research

2025

1. Job Loss and Earnings Inequality: Distributional Effects of Formal Re-Employment in Chile

   Rafael Carranza, Joaquín Prieto, and Kirsten Sehnbruch

   Economic Analysis and Policy, Jun 2025

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   This paper examines the impact of job losses on the subsequent earnings of formal workers in Chile using administrative data. It contributes to the literature by examining the impact of job losses across the earnings distribution using unconditional quantile regression analysis. The paper thus provides evidence on the costs of losing a formal job in an emerging economy that is now considered ’high-income’ but still suffers from high earnings inequality and other issues that characterise labour markets in developing countries, such as high job rotation.

2. Wealth Inequality in Latin America (2000–2020): Data, Facts and Conjectures

   Rafael Carranza, Mauricio De Rosa, and Ignacio Flores

   Oxford Open Economics, Feb 2025

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   How has wealth accumulated in Latin America and how is it distributed across households? Despite the region being widely recognized for its extreme income inequality, data on wealth are scarce, partial and often contradictory, making it difficult to answer these basic questions. We estimate wealth aggregates based on macroeconomic data and wealth inequality based on recently available surveys and on administrative data. We contrast our results with those in the literature, with a handful of estimates from administrative sources, and with estimates from Credit Suisse and wid.world. In considering all the evidence, we distinguish reliable facts from what can only be conjectured or speculated. We find that aggregate wealth increased over two decades in four countries, and that wealth inequality is extremely high where it can be measured (with a top 1% share of up to 40%), which is likely to be the case for the whole region.

2024

1. Intergenerational Poverty Persistence in Europe – Is There a ‘Great Gatsby Curve’ for Poverty?

   Michele Bavaro, Rafael Carranza, and Brian Nolan

   Research in Social Stratification and Mobility, Dec 2024

   Abs DOI

   While the influence of poverty in childhood on adulthood outcomes has been extensively studied, little is known about how the strength of intergenerational persistence in poverty itself varies across countries. Here we examine the intergenerational persistence of poverty in a comparative analysis of 30 European countries using data from the 2019 ad hoc module of the EU-SILC dataset. We construct proxy measures of poverty in the parental household employing information on the inability to meet basic needs and financial hardship when growing up, together with parental education and occupational social class. The strength of the association between current poverty based on the indicators at the core of the EU’s social inclusion process and these measures of parental poverty is assessed and compared across countries. The cross-country variation in poverty persistence is probed concerning its relationship with the current and past extent of poverty: persistence tends to be stronger where current or parental poverty is higher, analogous to the Great Gatsby Curve relating intergenerational income mobility to income inequality at the country level. Mediation analysis highlights the role of own education as well as occupation in underpinning the observed relationship between current and parental poverty.

2. Assessing Income Redistribution: What Are the Key Analytic Choices?

   Rafael Carranza and Brian Nolan

   Fiscal Studies, Dec 2024

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   We present the extent of divergence in the literature on the stylised facts about income redistribution in rich countries. Analytical choices that underpin this divergence are then identified and investigated empirically using microdata for 30 European countries. In terms of direct redistribution via cash transfers and direct taxes, whether social insurance pensions are treated as redistribution – the conventional approach – or as market income – as in some recent studies – is seen to be critical. When the analysis is extended to include indirect taxes and non-cash benefits from state spending, they work in opposite directions and generally have only a limited net redistributive impact. Being able to attribute the benefits of such spending to households in more satisfactory ways is a priority. Whether household survey data are ‘corrected’ to include missing incomes at the top as well as imputed rent of owner-occupiers and undistributed profits of companies is also seen to have a substantial impact on the scale of measured redistribution. Finally, extending the scope of redistributive analysis to include all of national income, as in recent studies from a Distributional National Accounts perspective, is investigated. This underlines the implications of including state spending on collective goods such as security and infrastructure, without a clear rationale for how it is meaningfully allocated across households.

3. What Makes Elites More or Less Egalitarian? Variations in Attitudes towards Inequality within the Economic, Political and Cultural Elites in Chile

   Rafael Carranza, Dante Contreras, and Gabriel Otero

   Socio-Economic Review, Jul 2024

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   This article investigates how the type of elite to which a person belongs and their intergenerational contextual experiences are associated with attitudes towards inequality among elite individuals. We propose that membership of the economic elite and access to private schools, higher education business schools and affluent residential areas may contribute to the development of views that favour inequality. Using unique survey data collected in 2018 from a sample of 416 individuals belonging to Chile’s economic, political and cultural elites, we construct an additive score to measure attitudes towards inequality. Results of our regression analyses indicate that individuals belonging to the economic and political elite are more tolerant of inequality than members of the cultural elite. Moreover, intergenerational experiences at both private schools and higher education business schools significantly contribute to the formation of attitudes that favour inequality. These contextual experiences also relate to significant attitudinal variations within all elite groups.

