Administrative Data Insights: A Chilean Study

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Research Context:

Event: BIS Consultative Council for the Americas (CCA) research network and conference.
Theme: “Macro-financial implications of climate change and environmental degradation.”
Location: Bogotá, Colombia. Dates: December 2-3, 2024.

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Research Summary

Focus:

This research investigates how inter-firm relationships in Chile affect the economic consequences of policies designed to reduce carbon emissions, such as carbon taxes. The study utilizes detailed administrative data, including customs records and real-time firm-to-firm transactions, to:

1. Measure direct CO2 emissions: Quantify emissions from fossil fuel use at the firm level.
2. Map emission propagation: Track how these emissions spread through the economy via supply chains.
3. Compare methodologies: Evaluate traditional input-output table construction against a new approach using firm-level transaction data.

Contribution:

The study makes two notable advancements:

1. Real-time Emissions Data: It establishes a detailed, up-to-date view of CO2 emissions by monitoring fuel imports and their flow through industries. This provides policymakers with more timely insights than conventional reporting.
2. Novel Ripple Effect Analysis: It introduces a new method to analyze emission spillover effects using firm-to-firm transaction data. This granular approach captures complex supply chain connections and helps identify sectors with possibly hidden costs from climate policies due to their network positions. The findings are validated against established methods, building confidence in their accuracy for policy analysis.

Findings:

sectoral Emission Dominance: Electricity generation, manufacturing, transport, and mining account for 95% of Chile’s direct CO2 emissions.
Indirect Emission insights: Indirect emissions (driven by supply chains) reveal different patterns. electricity production, while a large direct emitter, has amplified impacts due to its role as a supplier, especially to the mining sector.
Mining Sector Exposure: The mining sector, despite being less directly emissions-intensive, shows high exposure to carbon taxes due to its reliance on electricity and other inputs.
Drivers of Emissions: Exports and household consumption are responsible for nearly 90% of total emissions, highlighting the influence of global demand and local spending on Chile’s carbon footprint.
Policy implications: These findings underscore the necessity of considering both direct emissions and supply chain-linked emissions when designing policies for a fair and effective green transition.

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Abstract

This project leverages unique Chilean administrative data to explore the crucial role of production networks in shaping the macroeconomic impacts of green transition policies.

data & Methodology: Using thorough customs and firm-to-firm transaction data covering all Chilean firms, the research constructs fossil fuel consumption and direct CO2 emissions at the firm, sectoral, and aggregate levels.
emission Sources: The electricity generation sector is identified as the primary contributor to aggregate CO2 emissions, followed by manufacturing, transport, and mining, consistent with official national sources.
Supply Chain Propagation: The study analyzes how CO2 emissions propagate through the economy via input-output linkages by constructing a firm-level production network and carbon footprint using firm-to-firm transaction data from the Chilean IRS. These results are validated against traditional input-output table approaches.
Network Analysis: Findings indicate that the electricity generation sector is central to the network, with significant downstream spillover effects.Conversely,the mining sector is positioned on the periphery with extensive upstream connections.
Carbon Tax Exposure: The copper mining industry is shown to be most exposed to a carbon tax implemented economy-wide, and also to a tax specifically targeting the electricity sector.

How does Chile’s Unique identification system (RUT) contribute to the effectiveness of longitudinal studies using administrative data?

Leveraging National databases for policy Evaluation

Chile has emerged as a leader in utilizing administrative data – data routinely collected by government agencies during service delivery – for rigorous policy evaluation and improved public management. This approach, increasingly adopted globally, offers a cost-effective and timely alternative to traditional survey-based research. The Chilean experience provides valuable lessons for nations seeking to enhance evidence-based policymaking. This article delves into specific applications, challenges, and benefits of this data-driven strategy.

The Chilean Administrative Data Ecosystem

The core of Chile’s success lies in it’s centralized administrative data infrastructure. Key components include:

The Unique Identification System (RUT): A national identification number linking individuals across various government databases. This is crucial for longitudinal tracking and data linkage.

The Single Digital Identity (Cédula Digital): Enhances data security and citizen access to their own information, fostering openness.

