About

I'm an Applied Microeconomist with research interests spanning the fields of Political Economy, Development Economics and Economic History.

My current research agenda focuses on the determinants of bureaucratic capacity in developing countries, and the long-term impact of historical institutions and conflict on economic development.

I'm a founding member of the Culture and Persistence Group at the VSE and currently a visiting student at the UC Berkeley’s Haas School of Business.

I expect to graduate in 2022 and will be available for interviews at the 2021/2022 ASSA/AEA and 2021/2022 EJME/EEA virtual meetings.

References:
Professor Francesco Trebbi (Committee Chair), Professor Siwan Anderson, Professor Matilde Bombardini, and Professor Patrick Francois.

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Working Papers

• "Bureaucratic Nepotism" Job Market Paper, September 2021.
      Abstract | Paper

Bureaucratic Nepotism is one of the most chronic and hard-to-identify pathologies within public administrations worldwide. Yet, the lack of comprehensive data and suitable empirical settings have limited its understanding in modern bureaucracies. This paper studies the extent, functioning and consequences of bureaucratic nepotism within public sector organizations. By linking confidential information on bureaucrat's family ties and administrative employer-employee records on the universe of civil servants in Colombia (2011-2017), I present three sets of empirical findings. First, I undercover the pervasiveness of family connections within the public administration and document how the prevalence of close family ties is negatively related to the performance of bureaucrats and public sector agencies. Second, I demonstrate how family connections to top-level managers and advisors significantly distort the promotion and compensation of civil servants. Exploiting within-bureaucrat variation in family connections generated by the turnover of top bureaucrats, I show that government employees receive higher salaries (2% to 5%) and are more likely to be hierarchically promoted (40%) when becoming family-connected to top managers and advisors. However, consistent with the extraction of private rents instead of better screening of workers, I find that family-connected promotees are negatively selected in terms of experience, education, and performance. Finally, I evaluate the 2015 anti-nepotism legislation reform in Colombia by exploiting a sharp discontinuity in the set of family connections restricted by this law. I determine the limited effectiveness of this reform and show how bureaucrats strategically responded to this policy change by substituting margins of favoritism and reshuffling within the public administration. Taken together, these findings provide the first systematic empirical examination of bureaucratic nepotism and anti-nepotism legislation in an entire modern bureaucracy.

• "Political Competition and State Capacity"
with Leopoldo Fergusson & Horacio Larreguy
Conditionally Accepted at The Economic Journal.
      Abstract | Paper | Journal

We develop a model of the politics of state capacity building undertaken by incumbent parties that have a comparative advantage in clientelism rather than in public goods provision. The model predicts that, when challenged by opponents, clientelistic incumbents have the incentive to prevent investments in state capacity. We provide empirical support for the model’s implications by studying policy decisions by the Institutional Revolutionary Party (PRI) that affected local state capacity across Mexican municipalities and over time. Our difference-in-differences and instrumental variable identification strategies exploit a national shock that threatened the Mexican government’s hegemony in the early 1960s. The intensity of this shock, which varied across municipalities, was partly explained by severe droughts that occurred during the 1950s.

• "Collateral Damage: The Legacy of the Secret War in Laos"
with Felipe Valencia Caicedo
Revision Requested at The Economic Journal.
      Abstract | Paper

Featured in
CEPR | VOX | VoxTalks | VSE News | Center for Global Development
As part of its Cold War counterinsurgency operations in Southeast Asia, the US government conducted a "Secret War" in Laos from 1964-1973. This war constituted one of the most intense bombing campaigns in human history. As a result, Laos is now severely contaminated with UXO (Unexploded Ordnance) and remains one of the poorest countries in the world. In this paper, we document the negative long-term impact of conflict on Laotian economic development, using highly disaggregated and newly available grid-cell data on bombing campaigns, satellite imagery, and development outcomes. We find that bombings have a negative, significant and economically meaningful impact on nighttime lights, expenditures and poverty rates. Almost 50 years after the conflict officially ended, bombed regions are poorer and growing at slower rates than unbombed areas. A one standard deviation increase in the total pounds of bombs dropped is associated with a 33% decrease in nightlights. To tackle the potential endogeneity of bombing, we use as instruments the distance to the Vietnamese Ho Chi Minh Trail as well as to US military airbases outside Laos established before the conflict started. Using census data at the village and individual levels, we show the deleterious impact of bombing and UXOs in terms of health, education, structural transformation, and rural-urban migration.