4. The Damages of Stigma, the Benefits of Prestige: Examining the Consequences of Perceived Residential Reputations on Neighbourhood Attachment

   Gabriel Otero, Quentin Ramond, María Luisa Méndez, Rafael Carranza, Felipe Link, and Javier Ruiz-Tagle

   Urban Studies, Feb 2024

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   This study examines how perceived residential reputations – that is, how people think non-residents assess the reputation of their neighbourhood – affect neighbourhood attachment, including residents’ sense of belonging, local civic membership, social relationships and compliance with social rules and norms in the neighbourhood. We focus on Santiago, the capital city of Chile: a highly segregated context. We use data from the Chilean Longitudinal Social Survey (ELSOC, 2016–2019) and information on neighbourhood characteristics. Results show that perceived residential reputations affect neighbourhood attachment, even after adjusting for time-invariant individual heterogeneity and lagged dependent variables. Specifically, perceived stigma reduces residents’ neighbourhood identification, physical rootedness, trust and sociability with neighbours, while positive perceived reputations improve these components of neighbourhood attachment, although to a lesser extent. However, perceived residential reputations do not affect the formation of strong ties between neighbours or local participation, suggesting that residential reputations mainly influence affective components of neighbourhood attachment. We conclude that perceived residential reputations reinforce the influence of individual characteristics and objective neighbourhood conditions in producing diverging patterns of neighbourhood attachment, with broader implications for social inequality in the city.

2023

1. How Much of Intergenerational Immobility Can Be Attributed to Differences in Childhood Circumstances?

   Rafael Carranza

   In Mobility and Inequality Trends, Jan 2023

   Abs DOI

   Can an estimate of the intergenerational elasticity (IGE) be interpreted as a measure of inequality of opportunity (IOp)? If parental income is the only childhood circumstance, then the answer is yes. However, parental income is one of many potential circumstances that can shape IOp. These circumstances can influence the offspring’s income indirectly – by influencing parental income –or directly, bypassing the IGE altogether. I develop a model to decompose the interaction between childhood circumstances, parental income and offspring income. Using the Panel Study of Income Dynamics for the United States, I find that childhood circumstances account for 55% of the IGE for individual earnings and 53% for family income, with parental education explaining over a third of those shares. Furthermore, the IGE misses a large part of the influence of circumstances: only 45% of the influence of parental education on the offspring’s income goes through parental income (36% for earnings).

2. Top Income Adjustments and Inequality: An Investigation of the EU-SILC^†

   Rafael Carranza, Marc Morgan, and Brian Nolan

   Review of Income and Wealth, Sep 2023

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   This paper provides a novel assessment of how the World Inequality Database (WID) top income adjustment applied by Blanchet, Chancel, and Gethin (2021) to European Union Statistics on Income and Living Conditions (EU-SILC) data for 26 countries over 2003–2017 for Distributional National Accounts purposes affects inequality in equivalized gross and disposable household income. On average, the Gini is increased by around 2.4 points for both gross and disposable income, with notable differences across countries but limited impact on trends. EU-SILC countries that rely on administrative register data see relatively small effects on inequality. Comparing with two other recent studies, differences in impacts on measured inequality depend less on the adjustment method and more on whether external data sources are used.

3. Upper and Lower Bound Estimates of Inequality of Opportunity: A Cross-National Comparison for Europe

   Rafael Carranza

   Review of Income and Wealth, Dec 2023

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   I provide lower and upper bound estimates of inequality of opportunity (IOp) for 32 European countries, between 2005 and 2019. Lower bound estimates use machine learning methods to address sampling variability. Upper bound estimates use longitudinal data to capture all-time invariant factors. Across all years and countries, lower bound estimates of IOp account from 6 percent to 60 percent of total income inequality, while upper bound estimates account from 20 percent to almost all income inequality. On average, upper bound IOp saw a slight decrease in the aftermath of the Great Recession, recovering and stabilizing at around 80 percent of total inequality in the second half of the 2010s. Lower bound estimates for 2005, 2011, and 2019 show a similar pattern. My findings suggest that lower and upper bound estimates complement each other, corroborating information and compensating each other’s weaknesses, highlighting the relevance of a bounded estimate of IOp.

