nep-dev New Economics Papers
on Development
Issue of 2008‒11‒11
twenty-six papers chosen by
Jeong-Joon Lee
Towson University

  1. How useful is the Theoretical and Empirical Growth Literature for Policies in the Developing Countries? By B. Bhaskara Rao; Arusha Cooray
  2. Democracy, rule of law, corruption incentives and growth By DE LA CROIX, David; DELAVALLADE, Clara
  3. Would empowering women intitiate the demographic transition in least-developed countries? By de la CROIX, David; VANDER DONCKT, Marie
  4. Temporary and Persistent Poverty among Ethnic Minorities and the Majority in Rural China By Gustafsson, Björn; Sai, Ding
  5. Financial Development and the Distribution of Income in Latin America and the Caribbean By Canavire Bacarreza, Gustavo Javier; Rioja, Felix
  6. North-South Trade Liberalization and Returns to Skill in the South: The Case of Mexico By Otero, Rafael; Hazarika, Gautam
  7. Household Access to Microcredit and Children's Food Security in Rural Malawi: A Gender Perspective By Hazarika, Gautam; Guha-Khasnobis, Basudeb
  8. Labour market regulation and economic performance: A critical review of arguments and some plausible lessons for India By Praveen Jha; Sakti Golder
  9. Is Asia adopting flexicurity? A survey of employment policies in six countries By Vandenberg, Paul
  10. Direct versus Indirect Colonial Rule in India: Long-term Consequences By Lakshmi Iyer
  11. Social Welfare and Demand for Health Care in the Urban Areas of Côte d'Ivoire By Arsène Kouadio; Vincent Monsan; Mamadou Gbongue
  12. Effect of Import Liberalization on Tariff Revenue in Ghana By William Gabriel Brafu-Insaidoo; Camara Kwasi Obeng
  13. Distribution Impact of Public Spending in Cameroon: The Case of Health Care By Bernadette Dia Kamgnia
  14. ECONOMIC GROWTH AND GROWTH LINKAGES IN CHINA 1994-2003 By Ari, Kokko; Ljungwall, Christer; Gustavsson Tingvall, Patrik
  15. Tax Administration Reform and Fiscal Adjustment:The Case of Indonesia(2001-07) By Eric Le Borgne; John Brondolo; Frank Bosch; Carlos Silvani
  16. Chile: Trade Performance,Trade Liberalization, and Competitiveness By Brieuc Monfort
  17. The effect of male migration for work on employment patterns of females in nepal By Lokshin, Michael; Glinskaya, Elena
  18. In pursuit of balance : randomization in practice in development field experiments By Bruhn, Miriam; McKenzie, David
  19. Intrahousehold inequality and child gender bias in Ethiopia By Koohi-Kamali, Feridoon
  20. Competitiveness of the knitwear industry in Bangladesh : a study of industrial development amid global competition By Bakht, Zaid; Salimullah, Md.; Yamagata, Tatsufumi; Yunus, Mohammad
  21. Transformation of a Woodworking and Furniture Industrial District in Kampala, Uganda: Dichotomous Development of SME Cluster and Large Firm Sector By Yoshida, Eiichi
  22. The Impact of Tobacco Production Liberalization on Smallholders in Malawi By Harashima, Azusa
  23. Real economy causes of the Great Deprivation of early 21st Century By Naqvi, Nadeem
  24. The Experimental Approach to Development Economics By Abhijit V. Banerjee; Esther Duflo
  25. Post-1500 Population Flows and the Long Run Determinants of Economic Growth and Inequality By Louis Putterman; David N. Weil
  26. Paying the Piper: The High Cost of Funerals in South Africa By Anne Case; Anu Garrib; Alicia Menendez; Analia Olgiati

  1. By: B. Bhaskara Rao; Arusha Cooray
    Abstract: This paper examines a recent view of Pritchett (2006) that there is a wide gap between the theoretical and empirical growth literature and the policy needs of the developing countries. Growth literature has focussed on the long term growth outcomes but policy makers of the developing countries need rapid improvements in the growth rate in the short to medium terms. We think that this gap can be reduced if attention is given to the dynamic effects of policies. With data on Singapore, Malaysia and Thailand we show that an extended version of the Solow (1956) model is well suited for this purpose. We found that the short to medium term growth effects of investment ratio are much higher than its long run effects and persist. Dynamic simulations for Singapore showed that these short and medium run growth effects are significantly higher than the steady state growth rate for up to 10 years.
