Adriana Kugler, Maurice Kugler, Juan Saavedra, Luis Herrera, 28 January 2016

Vocational training programmes offer a second chance to those who drop out of the formal education system. Most studies of the success of such programmes, however, typically only analyse outcomes directly after participation. This column examines the medium- and long-term outcomes of a vocational training programme in Colombia. Results suggest that vocational training and formal education are complementary investments and that there are educational spillover effects for family members, in particular among applicants with high baseline educational attainment.

Sebastian Galiani, Camila Navajas Ahumada, Marcela Meléndez, 10 August 2015

Informality is widespread in most developing countries. A challenge for governments is to lure informal firms into the formal economy. This column presents evidence from an experiment designed to induce formalisation in Colombia. Assistance through the bureaucratic process and the removal of the fixed costs of formalising increased the likelihood of formalisation. However, this effect did not persist over time, with many firms returning to the informal sector when minimal fixed costs came back into effect.

Sebastian Edwards, 04 February 2015

The conventional ‘trilemma’ view is that countries that allow free capital flows can still pursue independent monetary policies as long as they allow flexible exchange rates. This column examines the pass-through of Federal Reserve interest rates to policy rates in Chile, Colombia, and Mexico. The author concludes that, to the extent that central banks take into account other central banks’ policies, there will be ‘policy contagion’ and that, even under flexible rates, monetary policy will not be fully independent.

Kerem Cosar, Nezih Guner, James Tybout, 07 July 2014

Trade liberalisations are often accompanied by labour market reforms, making it difficult to isolate their effects. This column discusses the effects of trade liberalisation, globalisation, and labour-market reforms on the Colombian labour market. Reduced trade frictions increased cross-firm wage inequality and shifted the firm-size distribution rightward, with offsetting effects on overall wage inequality. Average income increased, but the gains were concentrated among employees of large, productive firms with access to export markets. Greater trade openness also increased job turnover.

Christian Daude, 10 December 2012

Latin American central banks are facing new challenges in the form of unprecedented levels of uncertainty and exchange rate appreciation pressures. This column, focusing on Brazil, Chile, Colombia, Peru and Mexico, argues that there is an overestimation of the potential output in several Latin American economies, a lack of an explicit policy direction from central banks, and lacklustre frameworks for macroprudential policy. Although inflation targeting has served countries in Latin America well, significant risks remain.

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