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This paper studies the design of education policies in a setting in which optimal redistributive labor taxation is available. It is usually argued that the crucial parameter to guide education policy is the complementarity of education and ability. This is true only when labor supply is fixed or when income taxes are not allowed. I show that, if labor supply is endogenous and if the government can tax income in a nonlinear way, the crucial parameter is how the education elasticity of wage changes with ability. Taking the elasticity criterion into account, education subsidies are optimal in cases in which, under the complementarity criterion, education taxes would be optimal. To do this, I use an asymmetric information setting that motivates nonlinear taxation of income and education. © 2007 Springer Science+Business Media, LLC.

En éste artículo considero el papel de las políticas educativas dentro de un esquema de redistribución del ingreso cuando los individuos difieren en dos parámetros: habilidad y riqueza heredada. Discuto la diferencia entre las reglas que emergen cuando los individuos difieren en sólo uno de estos parámetros y cuando difieren en los dos. La conclusión principal es que la forma de la regla que emerge cuando los individuos difieren sólo en su habilidad es la misma que cuando difieren en habilidad y riqueza heredada. La diferencia entre las reglas que emergen en las dos situaciones es en la manera de implementarlas y no en la forma de la diferencias entre las asignaciones de educación. ; In this paper I consider the role of education policies in redistribution of income when individuals differ in two aspects: ability and inherited wealth. I discuss the extent to which the rules that emerge in unidimensional settings apply also in the bidimensional setting considered in this paper. The main conclusion is that, subject to some qualifications, the same type of rules that determine optimal education policies when only ability heterogeneity is considered apply to the case where both parameters of heterogeneity are considered. The qualifications pertain to the implementation of the optimal allocation of resources to education and not the way the optimal allocations first- and second-best differ.

ABSTRACTWe model the decisions of young individuals to stay in school or drop out and engage in criminal activities. We build on the literature on human capital and crime engagement and use the framework of Banerjee (1993) that assumes that the information needed to engage in crime arrives in the form of a rumour and that individuals update their beliefs about the profitability of crime relative to education. These assumptions allow us to study the effect of social interactions on crime. In our model, we investigate informational spillovers from the actions of talented students to less talented students. We show that policies that decrease the cost of education for talented students may increase the vulnerability of less talented students to crime. The effect is exacerbated when students do not fully understand the underlying learning dynamics.

Abstract
Using a simple model to characterize adolescents' behavior, we show that the effect of educational Conditional Cash Transfer (CCT) programs on teenage pregnancy depends on the limits and conditions of the programs. The model shows that when benefits are conditional on school success or when the program has a binding duration limit, the CCT reduces teenage pregnancy rates. Using original data, we estimate this relation for two different CCT programs implemented in Bogotá, Colombia. The two programs differ in that only one of them conditions benefit renewal on school success. The empirical results are consistent with the predictions of the model. Only the program that conditions renewal of the transfer, reduces average teenage pregnancy rates. We also find that, also consistent with our model, the other program reduces teenage pregnancy rates only for those girls for which the duration limit is binding.

Abstract
This paper characterizes the labor market of youth in Colombia from 2008 to 2017. We estimate labor market indicators for individuals aged between 14 and 28 years using microdata from Colombia's household surveys over the study period. Our estimates document the main patterns and trends in the labor market of youth in labor force participation, employment, unemployment, informality, and earnings. We compare these statistics with the same indicators of adults (individuals aged between 29 and 65 years), and explore differences in characteristics within youth such as gender, region, educational attainment, socioeconomic status (SES), and experience. Results indicate that participation rate of young Colombians have increased in recent years, but are mainly employed in low-quality jobs namely unsalaried and informal. We also document marked inequalities in labor market outcomes across youth characteristics. We provide a series of recommendations to guide future youth labor policy based on these estimates as well as the critical analysis of recent youth policies in Colombia.

This paper shows that the combination of habit formation - present consumption creating additional consumption needs in the future - and myopia may explain why some retirees are forced to unretire, i.e., unexpectedly return to work. It also shows that when myopia about habit formation leads to unretirement there is a case for government's intervention. In a first-best setting the optimal solution can be decentralized by a simple Pigouvian (paternalistic) consumption tax (along with suitable lump-sum taxes). In a second-best setting, when personalized lump-sum transfers are not available, consumption taxes may have conflicting paternalistic and redistributive effects. We study the design of consumption taxes in such a setting when myopic individuals differ in productivity.

AbstractThis paper evaluates the randomized Good Drinks program in four localities of Bogotá, Colombia. The intervention encourages bartenders to adopt standardized practices that promote responsible behavior in terms of alcohol consumption with the goal of reducing alcohol‐related violence and was implemented in cooperation with Colombia's largest brewery and the city's Secretariat of Security, Coexistence, and Justice. Tracing out the relationship between alcohol consumption and violence is useful because alcohol‐related incidents often lead to more serious crimes. Our experimental design allows estimating direct and spillover effects on reported incidents within and around bars. Results show that bartenders in treatment locations sell more water and food, thus contributing to more responsible behavior by patrons. However, we find no direct or spillover effects of these changes in consumption on brawls five months after the program, but some improvement on other alcohol‐related incidents. The experience of the Good Drinks program provides a better understanding of three aspects related to alcohol regulation and policy: (i) the role bartenders can play to curb excessive alcohol consumption and promote good behavior among customers, (ii) a practical experience of using less restrictive interventions for alcohol regulation, and (iii) the value of public‐private partnerships.