    Keywords: Solow Growth Model, Endogenous Growth, Dynamic Growth Effects of Investment Rate, Policies for Developing Countries.
    JEL: O11
    Date: 2008–10–29
  2. By: DE LA CROIX, David (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); DELAVALLADE, Clara
    Abstract: We bridge the gap between the standard theory of growth and the mostly static theory of corruption. Some public investment can be diverted from its purpose by corrupt individuals. Voters determine the level of public investment subject to an incentive constraint equalizing the returns from productive and corrupt activities. We concentrate on two exogenous institutional parameters: the "technology of corruption" is the ease with which rent-seekers can capture a proportion of public spending. The "concentration of political power" is the extent to which rent-seekers have more political influence than other people. One theoretical prediction is that the effects of the two institutional parameters on income growth and equilibrium corruption are different according to the constraints that are binding at equilibrium. In particular, the effect of judicial quality on growth should be stronger when political power is concentrated. We estimate a system of equations where both corruption and income growth are determined simultaneously and show that income growth is more affected by our proxies for legal and political institutions in countries where political rights and judicial institutions respectively are limited.
    Keywords: economic growth, corruption, rule of law, incentive constraint, political power
    JEL: O41 H50 D73
    Date: 2008–06
  3. By: de la CROIX, David (Université catholique de Louvain (UCL). Center for Operations Research and Econometrics (CORE)); VANDER DONCKT, Marie
    Abstract: We examine the pathways by which gender inequality affects fertility and hampers growth. We introduce several dimensions of gender inequality into a 2-sex OLG model with a non-unitary representation of household decision-making. We characterize a Malthusian corner regime which is characterized by strong gender inequality in education and high fertility. We find both in theory and in the data that reducing the social and institutional gender gap does not help to escape from this regime while reducing the wage gender gap lowers fertility only in countries which have already escaped from it. The key policies to ease out the countries in the Malthusian regime are to promote mother's longevity and to curb infant mortality. In the interior regime, parents consider the impact of their children education on the expected intra-household bargaining position in their future couple. Education could thus compensate against the institutional and social gender gap that still exists in developed countries.
    Keywords: gender gap, fertility, education, household bargaining.
    JEL: J13 O11 O40
    Date: 2008–07
  4. By: Gustafsson, Björn (Göteborg University); Sai, Ding (Chinese Academy of Social Sciences)
    Abstract: Poverty among ethnic minorities and the majority in rural China for the years 2000, 2001 and 2002 is investigated taking a dynamic view and using a large sample covering 22 provinces. Based on the National Bureau of Statistics' low income line, almost one-third of the ethnic minorities experienced poverty during the three years studied while the corresponding proportion among the ethnic majority was only about half as high. Still, by far most of the poor in rural China belong to the ethnic majority. The relatively high poverty rates for ethnic minorities in rural China are found to be due to higher rates of entry than for the majority, while differences in exit rates across ethnicities are few. To a large extent, ethnic poverty differences can be attributed to differences in location together with temporary and persistent poverty in rural China having a very clear spatial character. Poverty is concentrated to the western region and villages with low average income. Determinants of persistent and temporary poverty in rural China differ due to location as well as household characteristics.
