Francisco Gallego

• PhD in Economics, MIT
• Professor at Pontifical Catholic University of Chile

In this paper we revisit the relationship between institutions, human capital and development. We argue that empirical models that treat institutions and human capital as exogenous are misspecified both because of the usual omitted variable bias problems and because of differential measurement error in these variables, and that this misspecificatio...

In an effort to reduce air pollution and congestion, Latin American cities have experimented with different policies to persuade drivers to give up their cars in favor of public transport. Two notable examples are the driving restriction program introduced in Mexico-City in November of 1989 –Hoy-No-Circula (HNC)– and the public transport reform car...

Levels of development vary widely within countries in the Americas. We argue that part of this variation has its roots in the colonial era, when colonizers engaged in different economic activities in different regions of a country. We present evidence consistent with the view that “bad” activities (those that depended heavily on labor exploitation)...

Sudden stops and international crises are a main feature of developing countries in the last 25 years. While their aggregate costs are well known, the microeconomic channels throught which they work have yet to be explored. In this paper we study their e¤ects on micro variables related to labor ows using sectoral panel data for 4 Latin American cou...

Why does schooling attainment vary widely across countries? Why are differences in schooling attainment highly persistent? I show that cross-country differences in schooling are related to political institutions, such as democracy and local democracy (political decentralization), which are affected by colonial factors. By using the number of native...

El propósito de este trabajo es, en base a la evidencia disponible, proponer recomendaciones para implementar y escalar programas de tutoría a nivel nacional, proyectándolos como una política pública de alto impacto que trascienda el contexto de pandemia.

This paper studies the persistent effect on social unrest of the Mining Mita-a colonial forced labor and migration institution that affected indigenous communities in Peru between 1573 to 1811. Using a geographical regression discontinuity design for identification, we provide causal evidence that Mita areas have experienced higher levels of social...

This paper explores how short-term tutoring affects educational outcomes in the short-and medium-term. We implemented a randomized experiment of a three-month small group tutoring program in Chile that aimed at improving reading outcomes among fourth graders using college student volunteers. We find small short-term effects on reading outcomes. Usi...

We explore how railroads affected population growth during the first globalization (1865–1920) in Chile. We look at areas with a strong comparative advantage in agriculture using novel data that document 60 years of railroad construction. Using instrumental variables, we present four main findings. First, railroads increased both urban and rural po...

This paper uses international commodity prices and local natural resource endowments as a source of plausibly exogenous variation in local Chilean economic conditions to study how these shocks impact fertility behavior of families in a small, emerging open economy where non-marital fertility is common but parental obligations are not well enforced....

This paper explores how discontinuities created by national borders can influence development across the Americas. We exploit the discontinuous nature of borders jointly with exogenous variation at the national level to identify discontinuous effects on proxies for economic development at the regional and pixel levels. We separate the effects of na...

This paper explores the role of parental information and control on children's internet use in Chile. We designed and implemented a randomized experiment whereby 7700 parents were sent weekly SMSs messages that (i) provided specific information about their children's internet use, and/or (ii) offered assistance with the installation of parental con...

Local air pollution has led authorities in many cities around the world to impose limits on car use by means of driving restrictions or license-plate bans. By placing uniform restrictions on all cars, many of these programs have created incentives for drivers to buy additional, more polluting cars. We study vintage-specific restrictions, which plac...

Changing pedagogical practices is a promising, cost-effective avenue for improving education in developing countries, especially when done without changing current inputs such as teachers and instruction time. This article presents the results of a randomized evaluation of a program that aimed at changing the pedagogical approach used to teach the...

Este artículo expone que, luego de la introducción de la ley de cuotas, los partidos políticos nominaron a candidatas mujeres en peores condiciones que a candidatos hombres en las elecciones parlamentarias del año 2017.

Introducción: La violencia es un problema de salud mental que se ha abordado poco en escolares respecto a sus diferencias por sexo. En particular, la percepción de violencia por escolares es de importancia para el diseño de intervenciones comunitarias en salud mental. Objetivo: Analizar las diferencias en la magnitud de la percepción de violencia s...

