Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

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Notice that when λ= 0 (the standard Salop case), we obtain from (1) and (2) w o = p - b Equations (1) and (2) provide two constraints to the equilibrium wage w o . The third and final restriction is that for a given τ, as we decrease the number of firms the wage must also increase to achieve the target utility. Worker utility (in a pooling equilibrium with wage w o ) is the number of firms, 1/b, times the total utility of workers hired by each firm: 2 ∫ b 2 o b ( w − s − x) dx = w o − s − b 0 4 This utility is larger than τ if and only if o b o b w − s − ≥ τ ⇔ w ≥ τ + s + (3) 4 4 We now present one important result: as competition decreases (enough), anger is more likely. The following proposition shows that as competition decreases, a pooling equilibrium is less likely. But since pooling equilibria have no anger, and separating equilibria do (in expected terms there will be some selfish firms), when pooling equilibria disappear, anger appears. Proposition 1. There is a critical n* such that for all n′> n ≥ n*, the set of pooling wages is smaller when there are n firms than when there are n′. That is, as competition decreases, anger is more likely. Proof. Define b* so that equations (3) and (1) hold with equality and are equated: * b * * 4 τ + s + = p − b ⇔ b = ( p − s −τ ) 4 5 Let n*=1/b*. For b* > b the set of equilibrium wages is increasing in b (decreasing in n) because: equation (3) is not binding; the slope of (2) is smaller (in absolute value), than the slope of (1). QED The plot below illustrates the three constraints on w o imposed by equations 1-3. The wage w o must lie between the two loci with negative slopes (the flatter one is equation 2 and the steeper, 1) which arise from the firms’ incentives not to deviate. The wage must also lie above the positively sloped constraint (equation 3 that arises from the condition that fewer firms imply higher wages if workers are to obtain their target utilities).
Admissible Region Bounds on w b Next we present another relevant result, connecting the productivity of firms, the rise in anger, and the possible subsequent regulation. This result provides a potential explanation for why people in less developed countries don't like capitalism. If productivity is lower and more volatile in LDCs, that would explain why capitalists and capitalism are not popular. Proposition 2. When productivity decreases, or when it becomes more volatile, anger is more likely. Proof. When productivity decreases, the two loci of equations (2) and (1) move downwards by the amount of the decrease in productivity. Since equation (3) is unchanged, the set of pooling equilibrium wages shrinks. A larger volatility in productivities makes it more likely that a low (pooling breaking) cost will happen, and then the selfish firms will reveal themselves as such and anger will arise. QED An interesting point to note is that higher variability in productivity in LDCs could be the consequence of higher regulations to begin with: firms in sectors with a comparative advantage could have higher worker productivities while firms in protected sectors, lower productivities (even considering government regulations to protect them). In a sense, then, Peronism by introducing distortions generates anger towards capitalists, and perpetuates the beliefs that Peronism fostered. The next result illustrates another obvious feature of the rise in anger: when for some exogenous reason workers become “captive” of one particular firm, anger is more likely. The mechanism is as one would expect: when worker's labor elasticity of supply decreases, local monopolies have
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Exceptional Argentina Di Tella, Gla
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A third explanation of Argentina’
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Maddison's "Western Offshoots" by l
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A final point on this mechanistic a
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GDP in 1900 at 12,100 (in constant
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nationalized railways and banks, to
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country interacted with initial con
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1900. As there is an extremely stro
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Between the 1940s and 1970s income
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particularly in terms of food consu
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Even before the 2001 crisis, Argent
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Scandinavia and Northern Europe the
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Figure 4. A modified Human Developm
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Figure 6. Per capita GDP across Arg
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production 15 . Moreover, beyond st
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Figure 10. Average weight of export
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etween the prewar export-led growth
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which was wholly bound to local dem
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protectionism", certainly stronger
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agricultural pastures and cropland
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far. Argentina's differential popul
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Appendix Figure A. 1. Argentina's r
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Peru 35 38 25 34 34 34 32 29 26 27
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Like the Llach paper, the Campante
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I. Introduction Both Buenos Aires a
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across the ocean. Over the course o
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Buenos Aires’ hinterland rose dra
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significantly greater education lev
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Why is there such a difference in l
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illion dollars today). Each Chicago
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Chicago also appears to have been a
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casualties. Roca secured the presid
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capital to St. Petersburg he was pr
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and the logarithm of per capita GDP
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Moreover, years of schooling today
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y its overwhelming political import
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200 Figure 2a: Annual Wage Data 187
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Figure 3: Real Monthly Wages in Chi
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Log GDP per capita 2000 5 6 7 8 9 1
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Figure 7 Log GDP per capita 2000 7
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Table 2: Top 5 Industries in Chicag
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Table 4: 19th Century Variables and
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A simple calculation suggests that
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toy model with a minimum of paramet
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were lifted, but import taxes remai
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to compute that the MPK term above
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versus foreigners, on most occasion
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X institutions policies income p
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series variation. The coincidence o
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Figure 1—The Great Divergence and
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Figure 3—Trade taxes
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Transition Remarks The previous ess
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CHAPTER FOUR Argentine Trade Polici
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Argentine comparative advantage lie
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thousands of product lines in Argen
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Japan). Third, the agricultural pro
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different preferences over trade pr
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two nomenclatures had to be manuall
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esult, soybeans were finally adopte