    Keywords: China, poverty, ethnic minorities
    JEL: I32 J15
    Date: 2008–10
  5. By: Canavire Bacarreza, Gustavo Javier (Georgia State University); Rioja, Felix (Georgia State University)
    Abstract: One of the central concerns in Latin America and the Caribbean (LAC) has been the reduction of poverty and inequality so prevalent in the continent. Using large world samples, the literature has found that financial development increases economic growth, increases the income of the poor, and reduces inequality. This paper studies the effects of financial development on the whole distribution of income in LAC. We find that the income of the poorest quintile has not been affected by expansion in the financial system. However, we do find that financial development has had a disproportionate positive effect on the incomes of the second, third and fourth quintiles. We also find some evidence for the Greenwood-Jovanovic (1991) hypothesis that this positive effect only begins after a country crosses a certain economic development threshold.
    Keywords: distribution of income, financial development, inequality
    JEL: O11 O16 G00
    Date: 2008–10
  6. By: Otero, Rafael (University of Texas at Brownsville); Hazarika, Gautam (University of Texas at Brownsville)
    Abstract: This study examines the effect of NAFTA, an instance of North-South trade liberalization, on returns to skill in Mexico. Mexico is abundant in low-skill workers relative to the US and Canada, and so, by the Hecksher-Ohlin-Samuelson trade model, NAFTA ought to have raised the relative earnings of low-skill workers, that is, lowered returns to skill in Mexico. Analysis of Mexican labor micro-data yields the finding that while returns to skill in industries producing tradeables have risen, ceteris paribus, since Mexico embarked upon trade liberalization by joining the GATT in 1986, this rise was less pronounced by 1999 in industries liberalized relatively rapidly by NAFTA, launched in 1994, than in industries liberalized relatively slowly by this phased trade treaty. This is considered evidence of NAFTA holding back rise in returns to skill, since it is plausible such a dampening would have been more marked in industries more rapidly exposed to trade with Mexico's skill abundant northern neighbors. Hence, this study suggests trade with developed nations may lower returns to skill in developing nations. It is speculated this may slow the pace of private human capital accumulation in developing nations, with negative consequences for their economic growth.
    Keywords: NAFTA, Heckscher-Ohlin model, human capital
    JEL: F11 I21
    Date: 2008–10
  7. By: Hazarika, Gautam (University of Texas at Brownsville); Guha-Khasnobis, Basudeb (UNU-WIDER)
    Abstract: Using data from the 1995 Malawi Financial Markets and Food Security Survey, this study seeks to discover if women's relative control over household resources or intra-household bargaining power in rural Malawi, gauged by their access to microcredit, plays a role in children's food security, measured by anthropometric nutritional Z-scores. Access to microcredit is assessed in a novel way as self-reported credit limits at microcredit organizations. Since credit limits, that is, the maximum sums that might be borrowed, hinge upon supply-side factors such as the availability of credit programs and the financial resources of lenders, it is plausible they are more exogenous than demand driven loan uptake or participation in microcredit organizations, the common ways of gauging access to microcredit. It is indicated that whereas the access to microcredit of adult female household members improves 0–6 year old girls', though not boys', long-term nutrition as measured by height-for-age, the access to microcredit of male members has no such salutary effect on either girls' or boys' nutritional status. This may be interpreted as evidence of a positive relation between women's relative control over household resources and young girls' food security. That women's access to microcredit improves young girls' long-term nutrition may be explained in part by the subsidiary finding that it raises household expenditure on food.
    Keywords: intra-household distribution, bargaining, microcredit, gender, Malawi
    JEL: O15
    Date: 2008–10
  8. By: Praveen Jha; Sakti Golder
    Keywords: labour flexibility / labour market / labour policy / labour law / India
    Date: 2008
  9. By: Vandenberg, Paul (International Management Institute, New Delhi)
    Abstract: The survey analyzes policies that provide flexibility for employers and security for workers in Asia. The cases exhibit distinct sub-regional patterns. India and Sri Lanka, in South Asia, provide (employer-based) ‘employment security’ and have not transitioned to broader systems of ‘labour market security’ as envisioned by the flexicurity model. China and Korea, in Northeast Asia, have made that transition over the past decade by reducing restrictions on retrenchment while introducing unemployment insurance and active measures. In Southeast Asia, Singapore and Malaysia offer flexible systems with strong active policies but low security in terms of employment protection and passive measures. The above characterizations apply to the formal economy. In China, India and Sri Lanka, where the informal and rural economies are large, governments have used public works, self-employment programs and skills training to support labour market outcomes.