Information and communication technologies can be used for educational purposes, but these devices may also pose as distractors that may tamper with the learning process. This paper presents results from a randomized controlled trial in which laptops replaced traditional textbook provision in elementary schools in high poverty communities in Hondur...

Background This paper studies the socioeconomic disparities in self-perceived oral health among Chilean adults and in the perceived physical, functional, psychological and social consequences of oral health. Methods In February 2011, 1,413 residents of Metropolitan Area of Santiago, Chile, were interviewed using a standardized questionnaire and exa...

Borrowing from the bundling literature, the paper presents a novel model of vertical and horizontal differentiation applied to transport decisions: households differ in their preferences for transportation modes — cars vs public transport — and in the amount of travel. Using few observables, the model is then used to interpret and compute policy co...

I investigate the effects of voucher-school competition on educational outcomes. I test whether voucher-school competition (1) improves student outcomes and (2) has stronger effects when public schools face a hard-budget constraint. Since both voucher-school competition and the degree of hardness of the budget constraint for public schools are endo...

I investigate the e�ffects of voucher-school competition on educational outcomes. I test whether voucher-school competition 1) improves student outcomes and 2) has stronger e�ffects when public schools face a hard budget constraint. Since both voucher school competition and the degree of hardness of the budget constraint for public schools are endo...

Using a novel data base for three emerging markets we study large shareholders and their relationship with professional managers. This is important to understand wage inequality and returns to high-level human capital since concentrated ownership is prevalent in developing countries. We find a compensation premium of about 30 log points for profess...

The evolution of the skill premium (i.e., the wage di erential between skilled and unskilled workers) has interest from at least two perspectives: it is a rough measure of inequality among workers of di erent quali cations and provides information on the characteristics of the development process of the economy. In this paper, I investigate empiric...

While the aggregate effects of sudden stops and international financial crises are well known, the disaggregated channels through which they work are not well explored yet. In this paper, using job flows from a sectoral panel dataset for four Latin American countries, we find that sudden stops are characterized as periods of lower job creation and...

Using a novel data base for three emerging markets, we find that the type of large shareholder matters for CEO compensation. In particular, we find a compensation premium of about 30 log points for professional (not controller-related) CEOs working in firms controlled by a family compared to firms controlled by other large shareholders. The premium...

Sudden stops and international financial crises have been a main feature of developing coun-tries in the last three decades. While their aggregate effects are well known, the disaggregated channels through which they work are not well explored yet. In this paper, we study the sectoral responses that take place over episodes of sudden stops. Using j...

Public schools in Chile receive a per-student subsidy depending on enrollment, and are managed by local governments that operate under soft budget constraints. In this paper, we study the effects of this system on per-student expenditures. Per-student expenditures on rural areas are 30% higher than in urban areas. We find that about 75% of this dif...

Using regional data for about 180 African provinces, we find that measures of Protestant missionary activity in the past are more correlated with schooling variables today than similar measures of Catholic missionary activity, as previous papers have suggested. However, we find that this effect is mainly driven by differences in Catholic areas (i.e...

Public schools in Chile receive a per-student subsidy depending on enrollment, and are managed by local governments that operate under soft budget constraints. In this paper, we study the effects of this system on (i) academic performance of students attending public schools and (ii) per-student expenditures. The academic performance of students in...

I study whether the evolution of the relative demand for skilled workers is a consequence of international transmission of skill upgrading technologies from developed countries (in particular the US) to developing ones. Using data for Chile from 1960 to 2000, I present sectoral and macro evidence consistent with this hypothesis and that does not su...

Public schools in Chile receive a per-student subsidy depending on enrollment, and are managed by local governments that operate under soft budget constraints. In this paper, we study the effects of this system on per-student expenditures. Per-student expenditures on rural areas are 30% higher than in urban areas. We find that about 75% of this dif...

Using regional data for about 180 African provinces, we find that measures of Protestant missionary activity in the past are more correlated with schooling variables today than similar measures of Catholic missionary activity, as previous papers have suggested. However, we find that this effect is mainly driven by differences in Catholic areas (i.e...

