In this paper we look at the income distribution by cohort in Chile. We construct a synthetic panel from cross section surveys and estimate the income distribution for cohorts born between 1902 and 1978. We then decompose the evolution of these distributions into age, year and cohort effects. The cohort effects show a period where inequality increases, to then decrease. We attempt to explain this evolution. The rise can be explained by variables associated with education, while the fall appears to be the consequence of a flattening of the income-age profile and hence a reduction in the returns to experience.

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 cultures before colonization as an instrument for political decentralization, I show that after controlling for the causal effect of income on schooling, the degree of democratization positively affects the development of primary education, whereas political decentralization has a positive and significant impact on more advanced levels of schooling.

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., areas in which Catholic missionaries were protected from competition from Protestant missionaries in the past). This is not surprising because most former Catholic colonies had a number of restrictions to the operation of Protestant missionaries that benefited Catholic missionaries. Therefore, our results are consistent with an economic rationale in which different rules created differences in competitive pressures faced by Catholic and Protestant missionaries.

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 may increase segregation, decrease school quality for poor students by moving good peers to other schools, and produce competition in irrelevant school attributes if parents do not care about education outcomes. Most researchers use reduced-form methods to study these claims. For instance, some papers analyze the effect of interschool competition on test scores and other measures, finding mixed evidence. 1 Other papers use a variety of methods to study the process of choice by parents. This paper uses semi-structural estimates of parents’ preferences from an earlier work to study the effects of school choice on both student welfare and socioeconomic segregation. 2 To the best of our knowledge, this is the first time school choice has been evaluated using this kind of approach, in which preferences are explicitly taken into account.

This paper presents a theoretical and empirical assessment of the operation of the Chilean voucher system. We argue that the system results critically depend on its design and regulations affecting the operation of schools. Thus, we claim that observed outcomes such as low quality, particularly for more disadvantaged students and a relatively high segregation level, are direct consequences of how the Chilean voucher system is designed. An increase in the average value of voucher and a differentiation by socioeconomic status can correct these negative outcomes. Ensuring that all schools supply a minimum quality level where parents may choose on quality grounds as well as other attributes; namely, distance, is certainly a key challenge. Unlike the textbook version of a voucher system, this implies that another instrument is needed in order to guarantee this minimum quality level.