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The Geography of Repression and Support for Democracy: Evidence from the Pinochet Dictatorship

September 11, 2018

Joint work with María Angélica Bautista, Luis Martínez, Pablo Muñoz, and Mounu Prem

We show that state-led repression under dictatorship can fail to discourage political opposition and can contribute to democratization in the medium term. Studying the military dictatorship of Augusto Pinochet in Chile, we exploit the fact that the predetermined location of military bases predicts local levels of civilian victimization, but is unrelated to historical political preferences, as well as to state presence during the dictatorship. We use geographic proximity to these bases to construct instrumental variables and estimate the causal effect of exposure to repression on citizens’ revealed preferences for democracy in the high-stakes plebiscite of 1988. We find that counties with a higher rate of civilian victimization also had a higher rate of voter registration for the plebiscite, as well as a lower vote share in support of Pinochet. However, these counties do not show differential political alignment in national elections after the return to democracy. Our results indicate that the common phenomenon of democratization by elections may be partly driven by increased support for democracy in response to repression under dictatorship.


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The Privatization Origins of Political Corporations

September 2018

Joint work with Mounu Prem and Francisco Urzúa

We show how the sale of state owned firms in dictatorships may lead to the creation of political corporations operating in democracies. Using several novel datasets, we characterize the privatizations of the Pinochet regime in Chile using a data driven algorithm, confirming that some state owned firms were sold underpriced to politically connected individuals. We then show how firms sold to buyers linked to Pinochet grew and benefited from the dictatorship and in democracy formed political connections, financed political campaigns, and were more likely to appear in the Panama Papers. These results reveal how authoritarian regimes can influence young democracies and document how political corporations can be created.


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Distorted Quality Signals in School Markets

September 2018

Nominated to the Juan Luis Londoño Prize to best paper on social issues by a young researcher

Joint work with José ignacio Cuesta and Cristián Larroulet

Information plays a key role in markets with consumer choice. In education, data on schools is often gathered through standardized testing. However, the use of these tests has been controversial because of distortions in the metric itself. We study the Chilean educational market and document that low-performing students are underrepresented in test days, generating distortions in school quality information. These distorted quality signals affect parents' school choice and induce misallocation of public programs. These results provide novel evidence for the costs that distortions in quality signals generated by standardized tests in accountability systems impose on educational markets.


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Economic and Non-Economic Factors in Violence: Evidence from Organized Crime, Suicides, and Climate in Mexico

August 2018, NBER Working Paper 24897

Joint work with Ceren Baysan, Marshall Burke, Solomon Hsiang, and Edward Miguel

Organized intergroup violence is almost universally modeled as a calculated act motivated by economic factors. In contrast, it is generally assumed that non-economic factors, such as an individual's emotional state, play a role in many types of interpersonal violence, such as "crimes of passion." We ask whether economic or non-economic factors better explain the well- established relationship between temperature and violence in a unique context where intergroup killings by drug-trafficking organizations (DTOs) and "normal" interpersonal homicides are separately documented. A constellation of evidence, including the limited influence of a cash transfer program as well as comparison with both non-violent DTO crime and suicides, indicate that economic factors only partially explain the observed relationship between temperature and violence. We argue that non-economic psychological and physiological factors that are affected by temperature, modeled here as a "taste for violence," likely play an important role in causing both interpersonal and intergroup violence.


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Losing Your Dictator: Firms During Political Transition

July 2018

Joint work with Mounu Prem

We use new firm-level data from Chile to study how political networks affect resource misallocation in a transition from dictatorship to democracy. We find that firms with links to the Pinochet regime (1973–1990) were relatively unproductive and benefited from resource misallocation during the dictatorship, and those distortions persisted into democracy. We show that, after learning that the dictatorship was going to end, firms in the dictator's network increased their productive capacity, experienced higher profits, and obtained more loans from the state-owned bank. We test for different explanations and provide suggestive evidence consistent with connected firms aiming to shield their market position for the transition to democracy. 


 Source: Nelson Arancibia

Collective Action in Networks: Evidence from the Chilean Student Movement

July 2018

Hundreds of thousands of students skipped school during the 2011 student movement in Chile to protest and reform educational institutions. Using administrative data on millions of students' daily school attendance on protest days, this paper presents robust evidence of school absenteeism following a threshold model of collective behavior. Students skipped school on a protest day only when more than 40% of the members of their networks also skipped school. Importantly, even though I show skipping school imposed significant educational costs on students, I also show it helped to shift votes towards non-traditional opposition parties in the 2012 local elections, candidates who were relatively more aligned with students’ demands.


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Recruiting Migrants for Development: Consequences of a 19th Century Settlement Policy

Reject and resubmit, Explorations in Economic History

This paper studies a settlement policy implemented by the Chilean government between 1882 and 1904 to analyze the relationship between European immigration and development. Based on historical census data, I show that this settlement policy was successful in recruiting Europeans, who located in different parts of the country. Using a panel data of provinces observed between 1860 and 1920, I find a strong, positive, and robust correlation between recruited Europeans and measures of development. Moreover, the arrival of Europeans is strongly associated with local economic output fifty years after the policy was terminated. These results together with narrative historical evidence suggest that the settlement policy was successful in triggering local development.