    Keywords: Labour flexibility / employment security / employment policy / labour policy / China / Korea R / India / Malaysia / Singapore / Sri Lanka
    Date: 2008
  10. By: Lakshmi Iyer (Harvard Business School, Business, Government and the International Economy Unit)
    Abstract: This paper compares economic outcomes across areas in India which were under direct British colonial rule with areas which were under indirect colonial rule. Controlling for selective annexation using a specific policy rule, I find that areas which experienced direct rule have significantly lower levels of access to schools, health centers and roads in the post-colonial period. I find evidence that the quality of governance in the colonial period has a significant persistent effect on post-colonial outcomes.
    Keywords: colonial rule, development, public goods
    JEL: O11 P16 N45
    Date: 2005–01
  11. By: Arsène Kouadio; Vincent Monsan; Mamadou Gbongue
    Abstract: This paper analyses the relationship between the demand for health care and that for health insurance by the population of Côte d’Ivoire. A Poisson model is used to estimate the demand for health care and a multinomial logit model for estimating the demand for insurance. The data on which the research was based were taken from a sample of 2,040 households that were interviewed as part of a survey on Recours aux soins et dépenses de santé or PSA 92 (Health care use and health expenses, or PSA 92), which was carried out in 1992 in Yopougon, a working class neighbourhood of Abidjan. The results show that the length of the illness appears to be the factor that triggers the use of modern health care. They also indicate that employment and age are important factors in making decisions about which insurance to take. Extending the data collection system to the rural population, or generalizing it to the whole population, and gaining a better definition of the variables “state of health”, “consulting a health service”, “behaviour of the insured person and of the insurance company vis-à-vis health services” should be envisaged to refine the research. All this will lead to a better grasp of the problems of moral hazard and adverse selection in Côte d’Ivoire’s health system as a result of the minimizing costs of the implementation of the expected Universal Health Insurance (AMU).
    Date: 2008–07
  12. By: William Gabriel Brafu-Insaidoo; Camara Kwasi Obeng
    Abstract: In contributing to the ongoing debate on the impact of trade liberalization, this paper investigates the quantitative effect of import liberalization on tariff revenue in Ghana. A decomposition analysis was conducted to determine the relative effects of the different features of the import policy reforms. In addition, the impact of tariff rate reductions on tariff revenue was inferred using estimated results from the real imports equation. The study indicates that import tariff revenue is neither buoyant nor elastic in Ghana. Even though exchange rate depreciation over the liberalization period has increased tariff revenue, it is offset by the revenue-reducing effect of tariff reductions over this period. Moreover, the net effect of import liberalization in the form of reductions in the average tariff rate has been negative. The study recommends further improvements in customs administration and duty collection mechanisms to reduce leakage, an effective detection of evasion, enforcement of penalties, and tax replacements as key complementing measures.
    Date: 2008–06
  13. By: Bernadette Dia Kamgnia
    Abstract: The study assessed Cameroonians’ participation in public health care services in order to grasp the distributional effects of those services. Three specific objectives are specified: determine the extent to which public spending on health care may constitute a targeted means for poverty reduction; identify the determinants of participation in health care services in general and in public services in particular; and propose alternative health care policies compatible with the government’s concern for poverty alleviation. In a benefit incidence analysis, it is shown that the benefits acquired from using publicly funded health care services are globally progressive. Integrated health care centres are chosen because of their nearness. Households appreciate the quality of services provided at the peripheral health care centres. Private health care is chosen because of the quality of the service, and people go to traditional healers or resort to self-medication because of the low cost. The majority of the considered factors – cost, nearness, revenue, education, age, gender and illness – had the expected sign and significantly affect the choice of health care providers. But for educated individuals who are employed in the formal sector, nearness and cost are the key variables in the design of health care policies.
