UC Irvine

This dissertation contains three papers that increase our understanding of the impacts of public policies, with a special focus on policies geared toward the poor. The first chapter considers the impact of the minimum wage, one of the most pervasive policy in existence today, to a population that has received very little direct attention in relation to said policy, the unemployed. In this chapter, we show that the policy does not benefit the unemployed. The second chapter studies a welfare program that has seen it's popularity surge in the last couple decades: conditional cash transfers (CCT) are a type of public policy that benefit the poor with cash in exchange for investments in their children. In this chapter, I show that a conditional cash transfer program can have pernicious labor supply distortions if maintained too long. The last chapter focuses not on one policy but rather on the knowledge necessary to create good country-level policies in a increasingly interconnected world. I show in this paper that the key determinant of long term development for a country is its people's principles (i.e., basic ideas), which means that imposing institutions to a third country (i.e., democracy) would be ineffective in increasing their wellbeing.

In the first chapter, we use four panels of the Survey of Income and Program Participation (SIPP) to find how the minimum wage impact unemployed workers, using a difference-in-difference strategy. We take advantage of the high-frequency of the SIPP data to study both the impact of minimum wage levels at the beginning of an unemployment period and the possible impact of a minimum wage increase while the worker is looking for a job. Our analysis shows that minimum wage levels have relatively mild effects on workers' labor outcomes; it does not show an impact on unemployment duration, or re-employment wages and hours over the next two years. However, minimum wage increases seem to have a more important impact on unemployed workers, their unemployment periods become longer and their working hours' trajectories are worsened. We find it particularly important that our analysis reveals no significant positive effects of higher minimum wages, or its increases, on the unemployed.

The second chapter of this dissertation uses data from seven editions of Chile's National Survey of Socioeconomic Characterization (CASEN), a longitudinal survey meant to evaluate public policies and describe the poor, to show how the oldest conditional cash transfer (CCT) in existence impacts labor force participation of women. Using a difference-in-difference strategy, I evaluate whether a small cash transfer that is suddenly made increasingly more generous and popular after 2007 impacts labor choices by Chilean mothers. Because I study a program that is sixteen years older than any other CCT, my findings can be relevant to rethink newer CCTs; the education level of the population I study more closely resembles educational attainment for many current CCT beneficiaries than their own country's average educational attainment in the early 2000s. I find evidence that older women increase slightly their labor force participation, but younger mothers between 18 to 24 years of age decrease their probability of working significantly (about 4%). The latter finding raises the question of whether the policy should be addressed to this group of young mothers at all.

In the last chapter of this dissertation, I consider the key determinants of long term wellbeing. Using data borrowed from \cite{acemoglu2002reversal} and complemented with additional relevant information on former colonies I compiled, I show that the aforementioned authors oversimplified the colonization process and that my approach explains the current and historical data better. My theory complicates matters by considering both direction and speed of progress. The direction of progress I argue is determined by principles, which are 'basic' ideas (i.e., a principle: 'all men are created equal'; not a principle: choice of jurisprudence). I show how Europeans played an important role in transmitting these principles (or not) to their colonies; I proxy this transmission with data on founding of the first university in each former colony. My theory also allows for different speeds in progressing towards societal goals. Borrowing from \cite{besley2009origins}, I contend that progress is faster for less heterogeneous societies everything else equal, I use population density in 1500 to find the former colonies that would be homogeneous today . My results show that having European principles explains a higher GDP by PPP in 1995 by 0.9 standard deviations, and being homogeneous explains an increase by 1.1 standard deviations in the same metric.