EVALUATING ECONOMIC POLICIES IN ECUADOR: 2007 - 2017
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2022
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This manuscript is a comprehensive analysis of the effects of the most significant nationwide economic and social policies in Ecuador from 2007-2017. In each top-down decision, we explain the motivation of the policies, the expected effects, and assess the results. The main work includes three chapters that empirically study the implication of policies made to support underprivileged groups, and one chapter that explains economic integration using a theoretical model. We evaluate the unexpected decision to increase the monthly unified minimum wage in 2008. Using a differences-in-differences approach we estimate the overall causal effect on the affected populations, which led to a decrease in labor demand by 0.5 percent after one month and by 2.5 percent after four months. We find that the minimum wage hike led to a 2.2 percentage point decline in the probability of remaining employed after one month, and the treatment effect rose to 3.9 percentage points after four months. We estimate the effects of the minimum wage hike on wage changes by wage bin throughout the monthly wage distribution. We find that, after one month, wages increased by 17 to 37 percent for workers paid less than $200 and also uncover wage spillover effects up to the 77th percentile of the wage distribution. The effects of a 2008 policy that eliminated tuition fees at public universities are analyzed using a difference-in-differences strategy that exploits variation across cohorts differentially exposed to the policy, as well as geographic variation in access to public universities. We find that the tuition fee elimination significantly increased college participation and shifted people into higher-skilled jobs. We detect no statistically significant effects on income. The bulk of the benefits of this fee elimination were enjoyed by those of higher socioeconomic status. Individuals who speak an indigenous language and those born in poor areas saw no improvements in college enrollment or changes in job type. Mobile money (MM) is the most promising tool to engage more individuals living in rural and marginalized communities with the banking sector. By accessing a comprehensive data set of the first MM project initiated by the Ecuadorian government, we tracked the behavior of users within the MM network. Temporal analysis of network representations of MM transactions shows agents’ behavior over time and reactions to tax-incentives for the use of non-cash transactions. Immediate positive effects on the economic activity of continuing users and a marginal effect on their interconnectedness are shown. The tax-incentive distorted economic behavior and had a modest effect on the adoption and diffusion of MM. Implementation of these new technologies requires consideration of specific characteristics of each economy and their implements. Using a theoretical model, on factor endowments shows that global integration with China can generate two sets of economies, one set that is better off, and a second set that are worse off or indifferent. This result is essential to understand the effects in countries like Ecuador during the 2006- 2014 period, when China joined the global stage resulting in positive effects on the Ecuadorian economy. Our study aims to contribute to the debate on how policies on minimum wages, elimination of tuition fees in higher education, financial inclusion, and trade explained by factor endowments affected the economic behavior of the populations studied and their overall wellness in developing countries.
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Economics, Labor economics, Ecuador, employment, higher education, minimum wage, mobile money, tuition reduction
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185 pages
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