Book Description

The main objective of this dissertation is to study some of the mechanisms suggested by the economic literature as factors that could prevent individuals from attaining certain domains of well-being. This thesis is divided in three independent essays providing new evidence on three issues within the field of economic development: the effect of social networks on immigrants' labor market outcomes (first essay), the long-lasting impact of income inequality on entrepreneurial success and job creation (second essay), and the importance of multiple abilities, parental educational background and race in explaining educational gaps (third essay). I explain the goal and findings of these three essays next. The first essay "The impact of social networks on immigrants' employment prospects: the Spanish case 1997-2007" analyzes the factors that could affect immigrants' integration in the host country. Specifically, I study the extent to which social networks affect job match and wages for immigrants in Spain. By focusing on social networks impact on labor market outcomes, I contribute to the empirical literature by addressing a less explored channel through which immigrants' social and economic integration could be affected. The findings suggest that social networks are likely to help immigrants to find a job in the short-run, but may limit opportunities to fully integrate in the longer term. These results shed light on the importance of social networks preventing immigrants' integration, as well as help to orientate the design of integration policies for immigrants living in Spain. The second essay "The Long-Term Effect of Inequality on Entrepreneurship and Job Creation" studies the extent to which initial conditions understood as income inequality in 1700s and 1800s, and credit market institutions, can condition entrepreneurship and job creation to flourish over time. This essay adds to the literature on the long-lasting effects of income inequality on economic development by empirically testing the predictions of the model by Banerjee and Newman (1993). This model predicts that countries with initially low income inequality would grow over time aided by a strong entrepreneurial sector. A contrasting equilibrium could be reached if a country starts with a high ratio of poor to wealthy people. In this case development runs out of steam. The findings of this essay give empirical support to the predictions of the model, showing that historical income inequality and current credit market imperfections prevent firms to be created and surviving over time, at the time that affect job creation over time. To the best of our knowledge, this article is the first one that tests the long-term effects of inequality on occupational choice. The third essay, entitled "Schooling progression in Uruguay: why some children are left behind?" studies the impact of parental traits on children's educational attainment in Uruguay. Specifically, I analyze whether long-term parental background, crystallized by parental educational background, race, cognitive and non-cognitive abilities, and short-term family income measured by the opportunity cost of education, affect child' schooling progression, and at what stage of the educational path they take on their importance. The results show that parental educational background, cognitive and non-cognitive abilities have effects of diverse magnitude across stages of the educational path. Long-term parental background has increasing effect over the children's schooling progression in comparison to short-term parental income as it decreases its significance when students progress to higher schooling stages. Specifically, cognitive ability has increasing effects on the students' likelihood of dropping out across the educational path. Motivation and risky behavior measuring non-cognitive ability also influence children's schooling completion at early stages of education.