How do parents choose among schools when they are allowed to do so? In this paper, we analyze detailed information of 70,000 fourth-graders attending about 1,200 publicly subsidized schools in the context of the Chilean voucher system. We model the school choice of a household as a discrete choice of a single school, based on the random utility mod...

Levels of economic development vary widely within countries in the Americas. We argue that part of this variation has its roots in the colonial era. Colonizers engaged in different economic activities in different regions of a country, depending on local conditions. Some activities, such as mining and sugar cultivation, were “bad” in the sense that...

Using regional data for about 180 African provinces, we find that measures of Protestant missionary activity in the past are more correlated with schooling variables today than similar measures for Catholic missionary activity, as previous papers have suggested. However, we find that this effect is mainly driven by differences in Catholic areas (ie...

School choice is one of the most widely debated policies aimed at increasing student welfare in different countries. Proponents argue that school choice may create incentives for schools to increase productivity, offer a product closer to student demands, and expand the choice set for poor students. Opponents, in contrast, argue that school choice...

Levels of economic development vary widely within countries in the Americas. We argue that this variation can be explained by differences in institutions which in turn have their roots in the colonial era. Colonizers engaged in different economic activities in different regions of a country, depending on the local conditions and the supply of nativ...

Sudden stops and international financial crises have been a main feature of developing countries in the last 25 years. While their aggregate effects are well known, the microeconomic channels through which they work have yet to be explored. In this paper, we study the rele-vance of financial and labor factors in the restructuring process that take...

Using cross-country data for about 70 countries and regional data for about 180 African provinces, we show that competition between Protestant and Catholic missionaries increased schooling in former colonies. Our evidence implies that Protestant missionaries increased schooling in Catholic countries by more than Catholic missionaries, but we cannot...

This paper studies the implications of school choice in the context of the Chilean quasivoucher system. We use information of school choices of about 80,000 students that lived in the Metropolitan Area of Santiago in Chile in 2002 and the results of the discrete choice model estimated in Gallego and Hernando (2008) to perform a number of exercises...

This dissertation consists of four essays on human capital, institutions, and incentives. In the first essay, I investigate the effects of voucher-school competition on educational outcomes in Chile. I present a theoretical model that produces three empirical predictions: voucher-school competition 1) improves student outcomes; 2) may put stronger...

The evolution of the skill premium (i.e., the wage differential between skilled and unskilled workers) in an economy has interest from at least two perspectives: the evolution of the skill premium is a rough measure of inequality among workers of different qualifications and provides information on the characteristics of the development process of...

We use the historical experience of former colonies to shed light on current debates about the effects of school competition on student outcomes. Using cross- country data for about 70 countries and regional data for about 180 African provinces, we show that competition between Protestant and Catholic missionaries increased schooling levels in form...

Fear of floating” is one of the central empirical characteristics of exchange rate regimes in emerging markets. However, while some view “fear of floating” in terms of the optimal ex post monetary response to external shocks, protecting balance sheets and avoiding inflation, others have argued that from an ex ante perspective such a policy leads to...

This article generates innovative confidence intervals for two of the most popular de-trending methods: Hodrick-Prescott and band-pass filters. The confidence intervals are obtained using block-bootstrapping techniques for dependent data. GDP trend growth and output gap intervals for the G7 economies are used as examples. This new methodology incre...

En este trabajo se desarrolla un modelo macroeconómico de equilibrio general parametrizado para la economía chilena. Las relaciones básicas del modelo son derivadas del comportamiento optimizador intertemporal de un grupo de agentes racionales. El modelo también refleja algunas características claves del mundo real ¿ como rigideces salariales de co...

This paper develops a macroeconomic general-equilibrium model fully parameterized for the Chilean economy. The model’s basic relations are derived from intertemporal optimization by a group of rational forward-looking agents. The model also adds critical real-world features – such as short-run wage rigidities and a group of myopic agents – that gen...

Friedman (1962) argued that a free market in which schools compete based upon their reputation would lead to an efficient supply of educational services. This paper explores this issue by building a tractable model in which rational individuals go to school and accumulate skill valued in a perfectly competitive labor market. To this it adds one ing...

