The Truth and Reconciliation Commission (TRC) in Peru is usually cited as an example of how captu... more The Truth and Reconciliation Commission (TRC) in Peru is usually cited as an example of how capture–recapture methods can help improve our understanding of mass violence from incomplete observed data. Using 25,000 documented death records, the TRC estimated a total of 69,000 killings, and that the Shining Path was the main perpetrator, in contrast with the raw data where the Peruvian State appears to be responsible for the most killings. One feature not often noticed is that the TRC applied an unusual indirect procedure, combining data on different perpetrators and lumping together missing perpetrator data in one group. I show that direct estimations with strict stratification by perpetrator and accounting for missing data do not support the results of the TRC’s indirect approach. I estimate a total of 48,000 killings, substantially lower than the TRC estimate, and the Peruvian State accounts for a significantly larger share than the Shining Path. Rather than an example of correctin...
IZA Policy Paper No. 180 SEPTEMBER 2021 Is the Global Competitiveness Index a Reliable Tool for t... more IZA Policy Paper No. 180 SEPTEMBER 2021 Is the Global Competitiveness Index a Reliable Tool for the Design of Labor Market Policies? Evidence from Peru* Peru’s national policy on productivity and competitiveness relies on the Global Competitiveness Index (GCI) by the World Economic Forum. We analyze the subjective component of GCI and show that, in the labor market area, this index has been largely constructed with opinion data coming from a particular group of the business sector. The opinion data is based on a survey of 98 business executives, which mainly represent firms with 100 or more employees and account for only 1% of total firms in Peru. Further, the questionnaire exhibits obvious flaws, and the underlying viewpoint that less employment protection promotes productive and formal work is not aligned with the evidence. Thus, we do not find that GCI provides a solid base for policy advice. JEL Classification: J08, J32, 043
These are the files relates to the paper entitled "Capturing Correctly: A Reanalysis of the ... more These are the files relates to the paper entitled "Capturing Correctly: A Reanalysis of the Indirect Capture-Recapture Methods in the Peruvian Truth and Reconciliation Commission"
Abstract.- We set up a dynamic model of firm investment in which liquidity con-straints enter exp... more Abstract.- We set up a dynamic model of firm investment in which liquidity con-straints enter explicitly into the firm’s maximization problem. The optimal policy rules are incorporated into a maximum likelihood procedure to estimate the structural parameters of the model. Investment is positively related to the firm’s internal finan-cial position when the firm is relatively poor. This relationship disappears for wealthy firms, which can reach their desired level of investment. Borrowing is an increasing function of financial position for poor firms. This relationship is reversed as a firm’s financial position improves, and large firms hold little debt. We find that liquidity con-straints matter significantly for the investment decisions of firms. If firms can finance investment by issuing fresh equity, rather than with internal funds or debt, average capital stock is about 6 % higher over a period of 20 years. Transitory interest rate shocks have a sustained impact on capital accumu...
In this paper we explain how easier home financing and higher homeownership rates increase unempl... more In this paper we explain how easier home financing and higher homeownership rates increase unemployment rates. To this purpose we build a model of job search with liquid wealth accumulation and consumption of housing, that can be rented, bought on credit, or sold. In our model, more relaxed house credit conditions increase workers' reservation wages, making them more selective in their job search. More selective job searches deteriorate employment transitions: job finding and job-to-job transitions rates decline while job loss rates increase, causing the overall unemployment rate to rise. We estimate this model structurally using NLSY data from 1978 until 2005. We find that more relaxed housing lending conditions, particularly lower downpayment requirements, increase unemployment rates by 6 percent points. We also find that declining labor demand decreases homeownership rates by 14 percent points.
