This paper studies the role of private sector companies in the development of local amenities. We use evidence from one of the largest multinationals of the 20th century: the United Fruit Company (UFCo). The firm was given a large land concession in Costa Rica—one of the so‐called “Banana Republics”—from 1899 to 1984. Using administrative census data with census‐block geo‐references from 1973 to 2011, we implement a geographic regression discontinuity design that exploits a land assignment that is orthogonal to our outcomes of interest. We find that the firm had a positive and persistent effect on living standards. Company documents explain that a key concern at the time was to attract and maintain a sizable workforce, which induced the firm to invest heavily in local amenities—like the development of education and health infrastructure—that can account for our result. Consistent with this mechanism, we show, empirically and through a proposed model, that the firm's investment efforts increase with worker mobility.
The recent economic history of global integration has been characterized by a dismantling of capital controls and increased foreign direct investment (FDI). This paper explores the role of impediments to international capital mobility, foreign direct investment, and technology diffusion in shaping Latin American economic growth. First, the paper summarizes and quantifies the effects of the Bretton Woods international financial system in Latin America. Then, I study the consequences of capital controls—and their dismantling—on FDI and trade-induced technological advancements and their role in shaping local development, especially in the 1990s after the implementation of several trade liberalization policies.
Many school districts with centralized school choice adopt strategy-proof assignment mechanisms to relieve applicants from needing to strategize based on beliefs about their own admissions chances. This article shows that beliefs about admissions chances shape choice outcomes even when the assignment mechanism is strategy-proof by influencing how applicants search for schools and that “smart matching platforms” that provide live feedback on admissions chances help applicants search more effectively. Motivated by a model in which applicants engage in costly search for schools and overoptimism can lead to undersearch, we use data from a large-scale survey of choice participants in Chile to show that learning about schools is hard, beliefs about admissions chances guide the decision to stop searching, and applicants systematically underestimate nonplacement risk. We use RCT and RD research designs to evaluate scaled live feedback policies in the Chilean and New Haven choice systems. Twenty-two percent of applicants submitting applications where risks of nonplacement are high respond to warnings by adding schools to their lists, reducing nonplacement risk by 58% and increasing test score value added at the schools where they enroll by 0.10 standard deviations. Reducing the burden of school choice requires not just strategy-proofness inside the centralized system but also choice supports for the strategic decisions that inevitably remain outside of it.
This paper studies the effects of the COVID-19 pandemic on small businesses between March and November 2020 using new survey data on 35,000 small businesses in eight Latin American countries. We document that the pandemic had large negative impacts on employment and beliefs regarding the future, which in turn predict meaningful economic outcomes in the medium-term. Despite the unprecedented amount of aid, policies had limited impact for small and informal firms. These firms were less aware of programs, applied less, and received less assistance. This may have lasting consequences, as businesses that received aid reported better outcomes and expectations about the future.
To quantify trade frictions, we examine multiproduct exporters. We build a flexible general-equilibrium model and estimate market entry costs using Brazilian firm-product-destination data under rich demand and market access cost shocks. Our estimates show that additional products farther from a firm's core competency come at higher production costs, but there are substantive economies of scope in market access costs. Market access costs differ across destinations, falling more rapidly in scope at nearby regions and at destinations with fewer nontariff barriers. We evaluate a counterfactual scenario that harmonizes market access costs across destinations and find global welfare gains similar to eliminating all current tariffs.
Family and social networks are widely believed to influence important life decisions, but causal identification of those effects is notoriously challenging. Using data from Chile, Croatia, Sweden, and the United States, we study within-family spillovers in college and major choice across a variety of national contexts. Exploiting college-specific admissions thresholds that directly affect older but not younger siblings’ college options, we show that in all four countries a meaningful portion of younger siblings follow their older sibling to the same college or college-major combination. Older siblings are followed regardless of whether their target and counterfactual options have large, small, or even negative differences in quality. Spillover effects disappear, however, if the older sibling drops out of college, suggesting that older siblings’ college experiences matter. That siblings influence important human capital investment decisions across such varied contexts suggests that our findings are not an artifact of particular institutional detail but a more generalizable description of human behavior. Causal links between the postsecondary paths of close peers may partly explain persistent college enrollment inequalities between social groups, and this suggests that interventions to improve college access may have multiplier effects.