Reparations

Abstract

Can reparations for victims of human rights violations help rebuild lives? We estimate the effects of reparations across the life cycle, leveraging variation induced by Colombia’s program for victims of the internal armed conflict. The reparations consist of large, one-off, lump-sum payments of up to 10,000 USD (PPP 26,000 USD) and represent, on average, three times recipients’ annual household income. We link comprehensive national administrative panel microdata and measure numerous individualand household-level outcomes, includingwork and living standards, health care utilization, and intergenerational impacts on victims’ children. We exploit the staggered rollout of reparation payouts and the unexpected timing of their receipt using event study approaches and document three main sets of results. First, reparations cause an immediate decrease in the probability of formal employment driven by shifts out of low-pay, high-risk, salaried jobs. Three years after receipt, victims have higher wages and are more likely to own an active business. Second, reparations cause an economically meaningful decrease in health care utilization, consistent with improved health due to better working and living conditions. Third, reparations increase high school test scores and college attendance rates of victims’ children. We conclude that the large transfers of money provided by reparations allow households to make fundamental investments, narrow the gaps formed due to conflict, and appear to be an effective policy tool to promote recovery and development. JEL: H31, H50, I2, I38, D74 ∗Corresponding author: Arlen Guarin is Ph.D. Candidate in Economics at the University of California, Berkeley, aguariga@berkeley.edu. Juliana Londoño-Vélez is Assistant Professor of Economics at UCLA and NBER Faculty Research Fellow, j.londonovelez@econ.ucla.edu. Christian Posso is Researcher at Banco de la República de Colombia (Central Bank), cpossosu@banrep.gov.co. We are grateful to Emmanuel Saez, Edward A. Miguel, Hilary Hoynes, and David Card for their helpful feedback, support, and encouragement. We thank Kaveh Danesh, Fred Finan, Rema Hanna, Ana María Ibáñez, Larry Katz, Supreet Kaur, Pat Kline, Adriana Lleras-Muney, Enrico Moretti, Paul Niehaus, Jesse Rothstein, Yotam Shem-Tov, Catalina Vallejo, and Christopher Walters for insightful suggestions, aswell asmany seminar participants for helpful comments. We thank Badir Ali Badran, Juan Sebastián Vargas, CarlosMedina, Fabio Sánchez, and Santiago Rengifo for their generous help and feedback. Silvia Granados, Sara Londoño, Nicolás Mancera, Brayan Pineda, Estefanía Saravia, and Santiago Velásquez Bonilla provided outstanding research assistance. Arlen and Juliana gratefully acknowledge financial support from the Center for Effective Global Action, theWeiss Family Program Fund, and the Center for Equitable Growth at UC Berkeley. The findings, interpretations, and conclusions expressed in this paper do not necessarily reflect the views of Banco de la República or its Board of Directors.