    Date: 2008–05
  14. By: Ari, Kokko (European Institute of Japanese Studies); Ljungwall, Christer (China Economic Research Center); Gustavsson Tingvall, Patrik (China Economic Research Center)
    Abstract: This paper investigates to what degree neighboring Chinese provinces were linked to each other in terms of economic growth, income levels, and foreign direct investment during the period 1994-2003. When looking at mainland China, we find that both the level of income and the rate of income growth in a province depend on developments in neighboring provinces. However, we find no evidence of any positive interdependence between growth in rich coastal provinces and their immediate inland neighbors. This suggests that there has been little harmonization in economic growth rates between these regions, and that the immediate hinterland of the coastal growth centers might be bypassed as China’s manufacturing sector is moving west.
    Keywords: Domestic integration; growth interdependence; China’s Economy
    JEL: F14 F15 O53
    Date: 2008–10–01
  15. By: Eric Le Borgne; John Brondolo; Frank Bosch; Carlos Silvani
    Abstract: Tax administration reforms can play an important role in fiscal adjustment. This role is examined by reviewing Indonesia's tax reform cum fiscal adjustment experience since 2001. The paper describes Indonesia's fiscal adjustment strategy, its tax administration reforms, and assesses the impact of these reforms on fiscal adjustment. Evidence suggests tax administration improvements had a strong positive impact on the tax yield and a positive effect on the investment climate. Lessons are presented for designing tax administration reforms within the context of a fiscal adjustment program and reform priorities are identified for Indonesia's ongoing efforts to strengthen tax administration.
    Keywords: Indonesia , Tax administration , Tax reforms , Fiscal reforms , Investment ,
    Date: 2008–05–22
  16. By: Brieuc Monfort
    Abstract: This paper analyses the evolution of Chile's trade between 1990 and 2007, studying in particular the impact of trade liberalization in addition to traditional price and demand determinants. The results show that export and import flows are mainly responsive to external and domestic demand, and less so to relative prices, although there is a small impact on imports. In addition, the analysis suggests that trade liberalization may have played a role in increasing exports and imports. Estimations of trade elasticities for other countries in Latin America tend to confirm the results found for Chile.
    Keywords: Chile , Trade liberalization , Competition , Exports , Imports ,
    Date: 2008–05–22
  17. By: Lokshin, Michael; Glinskaya, Elena
    Abstract: This paper assesses the impact of work-related migration by males on the labor market behavior of females in Nepal. Using data from the 2004 Nepal household survey, the authors apply the Instrumental Variable Full Information Maximum Likelihood method to account for unobserved factors that could simultaneously affect males'decision to migrate and females'decision to participate in the labor market. The results indicate that male migration for work has a negative impact on the level of market work participation by the women left behind. The authors find evidence of substantial heterogeneity (based both on observable and unobservable characteristics) in the impact of male migration. The findings highlight the important gender dimension of the impact of predominantly male worker migration on the wellbeing of sending households. The authors argue that strategies for economic development in Nepal should take into account such gender aspects of the migration dynamics.
    Keywords: Population Policies,Anthropology,Gender and Development,Housing&Human Habitats,Gender and Law
    Date: 2008–10–01
  18. By: Bruhn, Miriam; McKenzie, David
    Abstract: Randomized experiments are increasingly used in development economics, with researchers now facing the question of not just whether to randomize, but how to do so. Pure random assignment guarantees that the treatment and control groups will have identical characteristics on average, but in any particular random allocation, the two groups will differ along some dimensions. Methods used to pursue greater balance include stratification, pair-wise matching, and re-randomization. This paper presents new evidence on the randomization methods used in existing randomized experiments, and carries out simulations in order to provide guidance for researchers. Three main results emerge. First, many researchers are not controlling for the method of randomization in their analysis. The authors show this leads to tests with incorrect size, and can result in lower power than if a pure random draw was used. Second, they find that in samples of 300 or more, the different randomization methods perform similarly in terms of achieving balance on many future outcomes of interest. However, for very persistent outcome variables and in smaller sample sizes, pair-wise matching and stratification perform best. Third, the analysis suggests that on balance the re-randomization methods common in practice are less desirable than other methods, such as matching.
