Andrés César

Abstract: This paper examines the causal effect of robot adoption on top income inequality in the U.S. between 2010 and 2015, integrating datasets from U.S. Censuses, the Internal Revenue Service, International Federation of Robotics, and OECD. We exploit spatial variation in exposure to robots, resulting from historical differences in industry specialization across U.S. metropolitan areas and the evolution of robot adoption across industries. Our findings reveal a robust and positive impact of robotization on taxable income exclusively for the top 1 percent of taxpayers, with the effect being more pronounced for higher income fractiles within this group. Specifically, an additional robot per thousand workers leads to relative increases in total taxable income of 2.9--3.7 percent for P99 to P99.9, 5.2--8.5 percent for P99.9 to P99.99, and 8.7--16.3 percent for P99.99 to P100. Consequently, robot adoption amplifies income inequality, particularly at the very top of the income distribution.

Abstract: This paper studies the effects of automation of production on labor market outcomes, and whether there is an effect of automation on functional and personal inequality in seven Latin American countries: Argentina, Brazil, Chile, Colombia, Ecuador, Mexico and Peru, during the period 1992–2015. The identification strategy exploits the exposure to automation across occupations and the acceleration of adoption of automation technology across time to construct a difference–in–differences estimator. Industry level estimates suggest that while automation reduces employment in industries with a higher share of workers performing routine tasks, the labor share remains unchanged, as wages of workers that remain employed weakly go up. Consistently, findings at the local labor market level suggest that unemployment increases in districts with a greater fraction of workers performing routine tasks and that the average wage increases. These districts also exhibit a relative increment in poverty and personal income inequality, as unemployment increases more rapidly among unskilled workers.

Abstract: This paper investigates whether the impact of trade shocks on employment and wages persists across generations. Using survey data with retrospective information on parental employment and instrumental variables, we study the effect of increased Chinese import competition in Brazilian industries on individuals with differently exposed fathers. Results show that several years after the shock, children of more exposed fathers have lower education and earnings, lower chances of formal jobs, and are more likely to rely on social assistance. These effects are substantially stronger for children from disadvantaged background, indicating that the shock had a negative impact on intergenerational mobility.

Abstract: We characterize price and quality adjustment on manufacturing imports in the event of a large devaluation, and present a simple model with the arguments. We document empirical findings using import data for Argentina during 1999-2004. On January 2002, Argentina faced a large banking and currency crisis, and ended a ten-year currency board to adopt a floating exchange rate system. During 2002, the U.S. dollar appreciated more than 200% relative to the AR peso. We show that border prices (measured in U.S. dollars) and estimated qualities of imported manufacturing products both decreased significantly, and that there was substitution towards lower price and lower quality product varieties. We document that price reduction and substitution across varieties also take place in many other devaluation episodes. Motivated by these facts, we rely on structural modeling to quantify the contribution of three channels towards the decrease in border prices. We develop a theoretical framework where firms sell one differentiated variety in a market characterized by monopolistic competition, and consumers choose the variety that provides them with the highest indirect utility. When there is a depre- ciation, real income falls, and consumers become less willing to pay for quality. Firms may find it profitable to reduce both, the mark-up and the quality of a given variety, while there is also an increase in the market share of lower quality product varieties. We simulate product-level price changes that closely match observed price changes. The counterfactual analysis suggests that within variety quality adjustment accounts for 50-57% of product-level price reductions, substitution across varieties accounts for 31-41%, and mark-up adjustment explains 10-17%.

Abstract: This chapter reviews key literature on the determinants and implications of technological change associated with the Third and Fourth Industrial Revolutions, which have spread globally since the late twentieth century, and presents descriptive evidence. The main conclusion is that while technological progress has not significantly threatened overall employment opportunities, it has clearly contributed to rising income inequality. Consequently, a future devoid of employment is not anticipated, although the prospects for equality remain uncertain. I argue that to maximize the benefits of technological advancement, education must evolve in tandem with technology, equipping individuals to work alongside new innovations throughout their lives. This would enable workers to fully leverage automation of routine tasks and augmentation of abstract and cognitive tasks, fostering teamwork, problem-solving, flexibility, creativity, and social intelligence. Furthermore, productivity growth driven by technological progress is likely to increase demand for both traditional and new goods and services, generate income gains that increase demand for quality, accelerate structural change, and exert pressure on resource utilization.

Abstract: This paper proposes a new link relating export destinations and the organization of the firm: the production of higher-quality varieties exported to rich destinations induces firms to restructure their production processes, becoming organizationally more complex. A theoretical model with these features is presented and then the mechanisms are explored using a panel of Chilean manufacturing plants. The identification strategy of the paper relies on falling tariffs on Chilean products across destinations caused by the signature of Free Trade Agreements with high-income countries (the European Union, the United States, and South Korea). Results show that Chilean plants that were induced by these tariff reductions to start exporting to high-income destinations increased the number of hierarchical layers and upgraded the quality of their products. This involved the addition of qualified supervisors that facilitated the provision of higher product quality. These effects took place at new high-income exporting firms.