This article generates innovative confidence intervals for two of the most popular de-trending methods: the Hodrick-Prescott and Band-Pass filters. The confidence intervals are obtained using block-bootstrapping techniques for dependent data. As an example, we present GDP trend growth and output gap intervals for the G7 economies. This new concept...

This paper provides empirical evidence on some of the microeconomic effects of the capital controls introduced in Chile during the 1990s, in particular, the unremunerated reserve requirement (URR). By looking at financial statements for a group of 73 Chilean firms during 1986–2001, the paper attempts to identify the effects of the URR on the firms'...

This papers highlights the evolution of offici al international reserves in several developed countries that have transited towards a scheme of Inflation Targeting (IT) and/or floating exchange rates. The aim is to find stylized facts and draw lessons of interest to other countries, such as Brazil, Chile and Mexico, which have revamped their moneta...

Este trabajo analiza la experiencia chilena de los años noventa con el uso de controles de capital. En particular, usando datos contables para un grupo de 73 empresas durante 1986-2001, el trabajo mide los efectos del encaje a los flujos de capital sobre la estructura y el costo de financiamiento de las empresas. Este trabajo es el primer intento p...

Este trabajo destaca la evolución de las reservas internacional oficiales en países desarrollados que han transitado a esquemas de metas de inflación y/o flotación cambiaria. Encontramos varios resultados que son de interés para las políticas económicas de países emergentes, tales como Brasil, Chile y México, que han transitado a esquemas monetario...

This paper presents a theoretical model and empirical estimations to evaluate the effects of competition on school quality. Empirical estimations, using roughly 5,000 Chilean schools in the 1994-1997 period and econometric techniques robust to endogeneity, support the theoretical model and show a positive and relevant effect of competition on the r...

New empirical evidence with regards to the effectiveness and efficiency of Chile's capital controls is provided here, based on more and better data on the range of controls and a broad assessment of their costs and benefits. The paper concludes that capital controls have been partially effective by raising the wedge between domestic and foreign int...

The objectives of this paper are, first, to describe the developments in Chilean financial markets at the macroeconomic level and, then, to examine their effects at the level of firms. After reviewing the main government policies towards financial markets in the last three decades, the paper describes the remarkable changes and progress in the bank...

This paper presents a theoretical model and empirical estimations to evaluate the effects of competition on school quality. Empirical estimations, using roughly 5,000 Chilean schools in the 1994-1997 period and econometric techniques robust to endogeneity, support the theoretical model and show a positive and relevant effect of competition on the r...

Economic growth in Chile since the mid 1980s has been remarkable for its high level and persistence. This paper explores the factors behind the high growth rates of the past 15 years and analyzes the extent to which they can be sustained in the future. The first part of the paper presents some stylized facts about growth in Chile. Taken together, t...

En este documento se comparan los resultados de la aplicación de distintos filtros de remoción de tendencia, aplicados a la serie del Índice Mensual de Actividad Económica de Chile (IMACEC), utilizando bases de datos en tiempo real. Se demuestra que las revisiones a los datos son extremadamente importantes, que pueden conducir a estimaciones sistem...

This is the first broad cross-country assessment of the ties between financial structure—the mix of financial instruments, institutions, and markets in a given economy—and economic growth since Raymond Goldsmith's 1969 landmark study. Most studies focus on developed countries and compare bank-based and market-based systems. Debates over the relativ...

This paper compares the results of applying several detrending methods to the Chilean monthly economic activity index (IMACEC) using real-time data sets. We show that data revisions are extremely important and that they can lead to systematically inconsistent estimates of the trend component. Furthermore, most of the filters commonly used to detren...

This paper studies empirically the relation between household economic saving (including durable good purchases) and the business cycle using Chilean data. The data show that the relation between household saving and the business cycle is given by the durable consumption dynamics.Consequently, a group of econometric regressions are made in order to...

Saving behavior at the household level in Chile has not been analyzed in recent decades. Based on 1988 and 1996-1997 Chilean microeconomic evidence (Household Budget Survey), this article studies household saving behavior. The analysis is extended to include broader definitions of saving such as investment in human capital and durable goods purchas...