    Keywords: Statistical&Mathematical Sciences,Scientific Research&Science Parks,Science Education,Economic Theory&Research,Climate Change
    Date: 2008–10–01
  19. By: Koohi-Kamali, Feridoon
    Abstract: The Rothbarth model of intrahousehold resource allocation has consistently failed to detect child gender bias in many applications over the past two decades. This paper challenges the current consensus that the Rothbarth method is not effective in revealing child gender bias from consumption behavior of adults. It proposes an approach to the Rothbarth model that restricts its application to samples of nuclear households, and employs an index of child gender based on the number of children in the household and related to a specific selective mechanism of discrimination. It demonstrates the effectiveness of this approach with an application to a 2005-06 Ethiopian consumption survey of 21,299 households conducted by Ethiopia's Statistical Authority, covering both urban and rural areas. The paper presents the first clear and extensive evidence of discrimination against girls by all four adult goods employed, and the outcome persists, in various degrees, when reexamined with a lower definition of child age, and with female-headed households. The findings provide support for gender-based policies in child-health and education in Ethiopia.
    Keywords: Gender and Law,Gender and Development,Educational Sciences,Youth and Governance,Population Policies
    Date: 2008–10–01
  20. By: Bakht, Zaid; Salimullah, Md.; Yamagata, Tatsufumi; Yunus, Mohammad
    Abstract: This paper assesses the technical efficiency and profitability of the knitwear industry in Bangladesh taking into account the sector’s role in poverty reduction. While stochastic frontier analysis was invoked to assess technical efficiency, three alternative measures, namely the rate of return, total factor productivity and the Solow residual, were used to gauge the extent and determinants of the profitability of the industry based on firm-level data collected in 2001. The estimation results indicate the high profitability of the knitwear firms. In Bangladesh, the dynamic development of the industry has entailed great diversity in efficiency in comparison with the garment industries of other developing countries. While there is a significant scale effect in profitability and productivity, no supporting evidence was found for the positive impact on competitiveness of industrial upgrading in terms of usage of expensive machinery and vertical integration and industrial agglomeration.
    Keywords: Bangladesh, Knitwear, Poverty reduction, Productivity, Profitability, Stochastic frontier analysis, Apparel industry, Textile industry
    JEL: D24 J31 L67 O14 O53
    Date: 2008–10
  21. By: Yoshida, Eiichi
    Abstract: Clustering small manufacturers are believed to attain various types of collective efficiency. A woodworking and furniture SME district in Uganda has created a learning environment for artisans to start up their own workshops. In the district workers can access various managerial information including business skills and input materials easily than outside. Hence it attracted new entrants to follow and district growth continued. On contrary large firms are locating separately and dispersedly from SME district and have a negative image to SME. This dichotomy has been created partly through spatial division of two sectors and partly through policy favouritism toward large firms. Clustering small manufacturers are believed to attain various types of collective efficiency. A woodworking and furniture SME district in Uganda has created a learning environment for artisans to start up their own workshops. In the district workers can access various managerial information including business skills and input materials easily than outside. Hence it attracted new entrants to follow and district growth continued. On contrary large firms are locating separately and dispersedly from SME district and have a negative image to SME. This dichotomy has been created partly through spatial division of two sectors and partly through policy favouritism toward large firms.
