Editors’ Summary

This issue of Economía consists of four papers. The first paper by Gladys López-Acevedo and Mónica Tinajero-Bravo looks at the effects of several programs aimed at small and medium-sized enterprises in Mexico on firm performance in the long term. The second paper by Eduardo Lora and Johanna Fajardo compares perception of one’s social ranking with objective measures of social ranking to find that there is a large difference between the two, partly because individuals incorporate a wide variety of wealth measures in their assessment apart from income. Verónica Amarante, Mery Ferrando, and Andrea Vigorito study the effects of conditional cash transfers on school attendance and child labor among teenagers in Uruguay in the third paper. Finally, Rodrigo Taborda discusses possible media bias in the reporting of exchange rate–related news during revaluation episodes in comparison with reporting during devaluation episodes in the fourth and last paper of this volume.

In the first paper, Gladys López-Acevedo and Mónica Tinajero-Bravo estimate the effects of a variety of support programs aimed at small and medium-sized enterprises in Mexico by using a novel ten-year panel data set of firm-level data from 1994 to 2005. These programs comprise primarily business development services such as consulting services, training programs for workers, quality control practices, and export promotion, among others, and programs that support R&D activities. Rigorous evaluations of such programs are scarce, particularly in developing countries, owing to lack of appropriate data sets that contain longitudinal information and allow some correction for self-selection into program participation. López-Acevedo and Tinajero-Bravo link a firm panel data set with program participation information from a different source to estimate treatment effects by using fixed-effects models. The longitudinal dimension of the data proves to be extremely useful in allowing identification of effects that take a long time to realize after program participation begins.

The results indicate that three of the four programs for small and mediumsized enterprises assessed have been successful in improving firm outcomes such as sales, value added per worker, and exports. Programs that promote R&D activities have been particularly effective in these dimensions. However, these effects only show after three to four years following the start of program participation, so they are undetectable in cross-section data sets or panel data sets with a shorter span. In some cases, effects continue to increase (as much as threefold) from year 3 to year 10 of program participation.

Alessandro Maffioli highlights several contributions of the paper. He notes that the construction of a long-term panel data set allows López-Acevedo and Tinajero-Bravo to address a variety of questions unanswered in the literature, owing to lack of appropriate data. However, Maffioli also indicates that it would have been extremely useful to understand not only individual program effects but also complementarities among them. In particular, the possibility of understanding coordination and sequencing of different policy instruments available for small and medium-sized enterprises is important for policy design.

In the second paper, Eduardo Lora and Johanna Fajardo use a rich data set for sixteen Latin American countries to assess the gap between perceived social ranking and objective social ranking based on income measures. After showing that the gap is large, the authors proceed to explore the factors that most explain this difference. By using the usual definitions of middle class (income ranges from US$2 to US$13 per day or from 0.5 to 1.5 times the median income), the authors show that only 69 percent of middle-income individuals classify themselves as such according to the first definition and only about 45 percent do so according to the second one. The authors indicate that individuals consider a wide variety of measures of wealth apart from income when assessing their social ranking. These include human capital (education), access to financial services, access to public utilities, and ownership of durable goods such as a car, washing machine, television, or computer, and they also consider the presence of children in the household...