El objetivo de este trabajo es desarrollar una metodología para construir series estadísticas consistentes nominales y reales sobre las compras, el consumo y el stock de bienes de consumo durables para la economía chilena en el período 1981-1999 con frecuencias anual y trimestral. Adicionalmente, el trabajo explora las diferencias entre este tipo d...

El comportamiento del ahorro de los hogares no ha sido analizado en Chile en las últimas décadas usando evidencia de origen micro. Este trabajo utiliza las Encuestas de Presupuestos Familiares de 1988 y 1996-1997 para presentar un análisis del comportamiento de ahorro de los hogares chilenos. El análisis se extiende para definiciones más amplias de...

This article presents alternative output trend theories and discusses different estimations for Chile’s GDP, using quarterly data from 1986 to 2001. Among methods considered are the Hodrick-Prescott filter, Quadratic and Gaussian kernels, the wavelets filter, and structural vector autoregressive models (SVAR). Output trend estimates are very sensit...

This study aims to establish the statistical probability that workers who are not contributing to pension funds might do so, provided with the right incentives to. Chile was used as a case study for this purpose. First, voluntary savings schemes were reviewed and compared with similar systems in the region. Based on this information, an analysis ha...

This paper presents a methodology to build series of purchases, consumption, and stocks of durable goods for the Chilean economy in the 1981-1999 period. The estimated series -both nominal and real- are presented in quarterly and annual frequencies. In addition, the paper explores the differences in their dynamic structure with regards to the evolu...

The objectives of this paper are, first, to describe the developments in Chilean financial markets at the macroeconomic level and, then, to examine their effects at the level of firms. First, the paper describes the remarkable changes in the size, activity, and efficiency of the banking sector and other capital markets (bond, stock, pension and ins...

El objetivo de este trabajo es describir el desarrollo de los mercados financieros en Chile a nivel macroeconómico, y luego examinar los efectos de este desarrollo en un conjunto de empresas. Para ello, el trabajo evalúa los cambios observados en el tamaño, nivel de actividad y eficiencia de los principales mercados financieros durante las décadas...

El comportamiento del ahorro de los hogares no ha sido analizado en Chile en las últimas décadas usando evidencia de origen micro. Este trabajo utiliza las Encuestas de Presupuestos Familiares de 1988 y 1996-1997 para presentar un análisis del comportamiento de ahorro de los hogares chilenos. El análisis se extiende para otras formas de ahorro como...

Saving behavior at the household level in Chile has not been analyzed in recent decades. Based on 1988 and 1996-1997 Chilean microeconomic evidence (Household Budget Survey), this article studies household saving behavior. The analysis is extended to include broader definitions of saving such as investment in human capital and durable goods purchas...

This article presents the results of an exploratory study on ethical perceptions and management attitudes at different organizational levels of firms operating in Chile. It analyzes the differences as a function of a set of objective characteristics of the firms included in the sample. This study is pioneer in its kind in Chile and, as such, it pos...

I investigate the effects of voucher-school competition on educational outcomes. In my model, parents decide between public schools and voucher schools (that is, private schools that receive a voucher for each enrolled student). The public schools have no direct incentive to produce quality, beyond meeting a minimum enroll-ment level and voucher sc...

El objetivo de este trabajo es desarrollar una metodología para construir series estadísticas consistentes nominales y reales sobre las compras, el consumo y el stock de bienes de consumo durables para la economía chilena en el período 1981-1999 con frecuencias anual y trimestral. Adicionalmente, el trabajo explora las diferencias entre este tipo d...

This paper examines the effects of inter-school competition on student outcomes by using exogenous variation in the availability of private schools in Chile. Given that naïve estimates of the effects of competition on student outcomes are biased by endogenous entry of schools, this paper uses variation in the number of Catholic priests per capita i...

Desde mediados de la década de los ochenta, el crecimiento en Chile ha destacado por su alto nivel y por su persistencia. Este artículo trata de dar algunos indicios acerca de los factores del alto crecimiento económico de los últimos 15 años y analiza hasta qué punto éstos son sostenibles en el tiempo. La primera parte de este artículo presenta al...