• "Media, Secret Ballot and the Process of Democratization in the United States"
with Leopoldo Fergusson & BK Song
Submitted to the Journal of Public Economics.
      Abstract | Paper

Can the media determine the success or failure of institutional reforms? We study the adoption of secret voting in the US and the role of media in this arguably crucial step to improve democracy. Using a difference-in-difference identification strategy and a rich dataset on local newspapers, we find that areas with high levels of media penetration exhibited multiple improvements in democratization outcomes following the adoption of the electoral reform. Specifically, the press contributed to the decrease in partisan attachment and support for dominant parties. It undermined the unintended consequence of the manipulation of electoral boundaries and the fall in turnout. We consider multiple concerns about our identification strategy and address the potential endogeneity of newspapers using an instrumental variable approach that exploits the introduction of wood-pulp paper technology, and woodland coverage at the county level in 1880. Exploring the heterogeneous effects of our results, we argue that the media mattered through the distribution of information to voters, and the increase of public awareness about political misconduct.

• "Social Dissent, Coercive Capacity, and Redistribution: Evidence from Authoritarian Mexico"
with Horacio Larreguy & Mariano Sánchez Talanquer
      Abstract | Paper

The extent to which authoritarian regimes use coercive, relative to redistributive, strategies to manage social dissent exhibit significant variation across the territory they govern. We argue that the incidence of different authoritarian tactics to deal with dissent depends on the coercive capacity of the state, which autocrats often inherit from the past. Where autocrats facing increasing discontent can rely on their capacity to coerce regime dissidents, they are more likely to eschew redistributive strategies. In contrast, dissent increases the likelihood of redistribution where autocrats lack readily-available tools for coercion. We provide empirical support for this argument primarily using a difference-in-differences identification strategy that exploits three sources of variation. First, we use a land reform that between 1910 and 1992 redistributed more than 50% of Mexico’s agricultural land. Second, we exploit a wave of dissent around the 1960s. Finally, we use municipal data on the availability of loyal semi-formal militias to coerce dissidents. Our results indicate that, when confronted with dissent, the PRI regime redistributed relatively less land in municipalities with more rural militia presence. We also show that, in those municipalities, events expressing social discontent were more successfully deterred. The study sheds light on how state coercive capacity shapes authoritarian strategies.

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Published Work

• "Conflict, Educational Attainment, and Structural Transformation"
with Leopoldo Fergusson & Ana Maria Ibañez,
In Economic Development and Cultural Change 69(1), 335-371. The Univeristy of Chicago Press, 2020.
Abstract | Paper | Journal

We examine the long-term impact of violence on educational attainment, with evidence from Colombia's La Violencia. Individuals exposed to violence during, and especially before, their schooling years experience a significant and economically meaningful decrease in years of schooling. This impact has consequences beyond human capital accumulation: exposed cohorts engage in activities with less human capital content. Violence thus influenced aggregate development - particularly the process of structural transformation, in which some sectors gain prominence as income increases. The effects result not so much from the direct destruction of physical infrastructure, but from affected households' responses to the hardships of conflict.

• "Consumers as VAT Evaders: Incidence, Social Bias, and Correlates in Colombia"
with Leopoldo Fergusson & Carlos Molina,
In Economía Journal   19(2), 21-67. Brookings Institution Press, 2019.
Abstract | Paper | Journal

Tax evasion lies at the core of the relationship between citizens and the state: it reflects the level of trust in the state and compliance with society’s implicit ‘social contract’. However, empirically analyzing it is challenging, with few direct and reliable measures. This has hampered the advancement of the theoretical and empirical literature, which is especially underdeveloped in the case of indirect tax evasion. We conduct list experiments on a large sample of households to estimate the incidence of value-added tax (VAT) evasion, as well as the extent of social desirability bias in respondent answers. Around 20% of respondents engage in evasion and, surprisingly, they are not ashamed to recognize this openly. Evasion is more prevalent in places with more informality and less physical presence of the state, as well as among poorer, less educated individuals, and those who disregard the rule of law.