    Keywords: SME, Cluster, Agglomeration, Incubation, Woodworking, Furniture, Uganda, Kampala
    JEL: D10 Q12 R10
    Date: 2008–10
  22. By: Harashima, Azusa
    Abstract: Burley tobacco production in Malawi was liberalized to permit production by smallholders in the early 1990s. The purpose of this paper is to show which smallholders began producing burley tobacco after liberalization and which smallholders still continue to produce it. Analysis of the characteristics of burley tobacco producers shows that only smallholders who had adequate farm size and adequate funds could start to produce it. With regard to the farm size requirements, only smallholders who had enough acreage to sell tobacco on the auction floors and who had enough acreage to rotate crops could start to produce. With regard to the financial requirements, only smallholders who could procure funds through informal institutions or who possessed their own capital to meet the necessary agricultural expenditures could start. So, it was only the wealthy households which could start to produce tobacco after liberalization and continue to produce it.
    Keywords: Malawi, Tobacco, Agriculture, Smallholder, Agricultural income, Liberalization
    JEL: D10 Q12 R20
    Date: 2008–10
  23. By: Naqvi, Nadeem
    Abstract: The American economy has undergone a dramatic structural change in the first decade of the 21st Century. The real-economy causes of this transformation, and their expression via the real estate market and its financial derivatives’ market, and their final manifestation in world financial markets, is explained using traditional economic theory. A three-sector Walrasian general equilibrium model, and a non-Walrasian temporary equilibrium model with fixed prices and quantity constraints, are both utilized to explain the real-economy causes of the observed stylized facts. Some remedies that will likely work, and ones that will not, are also identified. (95 words)
    Keywords: financial crisis; credit crunch; mortgage backed securities; fiscal policy; monetary policy; the U.S. economy; outsourcing; international capital mobility
    JEL: D5 D3 F2 E5 F1 E3
    Date: 2008–11–04
  24. By: Abhijit V. Banerjee; Esther Duflo
    Abstract: Randomized experiments have become a popular tool in development economics research, and have been the subject of a number of criticisms. This paper reviews the recent literature, and discusses the strengths and limitations of this approach in theory and in practice. We argue that the main virtue of randomized experiments is that, due to the close collaboration between researchers and implementers, they allow the estimation of parameters that it would not otherwise be possible to evaluate. We discuss the concerns that have been raised regarding experiments, and generally conclude that while they are real, they are often not specific to experiments. We conclude by discussing the relationship between theory and experiments.
    JEL: O1
    Date: 2008–11
  25. By: Louis Putterman; David N. Weil
    Abstract: We construct a matrix showing the share of the year 2000 population in every country that is descended from people in different source countries in the year 1500. Using this matrix, we analyze how post-1500 migration has influenced the level of GDP per capita and within-country income inequality in the world today. Indicators of early development such as early state history and the timing of transition to agriculture have much better predictive power for current GDP when one looks at the ancestors of the people who currently live in a country than when one considers the history on that country's territory, without adjusting for migration. Measures of the ethnic or linguistic heterogeneity of a country's current population do not predict income inequality as well as measures of the ethnic or linguistic heterogeneity of the current population's ancestors. An even better predictor of current inequality in a country is the variance of early development history of the country's inhabitants, with ethnic groups originating in regions having longer histories of agriculture and organized states tending to be at the upper end of a country's income distribution. However, high within-country variance of early development also predicts higher income per capita, holding constant the average level of early development.
    JEL: F22 N30 O40
    Date: 2008–10
  26. By: Anne Case; Anu Garrib; Alicia Menendez; Analia Olgiati
    Abstract: We analyze funeral arrangements following the deaths of 3,751 people who died between January 2003 and December 2005 in the Africa Centre Demographic Surveillance Area. We find that, on average, households spend the equivalent of a year's income for an adult's funeral, measured at median per capita African (Black) income. Approximately one-quarter of all individuals had some form of insurance, which helped surviving household members defray some fraction of funeral expenses. However, an equal fraction of households borrowed money to pay for the funeral. We develop a model, consistent with ethnographic work in this area, in which households respond to social pressure to bury their dead in a style consistent with the observed social status of the household and that of the deceased. Households that cannot afford a funeral commensurate with social expectations must borrow money to pay for the funeral. The model leads to empirical tests, and we find results consistent with our model of household decision-making.
    JEL: D12 O12
    Date: 2008–10

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