Documento de trabajo
Commodity prices shocks and poverty reduction in Chile
Fecha
2017-07Registro en:
Serie de Documentos de Trabajo No. 449, Julio 2017
Autor
Álvarez Espinoza, Roberto
García Marín, Álvaro
Ilabaca, Sebastián
Institución
Resumen
This paper examines the local economic impact of large increases in metal-mining product
prices on poverty in Chile. Using household data from 1998 to 2013 and exploiting
differences in municipalities’ exposure to price changes, we provide evidence of a
reduction in poverty rates following the positive terms of trade shock of 2003. According
to our estimations, the increase in mineral prices experienced between 2003 and 2009
reduced poverty by more than 2 percentage points in municipalities relatively exposed to
the commodity boom – with at least 7% of employment in the metal-mining sector – in
comparison to municipalities with no exposure to the boom. In addition, we explore some
of the mechanisms explaining the reduction in poverty. We find significant effect of higher
products prices on wages and employment, especially for unskilled workers and for
workers employed in metal-mining industries.