• "I Sell My Vote, and So What? Incidence, Social Bias, and Correlates of Clientelism in Colombia"
with Leopoldo Fergusson & Carlos Molina,
In Economía Journal   19(1), 181-218. Brookings Institution Press, 2018.
Abstract | Paper | Journal

Exchanging one’s vote for particularistic benefits—practices usually grouped under clientelism—is often thought to weaken programmatic links between citizens and politicians and disincentivize public good provision, as well as undermine voter autonomy and the ideal role of elections. However, empirically analyzing this key phenomenon for the working of democracies entails formidable challenges. We conduct list experiments on a large sample of households to estimate the incidence of clientelistic vote buying, as well as the extent to which respondents refrain from openly recognizing this behavior. Nearly one out of every five respondents engage in clientelism, and, surprisingly, they do not feel ashamed to admit it. Guided by the existing literature and systematically verifying the sensitivity of the results to model specification, we examine the robust correlates of clientelism and discuss the implications of our key findings.

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Work in Progress

• "The Friedman Hypothesis"
with Marianne Bertrand, Matilde Bombardini, Raymond Fisman, Francesco Trebbi, June 2020
      Abstract

Comming soon

• "Systematic Discrimination and Police Shootings in the US"
with Thorsten Rogall, September 2021
      Abstract

Estimates suggest that over their lifetime 1 in 1,000 black men and boys can expect to be killed by the US police (Edwards et al., 2019). A recent, very prominent example is the death of George Floyd by the hands of a white police officer in Minnesota. What explains this recurring police violence against African Americans? Is it systematic racism? a generalized culture of violence? We believe these questions, or any question, on how to understand and possibly prevent violence is utterly important. In this project, we will empirically assess whether today’s police violence can be traced to historical Lynchings in the US. And if so, what the exact magnitudes and mechanisms of transmission are.

• "Low Entrepreneurial Intent: A Legacy of South Africa’s Mining Monopsony"
with Neil Lloyd, July 2020
      Abstract

This project investigates the hypothesis that the low levels of self-employment and informal sector activity in contemporary South Africa can be linked to the legacy of labour recruitment in South Africa’s gold mining industry. At the outset of the Witwatersrand gold rush (1886) labour was largely sourced from outside of South Africa: Southern Mozambique, Botswana, even China. However, during the early 1900’s a series of events culminated in the expansion of recruitment to African men within South Africa. These events included the collapse of the Witwatersrand Native Labour Association (WNLA) as a centralized recruitment agency, the decision by the Transvaal government to repatriate around 30,000 Chinese workers, and a recession in the Cape province which led the governor to encourage recruiters to expand their operations to the Cape’s ‘native reserves’. We combine historical recruitment data with contemporary, geo-coded survey data to estimate the long run impact of the centralized mining recruitment on contemporary self-employment. Our research design exploits the historical borders of districts selected for recruitment, as well as the historical location of private sector recruiters prior to the re-establishment of a monopsony in 1918.

Pre-Doctoral Research

• "More than Words and Good Intentions: The Political Agenda-Setting Power Behind Foreign Aid Mechanisms", September 2014 (Master's thesis) cited in the 2021, JEL "Foreign Influence and Domestic Policy"
      Abstract | Paper

In this paper, international aid is examined as a tool for political agenda-setting. A theoretical model is constructed for the analysis, incorporating the incentives created by foreign aid, on the political benefits of recipient governments. The model also incorporates the compensating benefits provided by these governments through the legitimization of the donor country's political agenda. The main results of this model indicate that governments which offer international assistance can in inffluence the political agenda of recipient countries through two channels: 1) By reducing the political costs of official intervention in issues that receive aid, and 2) By generating incentives for additional political rent-seeking. The results are studied in the case of aid provided by the USA to Colombia during the period 1998-2012, which shows the power of US presidents to establish part of the Colombian political agenda related to drugs and terrorism. The results are obtained through a novel content analysis of presidential speeches in both countries and from a set of estimates corrected by possible problems of endogeneity in foreign aid allocation.

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Miscelaneous

I am also an alumnus of the Ronald Coase Institute

© Juan Felipe Riaño, 2021