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Figure 1 Trade Openness Exports + I
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Figure 5 Relative Sectoral Protecti
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Figure 7 Average Export Taxes 0 10
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Figure 9 Average Export Taxes at 2-
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Figure 11 Evolution of Argentine Ag
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Figure 13 Yields in Agriculture: Wh
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Table 2 Livestock per Capita 1895 C
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Table 5 Mean Share of Exports (Impo
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Table 7 Tariff Statistics for perio
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Table 9 Evolution of Industrial Pro
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CHAPTER FIVE Path-Dependent Import-
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actors, and they were demanding pro
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the primary sector, using land and
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Figure 1: The Long Run: Four Region
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Finally, in the reversal of pattern
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Figure 3: Medium Run Preferences ov
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sector to give rise to a protection
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technological improvements or incre
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Argentina did relatively well when
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World War, a second globalization e
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Argentine primary sector and ensure
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Clearly, world market conditions we
Page 163 and 164: for the years to come. The most imp
Page 165 and 166: governments zigzagged in their poli
Page 167 and 168: public spending on infrastructure s
Page 169 and 170: understand the rise of the urban-ru
Page 171 and 172: To sum up, by the beginning of the
Page 173 and 174: has a comparative advantage in the
Page 175 and 176: L λ = m L K κ = m K That is, λ i
Page 177 and 178: K c a = 1− α 1−α T A ( κ )
Page 179 and 180: Given a set of parameters ϒ , φ a
Page 181 and 182: consumption of good i. For any agen
Page 183 and 184: Proposition 3 In the short run, pro
Page 185 and 186: ρ 1/ 1 ρ ρ 1 ( ξ ξ ) 1 TT K ,
Page 187 and 188: Up to 2008, the FPV government had
Page 189 and 190: negative correlation between the pr
Page 191 and 192: policies would, supposedly, eviscer
Page 193 and 194: I. Introduction In a seminal study,
Page 195 and 196: terms, Peronist beliefs in the 1990
Page 197 and 198: Several authors have emphasized the
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Page 201 and 202: of already available information. A
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Page 205 and 206: Argentines (who implement these pol
Page 207 and 208: opinion about elements of capitalis
Page 209 and 210: intense (the proportion is under 1.
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Page 213: cost of the deviating firm, since w
Page 217 and 218: The previous proposition may be par
Page 219 and 220: and note that Peron insists on the
Page 221 and 222: Appendix 2: Definitions of Variable
Page 223 and 224: Table II: The Beliefs of Peronists
Page 225 and 226: Transition Remarks The previous cha
Page 227 and 228: CHAPTER SEVEN A Short Episodic Hist
Page 229 and 230: the income distribution between 193
Page 231 and 232: empirical evidence and on existing
Page 233 and 234: of commodities. The country was off
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Page 237 and 238: Argentina in 1942 (4.1%) is not ver
Page 239 and 240: This change in inequality is also r
Page 241 and 242: 1982, when Mexico’s default on it
Page 243 and 244: 1995. While growth bounced back qui
Page 245 and 246: The main characteristics of this ep
Page 247 and 248: skilled workers that more than offs
Page 249 and 250: Household Expenditure Survey. An in
Page 251 and 252: The relationship between internatio
Page 253 and 254: machinery and equipment can acceler
Page 255 and 256: occurred not only in production tec
Page 257 and 258: a relative abundance of rents to sh
Page 259 and 260: even when the number of well-off in
Page 261 and 262: and similar patterns emerge when co
Page 263 and 264: This chapter described the level an
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Transition Remarks Economic success
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CHAPTER EIGHT Why do Argentines tru
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in the 1970s and 1980s. Despite the
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Figure 5. Percentage of the populat
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analysis of the Argentinean and Chi
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observationally equivalent individu
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the low rank policeman. 13 4. The C
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Figure 7. Share of people having a
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6. Why did the Argentinean Police d
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instability, σ, a worried leader h
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the deeper question of why the Arge
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Table 2. Comparative facts for cano
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of formal education, whereas in the
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only bargaining tool to get money.
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Table 6. Tierra del Fuego Subinspec
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4. Police deaths during the 20th ce
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Of course, these conclusions depend
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“stop go” dynamics 4 ). In fact
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income distribution and earnings gr
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Figure 2. Basic Statistics Food Clo
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Table 2 Dep. Var.: Share of food Sm
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Figure 3. Variety in food retailing
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Table 3 Dep. Var.: Share of food at
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3.3 Income distribution effects The
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Figure 6. Individual Effects Using
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Expenditure Income 5000 6000 4000 4
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Figure 10. Income distribution Dens
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Appendix A: Estimation strategy Est
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w ijt where [ ln( 1+ ∏ ) − ln(
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2.2 Income distribution effects Fol
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Appendix B: The data To run our est
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Appendix C: Additional tables C1: B
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C3: Table 3 coefficients Dummy for
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CONCLUSION 20 th century Argentina
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can be harbingers of worse things t
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Ahumada, Hildegart, Alfredo Canaves
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Barro, Robert J. 2005. “Rare Even
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Burzaco, Eugenio et al. 2004. “Ma
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Cortés Conde, Roberto and María M
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Di Tella, Rafael, Juan Dubra and Ro
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Gaggero, Horacio and Alicia Garro.
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Gerchunoff, Pablo, Fernando Rocchi
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James, Daniel. 1988. “October 17
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Maddison, Angus. 2006. The World Ec
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Piketty, T. 2003. “Income Inequal
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Spiller, Pablo and Mariano Tommasi.
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Williamson, Jeffrey G. 1995. “The
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Exceptional Argentina Di Tella, Glaeser and Llach - Thomas Piketty

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