In this paper I propose a model of wage-specific search intensity in an environment of random job... more In this paper I propose a model of wage-specific search intensity in an environment of random job and on-the-job search. I move on from the usual search intensity setup that increases the arrival rate associated with all possible wage draws. In the proposed framework agents can choose the segments of the wage offer distribution where they want to search more intensively. Compared to the classic search intensity setup, this framework saves agents the effort to search for jobs that are not meant to be accepted or are less attractive because they pay too little or they are to difficult to get. This increase in efficiency implies that total search intensity is lower than in the classic setup. The wage-specific search intensity becomes a displaced and rescaled version of the original wage offer distribution, while hazard rates by current wages are higher than in the classic setup for higher wages. Understandably, the higher the current wages the higher the efficiency gains from having a ...
Purpose This paper aims to weigh the restrictions to job creation imposed by labor market imperfe... more Purpose This paper aims to weigh the restrictions to job creation imposed by labor market imperfections with respect to financial market imperfections. The authors want to see which restriction is more severe, and thus assess which is more powerful in creating permanent employment if it were removed. Design/methodology/approach A structural estimation is performed. The policy rules of the dynamic programming model are integrated into a simulated maximum likelihood procedure by which the model parameters are recovered. Data come from the CBBE (Balance Sheet data from the Bank of Spain). Identification of key parameters comes mainly from the observation of debt variation and sluggish adjustment to permanent labor. Findings Long-run permanent employment increases up to 69% when financial constraints are removed, whereas permanent employment only increases up to 54% when employment protection or firing costs are eliminated. The main finding of this paper is that the long-run expansion o...
Rendon (2019) showed that the indirect estimation of total killings in the Peruvian Truth and Rec... more Rendon (2019) showed that the indirect estimation of total killings in the Peruvian Truth and Reconciliation Commission introduced a distortion. Two of the original analysts, Manrique-Vallier and Ball (2019), provide an indirect defense of their work using new data, and argue that this supports their unprecedented indirect method over the direct estimator. In this rejoinder I show that their new figure of 17,687 killings by the Shining Path is closer to the direct estimate of 18,341 than to their indirect estimate of 31,331 killings. I also show that the indirect method systematically produces impossible negative predicted killings and overfits massively. I reiterate my conclusion that their indirect estimates are unreliable and should be retracted.
The Truth and Reconciliation Commission (TRC) in Peru is usually cited as an example of how captu... more The Truth and Reconciliation Commission (TRC) in Peru is usually cited as an example of how capture–recapture methods can help improve our understanding of mass violence from incomplete observed data. Using 25,000 documented death records, the TRC estimated a total of 69,000 killings, and that the Shining Path was the main perpetrator, in contrast with the raw data where the Peruvian State appears to be responsible for the most killings. One feature not often noticed is that the TRC applied an unusual indirect procedure, combining data on different perpetrators and lumping together missing perpetrator data in one group. I show that direct estimations with strict stratification by perpetrator and accounting for missing data do not support the results of the TRC’s indirect approach. I estimate a total of 48,000 killings, substantially lower than the TRC estimate, and the Peruvian State accounts for a significantly larger share than the Shining Path. Rather than an example of correctin...
IZA Policy Paper No. 180 SEPTEMBER 2021 Is the Global Competitiveness Index a Reliable Tool for t... more IZA Policy Paper No. 180 SEPTEMBER 2021 Is the Global Competitiveness Index a Reliable Tool for the Design of Labor Market Policies? Evidence from Peru* Peru’s national policy on productivity and competitiveness relies on the Global Competitiveness Index (GCI) by the World Economic Forum. We analyze the subjective component of GCI and show that, in the labor market area, this index has been largely constructed with opinion data coming from a particular group of the business sector. The opinion data is based on a survey of 98 business executives, which mainly represent firms with 100 or more employees and account for only 1% of total firms in Peru. Further, the questionnaire exhibits obvious flaws, and the underlying viewpoint that less employment protection promotes productive and formal work is not aligned with the evidence. Thus, we do not find that GCI provides a solid base for policy advice. JEL Classification: J08, J32, 043
These are the files relates to the paper entitled "Capturing Correctly: A Reanalysis of the ... more These are the files relates to the paper entitled "Capturing Correctly: A Reanalysis of the Indirect Capture-Recapture Methods in the Peruvian Truth and Reconciliation Commission"
Abstract.- We set up a dynamic model of firm investment in which liquidity con-straints enter exp... more Abstract.- We set up a dynamic model of firm investment in which liquidity con-straints enter explicitly into the firm’s maximization problem. The optimal policy rules are incorporated into a maximum likelihood procedure to estimate the structural parameters of the model. Investment is positively related to the firm’s internal finan-cial position when the firm is relatively poor. This relationship disappears for wealthy firms, which can reach their desired level of investment. Borrowing is an increasing function of financial position for poor firms. This relationship is reversed as a firm’s financial position improves, and large firms hold little debt. We find that liquidity con-straints matter significantly for the investment decisions of firms. If firms can finance investment by issuing fresh equity, rather than with internal funds or debt, average capital stock is about 6 % higher over a period of 20 years. Transitory interest rate shocks have a sustained impact on capital accumu...
