grow up. By age 15, treated children have accumulated 0.8 extra years of education and are 27 percentage points more likely to be in school compared to their untreated siblings. Instrumental variables estimates that control for non random selection of siblings into preschool lead to similar results. We speculate that early grade repetition harms subsequent school progression and that pre-primary education appears as a successful policy option to prevent early grade failure and its long lasting consequences.
Sebastian Galiani, Daniel Heymann, Carlos Dabús, Fernando Tohmé, On the emergence of public education in land-rich economies, Journal of Development Economics, Volume 86, Issue 2, 2008, Pages 434-446, ISSN 0304-3878, https://doi.org/10.1016/j.jdeveco.2007.12.004., 2008
We analyze the emergence of large-scale education systems by modeling the incentives that the eco... more We analyze the emergence of large-scale education systems by modeling the incentives that the economic elite could have (collectively) to accept taxation destined to nance the education of credit-constrained workers. Contrary to previous work, in our model this incentive does not arise from a complementarity between physical and human capital in manufacturing. Instead, we emphasize the demand for human-capitalintensive services by high-income groups. Our model seems capable to account for salient features of the development of Latin America in the 19th century, where, in particular, land-rich countries such as Argentina established an extensive public education system and developed a sophisticated service sector before starting signi cant manufacturing activities.
Sebastian Galiani, Paul Gertler, Ernesto Schargrodsky, School decentralization: Helping the good get better, but leaving the poor behind, Journal of Public Economics, Volume 92, Issues 10–11, 2008, Pages 2106-2120, ISSN 0047-2727, https://doi.org/10.1016/j.jpubeco.2008.05.004., 2008
The decentralization of public services is a major feature of institutional innovation. The main ... more The decentralization of public services is a major feature of institutional innovation. The main argument in support of decentralization is that it brings decisions closer to the people, thereby alleviating information asymmetries and improving accountability. However, decentralization can also degrade service provision in poor communities that lack the ability to voice and defend their preferences. In this paper, we analyze the average and distributional effects of school decentralization on educational quality in Argentina. We find that decentralization had an overall positive impact on student test scores. The decentralization gains, however, did not reach the poor. Thus, although "bringing decisions closer to the people" may help the good get better, the already disadvantaged may not receive these benefits.
GALIANI, S., GONZALEZ-ROZADA, M. and SCHARGRODSKY, E. (2009), Water Expansions in Shantytowns: Health and Savings. Economica, 76: 607-622. https://doi.org/10.1111/j.1468-0335.2008.00719.x, 2009
This paper examines the effects of the expansion of the water network in urban shantytowns in Arg... more This paper examines the effects of the expansion of the water network in urban shantytowns in Argentina. We find large reductions in the presence, frequency, and severity of diarrhea episodes among children in the households reached by network expansions relative to the control group. Moreover, expanded water connections induce savings, as these families are able to substitute piped water for more expensive and distant sources of water. These health and savings effects are also important for households that previously had clandestine self-connections to the water network, which were free but of low quality.
Samuel Berlinski, Sebastian Galiani, Paul Gertler, The effect of pre-primary education on primary school performance, Journal of Public Economics, Volume 93, Issues 1–2, 2009, Pages 219-234, ISSN 0047-2727, https://doi.org/10.1016/j.jpubeco.2008.09.002., 2009
Although the theoretical case for universal pre-primary education is strong, the empirical founda... more Although the theoretical case for universal pre-primary education is strong, the empirical foundation is weak. In this paper, we contribute to the empirical case by investigating the effect of a large expansion of universal pre-primary education on subsequent primary school performance in Argentina. We estimate that one year of preprimary school increases average third grade test scores by 8 percent of a mean or by 23 percent of the standard deviation of the distribution of test scores. We also find that preprimary school attendance positively affects student's self-control in the third grade as measured by behaviors such as attention, effort, class participation, and discipline.
Cattaneo, Matias D., Sebastian Galiani, Paul J. Gertler, Sebastian Martinez, and Rocio Titiunik. 2009. "Housing, Health, and Happiness." American Economic Journal: Economic Policy, 1 (1): 75-105. DOI: 10.1257/pol.1.1.75, 2009
Despite the importance of housing for people's well-being, there is little evidence on the causal... more Despite the importance of housing for people's well-being, there is little evidence on the causal impact of housing and housing improvement programs on health and welfare. In this paper, we help to fill this gap by investigating the impact of a largescale effort by the Mexican Government to replace dirt floors with cement floors on child health and adult happiness. We find that replacing dirt floors with cement floors significantly improves the health of young children. Specifically, we find that a complete substitution of dirt floors by cement floors in a house leads to a 78 percent reduction in parasitic infestations, 49 percent reduction in diarrhea, 81 percent reduction in anemia and a 36 to 96 percent improvement in cognitive development. Additionally, we find that replacing dirt floors by cement floors significantly improves adult welfare, as measured by increased satisfaction with their housing and quality of life, as well as significantly lower rates of depression and perceived stress. JEL: I12, I38 and H43.
Ignacio Franceschelli, Sebastian Galiani, Eduardo Gulmez, Performance pay and productivity of low- and high-ability workers, Labour Economics, Volume 17, Issue 2, 2010, Pages 317-322, ISSN 0927-5371, https://doi.org/10.1016/j.labeco.2009.04.006., 2010
Existing literature has mainly focused on analyses of the overall effect of a change in the incen... more Existing literature has mainly focused on analyses of the overall effect of a change in the incentive scheme. Lazear (2000), for example, estimates the average increase in productivity after a firm switches from an hourly-wage scheme to a piece-rate plus basic-wage scheme. His paper does not, however, account for the fact that many workers remained within the basic-wage range after the change was made in the incentive scheme. In the present paper we explore how the incentive effect might have been different for those workers seeking the basic wage, and those workers seeking the piece-rate component of the wage. Surprisingly, the change in productivity is approximately the same in percentage terms for both types of workers.
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Papers by Sebastian Galiani