The "border effect" literature finds that political borders have a very large impact on relative prices, implicitly adding several thousands of miles to trade. In this paper we show that the standard empirical specification suffers from selection bias, and propose a new methodology based on quantile regressions. Using a novel data set from Uruguay, we apply our procedure to measure the segmentation introduced by city borders. City borders should matter little for trade. We find that when the standard methodology is used, two supermarkets separated by 10 kilometers across two different cities have the same price dispersion as two supermarkets separated by 30 kilometers within the same city; so the city border triples the distance. When our methodology is used, the city border effect becomes insignificant. We further test our methodology using online prices for the largest supermarket chain in the country, and show that the "online border" is equivalent to the average distance from the online warehouse to each of the offline stores.
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This paper analyzes the impact of remittances on child human capital in Mexico. During the 90's and in particular after the "tequila crisis" Mexican workers increased the remittances that were sent to their homes from the United States. I will analyze the effect of such increasing source of income on child human capital decisions. Contrary to Hanson and Woodruff (2003) the results obtained from Census data indicate a positive and small effect of remittances on schooling only for children living in cities with fewer than 2,500 inhabitants and with mothers with a very low level of education. However its magnitude is not substantial.
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