In this paper we explain how easier home financing and higher homeownership rates increase unempl... more In this paper we explain how easier home financing and higher homeownership rates increase unemployment rates. To this purpose we build a model of job search with liquid wealth accumulation and consumption of housing, that can be rented, bought on credit, or sold. In our model, more relaxed house credit conditions increase workers' reservation wages, making them more selective in their job search. More selective job searches deteriorate employment transitions: job finding and job-to-job transitions rates decline while job loss rates increase, causing the overall unemployment rate to rise. We estimate this model structurally using NLSY data from 1978 until 2005. We find that more relaxed housing lending conditions, particularly lower downpayment requirements, increase unemployment rates by 6 percent points. We also find that declining labor demand decreases homeownership rates by 14 percent points.
In this paper I propose a model of wage-specific search intensity in an environment of random job... more In this paper I propose a model of wage-specific search intensity in an environment of random job and on-the-job search. I move on from the usual search intensity setup that increases the arrival rate associated with all possible wage draws. In the proposed framework agents can choose the segments of the wage offer distribution where they want to search more intensively. Compared to the classic search intensity setup, this framework saves agents the effort to search for jobs that are not meant to be accepted or are less attractive because they pay too little or they are to difficult to get. This increase in efficiency implies that total search intensity is lower than in the classic setup. The wage-specific search intensity becomes a displaced and rescaled version of the original wage offer distribution, while hazard rates by current wages are higher than in the classic setup for higher wages. Understandably, the higher the current wages the higher the efficiency gains from having a ...
Purpose This paper aims to weigh the restrictions to job creation imposed by labor market imperfe... more Purpose This paper aims to weigh the restrictions to job creation imposed by labor market imperfections with respect to financial market imperfections. The authors want to see which restriction is more severe, and thus assess which is more powerful in creating permanent employment if it were removed. Design/methodology/approach A structural estimation is performed. The policy rules of the dynamic programming model are integrated into a simulated maximum likelihood procedure by which the model parameters are recovered. Data come from the CBBE (Balance Sheet data from the Bank of Spain). Identification of key parameters comes mainly from the observation of debt variation and sluggish adjustment to permanent labor. Findings Long-run permanent employment increases up to 69% when financial constraints are removed, whereas permanent employment only increases up to 54% when employment protection or firing costs are eliminated. The main finding of this paper is that the long-run expansion o...
Rendon (2019) showed that the indirect estimation of total killings in the Peruvian Truth and Rec... more Rendon (2019) showed that the indirect estimation of total killings in the Peruvian Truth and Reconciliation Commission introduced a distortion. Two of the original analysts, Manrique-Vallier and Ball (2019), provide an indirect defense of their work using new data, and argue that this supports their unprecedented indirect method over the direct estimator. In this rejoinder I show that their new figure of 17,687 killings by the Shining Path is closer to the direct estimate of 18,341 than to their indirect estimate of 31,331 killings. I also show that the indirect method systematically produces impossible negative predicted killings and overfits massively. I reiterate my conclusion that their indirect estimates are unreliable and should be retracted.
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