Data Integration Platforms: Sophisticated systems allowing secure and efficient linkage of data from ministries of education, health, labor, and social growth.

Dedicated Analytical Teams: Government agencies employ statisticians and data scientists to conduct analyses and translate findings into actionable insights.

This robust system facilitates research across a wide spectrum of policy areas, from education and healthcare to social welfare and labor market dynamics.

Key Areas of Impact: Case Studies

Several impactful studies demonstrate the power of administrative data in Chile:

Education Quality & teacher Effectiveness: Researchers linked student performance data (SIMCE scores) with teacher characteristics and classroom observations to identify effective teaching practices and inform teacher training programs. This analysis moved beyond simple correlations to explore causal relationships.

Healthcare Access & utilization: Analyzing data from the National Health Fund (FONASA) and private health insurers revealed disparities in access to healthcare services based on socioeconomic status and geographic location. This led to targeted interventions to improve equity.

Social Program Evaluation: The Chile Solidario program, aimed at reducing extreme poverty, has been rigorously evaluated using administrative data to assess its impact on beneficiaries’ income, employment, and health outcomes. This iterative evaluation process allows for continuous program improvement.

Labor Market Dynamics & Unemployment Benefits: Data from the National Institute of Statistics (INE) and the employment Insurance System allowed researchers to understand the effectiveness of unemployment benefits in facilitating re-employment and mitigating the economic impact of job loss.

Data linkage Techniques & Methodological Considerations

Successfully leveraging administrative data requires careful attention to methodological challenges:

1. Data Quality: Ensuring data accuracy, completeness, and consistency across different sources is paramount. Chile employs rigorous data validation procedures and invests in data cleaning initiatives.
2. Privacy & Confidentiality: Protecting individual privacy is non-negotiable. Chile utilizes data anonymization techniques, secure data enclaves, and strict access controls to safeguard sensitive information. Differential privacy is an increasingly explored technique.
3. Causality vs. Correlation: Administrative data frequently enough reveals correlations, but establishing causality requires sophisticated statistical methods, such as propensity score matching, instrumental variables, and regression discontinuity designs.
4. Selection Bias: Individuals participating in certain programs may differ systematically from those who do not. Addressing selection bias is crucial for obtaining unbiased estimates of program impact.
5. Data Governance: Clear data governance frameworks are essential for defining data ownership,access rights,and data sharing protocols.

Benefits of Administrative Data Analysis

The advantages of using administrative data for policy evaluation are substantial:

Cost-Effectiveness: Significantly lower costs compared to traditional surveys.

Timeliness: Data is often available in real-time or near real-time, enabling rapid policy responses.

Large Sample Sizes: Administrative databases typically contain data on a large proportion of the population, increasing statistical power.

Reduced Response Bias: Eliminates the biases associated with self-reported data.

Longitudinal Data: Enables tracking of individuals and outcomes over time, facilitating the study of long-term effects.

Improved Program Targeting: Identifies individuals and communities most in need of assistance.

Practical Tips for Implementing Administrative Data Initiatives

For organizations considering adopting a similar approach:

Secure Executive Sponsorship: Strong leadership support is essential for overcoming organizational barriers.

Invest in Data Infrastructure: Develop robust data integration platforms and data governance frameworks.

Build Analytical Capacity: Recruit and train skilled data scientists and statisticians.

Prioritize Data Quality: Implement rigorous data validation and cleaning procedures.

Establish Clear Privacy Protocols: Protect individual privacy and comply with data protection regulations.

Foster Collaboration: Encourage collaboration between government agencies, researchers, and the private sector.

* Embrace Open Data Principles: Were appropriate and privacy-preserving, make anonymized data publicly available to promote transparency and innovation.

The Future of administrative Data in Chile & beyond

Chile continues to refine its administrative data ecosystem, exploring new technologies like machine learning and artificial intelligence to enhance analytical capabilities.The country is also actively sharing its experiences and best practices with other nations in Latin America and beyond, contributing to a global movement towards evidence-based policymaking. The increasing availability of data and advancements in analytical techniques promise to unlock even greater insights from administrative data