Three Essays in Political Economy of Public Goods in Chile

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2021

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Abstract

In October of 2019, a social crisis exploded in Chile; over one million Chileans marched on the streets, followed by riots and extensive destruction of public and private property. The economic and social inequality was unequivocally the cause of this conflict. Simultaneously, similar crisis crises occurred in many parts of the world, from Sudan to Indonesia and even in the US. The three chapters of this dissertation address the causes of the social crisis within the population and why it has been hard for the State to fund more social services. The first chapter measures and analyzes intergenerational income mobility in Chile. By creating a new administrative panel dataset, I look at the different educational and labor market roadblocks that individuals face while climbing the social mobility ladder. The year-to-year data allows this chapter to analyze in detail the possible roadblocks and co-funding factors that affect mobility. These challenges include low returns in higher education for low-income students, socioeconomic class, role models in schools, drop-out, and irregular labor markets.

The second chapter questions whether public policies can promote intergenerational income mobility. Using a subway expansion as a quasi-experiment, this chapter shows how a reduction in transport cost increased educational opportunities of students' and their intergenerational income mobility by 2 percentage points, an increase equivalent to a 5$\%$ increase in wages. Allowing students to attend school beyond their neighborhood could be an effective policy to promote intergenerational mobility and should be considered before moving the whole family to a different neighborhood.

The last chapter explores how members of the economic elite in Congress can reduce taxes, one of the most effective methods to reduce inequality. By creating a new biographical dataset of over 2500 members of Congress, I am able to analyze the educational history and wealth of Congressmen. I use the detailed biographical characteristics such as being a landowner or firm owner and find that a 10% reduction of elite members in Congress is associated with a 0.45 GDP points increment of taxes in the country. Overall, my findings suggest that it's possible to achieve a highly detailed analysis of the roadblocks of intergenerational mobility, that public policies can affect social mobility, and that the influence of elite members in Congress has historically reduced the State's capacity.

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Meneses, Francisco (2021). Three Essays in Political Economy of Public Goods in Chile. Dissertation, Duke University. Retrieved from https://hdl.handle.net/10161/23105.

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