Abstract: We study the causal impact of export growth on Chilean local economic development by exploiting spatial and time variations in local exposure arising from past differences in industry specialization across local labor markets and the evolution of tariffs and exports across industries. We find that growing exports implied a significant reduction in labor informality and labor income gains in more exposed local markets, driven by job creation and wage growth in the formal sector. These effects concentrate on senior skilled workers. Exposed locations also exhibit a relative decline in monetary poverty.

Abstract: Este trabajo caracteriza la evolución de la distribución personal del ingreso de la población urbana argentina durante el período 1992-2014 utilizando un análisis de microdescomposiciones econométricas. Los resultados sugieren que la dinámica del mercado laboral de los hombres es el determinante principal de los cambios observados en la distribución del ingreso per cápita familiar durante todo el período analizado. El incremento de los retornos a la educación explica alrededor de un 45 por ciento del aumento de la desigualdad de ingresos laborales entre 1992 y 1999, mientras la disminución de dichos retornos explica un 60 por ciento de la reducción de la desigualdad de ingresos laborales del período 2006-2014. La situación laboral de las mujeres amortigua una parte no menor (15 por ciento) del deterioro distributivo ocurrido durante la crisis socioeconómica de 1999-2002. El aumento de los ingresos no laborales, derivado principalmente de la ampliación de la cobertura de la red de seguridad social, explica alrededor de un tercio de la mejora distributiva ocurrida durante el período 2006-2014.

Abstract: We study changes in employment across occupations characterized by different degrees of exposure to routinization in the six largest Latin American economies over the past two decades. We combine our own indicators of routine task content (RTC), based on information from the Programme for the International Assessment of Adult Competencies (PIAAC), with labor market microdata from harmonized national household surveys. We find that growth in employment was inversely related to the automatability of tasks typically performed in each occupation, and positively correlated with the initial wage. Consequently, the share of high RTC occupations in total employment decreased in all countries and periods. This decline is linked to shifts in the economic structure towards sectors more intensive in low RTC occupations, as well as changes in the intensity of use of different occupations within sectors.

Abstract: We study the effect of robots on labor markets in Argentina, Brazil, and Mexico, the major robot users in Latin America, during the period 2004–2016. We exploit spatial and time variations in exposure to robots arising from initial differences in industry specialization across geographic locations and the evolution of robot adoption across industries, to estimate a causal effect of robots on local labor market outcomes. We find that district’s exposure to robots causes a relative deterioration in labor market indicators such us unemployment and labor informality. We document that robots mainly replace formal salaried jobs, affecting young and semi-skilled workers to a greater extent, and that informal employment acts as a buf- fer that prevents a larger increase in unemployment.

Abstract: Using households survey microdata from Argentina, Brazil, Chile, Colombia, Mexico and Peru, we characterize changes in employment and wages between the mid-2000s and the late-2010s emphasizing the gender dimension from the viewpoint of the task-based approach. We employ surveys from PIAAC-OECD to study the task content of jobs and create an index of routine task content (RTC) of occupations. We document five facts: (i) The proportion of routine tasks is currently higher for women than for men. (ii) The employment structure is considerably more biased towards high-RTC jobs in Latin America than in OECD countries, for both genders. (iii) There was an increase in the employment participation of low-RTC jobs during the period under study, mainly driven by movements in the occupational structure of women, especially the young and middle-aged. (iv) Wage gains were relatively higher in high-RTC occupations, with this pattern more pronounced for men than for women. (v) While there was a modest reduction in the gender wage gap, the decline was stronger in computer-intensive occupations.

Abstract: In this paper we characterize workers’ risks from automation in the near future in the six largest Latin American economies as a function of the exposure to routinization of the tasks that they perform and the potential automation of their occupation. We combine (i) indicators of potential automatability by occupation and (ii) worker’s information on occupation and other labor and demographic variables. We fi nd that the ongoing process of automation is likely to signifi cantly aff ect the structure of employment. In particular, unskilled and semi-skilled workers are more at risk of bearing a disproportionate share of the adjustment costs. Automation will probably be a more dangerous threat for equality than for overall employment.

Abstract: New automation technologies affect workers in a heterogeneous manner according to their demographic characteristics, skills, and the tasks they perform. In this paper we study the effects of automation on labor market outcomes in a developing country, Chile. We focus our analysis on the heterogeneous impacts of automation across cohorts. Does automation affect young workers differently than older workers? Do young workers tend to perform routine tasks? Are young workers in routine occupations more exposed to negative effects of technology? Our empirical strategy is based on exploiting differences in the routinization of tasks across districts and occupations and a change in the trend of automation technology adoption in Chile. We find that young workers are more easily displaced by automation than older workers of similar characteristics. At the same time, cohorts of young workers are more skilled and more mobile than older workers, which implies that they have good prospects of working in complement with automation technology in the near future. The young and unskilled are the most vulnerable group of workers.