4. Spatial Divisions of Poverty and Wealth: Does Segregation Affect Educational Achievement?

   Gabriel Otero, Rafael Carranza, and Dante Contreras

   Socio-Economic Review, Mar 2023

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   We examine how different spatial compositions affect the educational achievement in mathematics of 16-year-old students in Chile, a Latin American country with high inequality and one of the most segregated education systems in the world. Conceptually, we complement the literature on ‘neighbourhood effects’, which typically addresses the influence of concentrated disadvantage, by focusing on concentrated advantage and its influence on educational outcomes. We construct a panel with all school students who took a national standardized mathematics test in 2010, 2014 and 2016 in the Metropolitan Region of Santiago, Chile. We complement it with survey data for the 52 districts of the Metropolitan Region, clustering the districts based on factors such as unemployment, economic inequality, access to services, experiences of violence and stigmatization. Our different identification strategies consistently show that concentrated poverty and affluence are both relevant for explaining educational achievement in mathematics above and beyond individual and school characteristics.

2022

1. Unemployment Insurance in Transition and Developing Countries: Moral Hazard vs. Liquidity Constraints in Chile

   Kirsten Sehnbruch, Rafael Carranza Navarrete, and Dante Contreras Guajardo

   The Journal of Development Studies, Oct 2022

   Abs DOI

   One of the most complex policy issues that developing countries will face as a result of the employment crisis caused by the Covid crisis is the question of how they can better protect the unemployed. However, the analysis of unemployment insurance (UI) in developing economies with large informal sectors is in its infancy, with few papers providing solid empirical evidence. This paper therefore makes several contributions: first, it applies Chetty’s 2008 landmark work on UI to a transition economy (Chile) and shows that the moral hazard effects expected by policy makers, who designed the system are minimal, while liquidity effects were entirely neglected. Second, it demonstrates that it is not enough merely to quantify effects such as moral hazard, but to understand their causes as unemployment generated by moral hazard or liquidity constraints has different welfare implications and should therefore result in different policies. By means of an RDD, this paper analyses the Chilean UI system using a large sample of administrative data, which allows for an extremely precise analysis of how the system works, thus providing invaluable empirical lessons for other countries.

2019

1. The Political Economy of Unemployment Insurance Based on Individual Savings Accounts: Lessons from Chile

   Kirsten Sehnbruch, Rafael Carranza, and Joaquín Prieto

   Development and Change, Jul 2019

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   In recent years, unemployment protection systems based on individual savings have been instituted in several developing countries. Chile was one of the first to establish such a system, which at the time was widely cited as a model for other countries. This article discusses the particular political context in which the Chilean system was created before examining how it works in terms of coverage and levels of benefits received by unemployed workers. The authors undertake a detailed analysis of the administrative data produced by the system and conclude that the insurance covers only a small proportion of the unemployed, as most workers generally had precarious jobs that did not allow them to contribute to the system consistently. The Chilean case illustrates how difficult it is to establish functioning unemployment insurance in developing countries with precarious labour markets. Based on the interaction between employment characteristics and the conditions imposed by the benefit system, the article assesses the efficacy of the Unemployment Insurance Savings Accounts (UISA) system and analyses whether it can indeed serve as a model for other developing countries.

2017

1. ‘Neighbourhood Effects’ on Children’s Educational Achievement in Chile: The Effects of Inequality and Polarization

   Gabriel Otero, Rafael Carranza, and Dante Contreras

   Environment and Planning A: Economy and Space, Nov 2017

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   This article studies the effects of the neighborhood in which a school is located on children’s mathematics achievement in Chile. It uses data taken from a sample of 127,020 sixth grade students measured by the National Education Quality Measurement System [Sistema Nacional de Medicio\textasciiacute n de la Calidad de la Educacio\textasciiacute n]. The incorporation of a measurement of socioeconomic polarization of the geographic environment, which is innovative in urban studies, allows us to qualify some critical aspects suggested in the academic discussion. A lagged dependent variable model is used, controlling for the score obtained by the same students in fourth grade. Using multilevel linear regressions, the results show positive effects related to participation in neighborhood organizations. One critical finding is that socio-economic polarization has a negative and significant impact on the educational achievement of sixth graders. The conclusions highlight the repercussions associated with acute inequalities in the neighborhoods, and speak to the importance of accessing dimensions which are more closely linked to cities’ social structure.