Abstract: In this chapter we present an empirical analysis of the impact of new automation technologies on employment, wages, and its distributional consequences in Latin America based on various own companion papers. Our analysis builds upon three focal and complementary topics that study the consequences of automation from different angles, with different combinations of data, and with different empirical strategies. The first topic is the potential replacement of workers by robots and its impact on welfare. We construct measures of robot adoption and study their effects on employment, wages, poverty, and income distribution. The second topic is the task-based approach. We build an index of routinization based on the description of tasks performed by each occupation. We identify workers that perform routine tasks and study how employment and wages have evolved according to their degree of routinization. Finally, the third topic deals with what the future holds for workers in Latin America. Based on job characteristics, we analyze the risks of being displaced by technology in the near future for different demographic groups. Throughout this chapter we use harmonized microdata from the SEDLAC database (a joint collaboration between CEDLAS-UNLP and the World Bank) for the six largest Latin American economies—Argentina, Brazil, Chile, Colombia, Mexico and Peru, which represent 79% of total population and 86% of total GDP of the region—for the period 1992-2016. This large sample allows us to provide a global perspective of the structure of jobs in Latin America.

Abstract: We study Chile’s labor market responses to trade shocks during 1996–2006, exploiting spatial and time variations in trade exposure arising from initial differences in industry specialization across local labor markets and the evolution of shocks across industries. We take advantage of China’s supply and demand’s worldwide shocks to instrument for Chinese import competition and demand for Chilean exports. Our main finding is that increasing manufacturing import competition implied a significant rise in labor informality in more exposed local markets, especially among young and unskilled workers. These groups also suffered significant relative wage losses. Meanwhile, locations that benefited most from the increased demand for primary products experienced a relative increase in employment, particularly among young individuals, and reallocation from self-employment towards salaried jobs in the formal sector, along with relative wage gains among old-age workers. Interestingly, these areas experienced a smaller increase in tertiary education enrollment rates than less exposed areas.

Abstract: We study the effect of a trade-induced competitive shock, defined as rising import competition from China, on Chilean manufacturing plants. For identification, we exploit the fact that in 1995–2006, Chinese import penetration increased sharply in Chile, but this expansion varied widely across manufacturing industries. We use Chinese export growth in high-income industry-country pairs as an instrument for Chinese import penetration. Our results suggest that plants in more exposed industries exhibit relative declines in revenue, employment, and physical capital and face a higher probability of exiting the panel than comparable plants in less exposed industries. All these effects are concentrated among establishments with low initial levels of productivity.

Abstract: Este trabajo revisa gran parte de la literatura dedicada a estudiar los efectos del comercio internacional sobre el crecimiento económico, el mercado laboral, la distribución del ingreso y el bienestar. De esta revisión se desprende que la integración comercial promueve el crecimiento, principalmente a través de mejoras en la productividad agregada de la economía, a la vez que genera una transformación de la estructura productiva que acarrea ganadores y perdedores. Además, los mercados están sujetos a fricciones que ralentizan las transiciones y acentúan los efectos heterogéneos del comercio sobre firmas, industrias, regiones y, en definitiva, sobre el bienestar de distintos individuos. Estos efectos se agudizan en presencia de restricciones financieras, baja movilidad laboral y debilidad institucional. En este contexto, es fundamental comprender los mecanismos por los cuales el comercio internacional genera dichos efectos para mejorar el diseño de políticas costo-efectivas, que permitan suavizar el proceso de ajuste para trabajadores y regiones desplazadas en pos de compartir los beneficios del comercio entre todos los miembros de la sociedad.

Abstract: El objetivo de este trabajo es evaluar los efectos de la apertura comercial y la globalización sobre los ingresos fiscales en América Latina para el período 1990-2012. Los modelos estimados por MGM en Diferencias predicen que una mayor apertura comercial genera un aumento en la presión tributaria total, por impuestos domésticos y por impuestos al comercio exterior, mientras que la globalización incrementa la presión solo por impuestos al comercio exterior. Considerando la tasa efectiva de imposición al comercio, se documenta un efecto Laffer entre la apertura comercial/globalización y los ingresos al comercio exterior, indicando que los países están en la parte creciente de la Curva de Laffer.

Abstract: We analyze the distributional impact of low carbon policies in India by combining a regional Computable General Equilibrium (CGE) model with a microsimulation framework that exploits household-level data. We model stylized scenarios with a combination of core economy-wide carbon pricing, low-carbon supply policies and innovation subsidies. We consider both the source-side impacts (reflecting how policies affect wage, capital, and transfer incomes) as well as the use-side impacts (reflecting how policies alter the prices of goods and services purchased by households). In this preliminary version of the paper, we present microsimulations for three low carbon policies scenarios by 2040. The results are compared with those of a baseline scenario that does not include decarbonization policies. Although there are heterogeneities in terms of employment there are common facts to highlight. The mining sector will be the most affected by decarbonization and the manufacturing sector will also experiment employment contractions. Agriculture, construction, and services will experiment expansions in the level of employment. The service sector experiences the largest increase in nominal wages. Changes in nominal total household income are positive independently of the considered scenario. As of now, and only considering the nominal evolution of household’s incomes, there does not seem to be regressive effects of low carbon policies in India.