nep-dev New Economics Papers
on Development
Issue of 2008‒12‒07
thirty-two papers chosen by
Jeong-Joon Lee
Towson University

  1. The Aid-Migration of Trade-Off By AZAM, Jean-Paul; BERLINSCHI, Ruxanda
  2. Alternative definitions of informal sector employment in South Africa By Hassan Essop; Derek Yu
  3. Rank, Income and Income Inequality in Urban China By Gustafsson, Björn; Sai, Ding
  4. Education and Mobility By Machin, Stephen; Pelkonen, Panu; Salvanes, Kjell G.
  5. Trade Policy, Poverty, and Development in a Dynamic General Equilibrium Model for Zambia By Edward F. Buffie; Manoj Atolia
  6. Variety Trade and Skill Premium in a Calibrated General Equilibrium Model: The Case of Mexico By Manoj Atolia; Yoshinori Kurokawa
  7. Relative Wealth Concerns and Entrepreneurship By Manoj Atolia; Kislaya Prasad
  8. Economic or Non-Economic Factors – What Empowers Women? By B, Ranjula; Wallentin, Fan Yang
  9. The Impacts of Food- and Oil Price Shocks on the Namibian Economy: the Role of Water Scarcity By Sahlén, Linda
  10. The Effect of Consumption and Production Structure on Growth and Distribution. A Micro to Macro Model By Tommaso Ciarli; André Lorentz; Maria Savona; Marco Valente
  11. Capital Formation and Capital Stock in Indonesia, 1950-2007 By Pierre van der Eng
  12. Poverty, Undernutrition and Vulnerability in Rural India: Public Works versus Food Subsidy By Raghbendra Jha; Katsushi S. Imai; Raghav Gaiha
  13. Implications of a Doha Agreement on Agricultural Markets in Sudan By Abdel Karim, Imad Eldin Elfadil; Abler, David
  14. Bioenergy and Rural Development in Developing Countries: a review of existing studies By Gerber, Nicolas
  15. The Impact of Location on Crop Choice and Rural Livelihood: Evidences from Villages in Northern Ethiopia By Nuru, Seid; Seebens, Holger
  16. Farmers' Subjective Valuation of Subsistence Crops: The Case of Traditional Maize in Mexico By Arslan, Aslıhan; Taylor, J. Edward
  17. How much of South Korea’s growth miracle can be explained by trade policy? By Michelle Connolly; Kei-Mu Yi
  18. Inequality and Cost of Electoral Campaigns in Latin America By Bugarin, Maurício; Portugal, Adriana; Sakurai, Sérgio
  19. Corruption and Positive Selection in Privatization By Raluca E. Buia; M. Cristina Molinari
  20. Non-agricultural Employment Determinants and Income Inequality Decomposition By Xiaoyun Liu; Terry Sicular
  21. "An Empirical Analysis of Gender Bias in Education Spending in Paraguay" By Thomas Masterson
  22. Standards compliance as an alternative learning opportunity under globalization in Latin America By Isabel Maria Bodas Freitas; Michiko Iizuka
  23. Labour standards and ILO’s effectiveness in the governance of globalization By Fabrizio Onida
  24. Democracy, openness and jumps in growth By Gabriele Deana; Andrea Gamba
  25. Shadow vs. market prices in explaining land allocation: Subsistence maize cultivation in rural Mexico By Aslihan Arslan
  26. Determinants of growth and convergence in a growing economy with heterogeneous entrepreneurs By Dirk Dohse; Ingrid Ott
  27. Aid and Sectoral Labour Productivity By Pablo Selaya; Rainer Thiele
  28. Institutions, Education, and Economic Performance By Lim, Jamus Jerome; Adams-Kane, Jonathon
  29. Determinants of the Growth Semi-Elasticity of Poverty Reduction By Stephan Klasen; Mark Misselhorn
  30. Inequality in Human Development: An empirical assessment of thirty-two countries By Michael Grimm; Stephan Klasen; Ken Harttgen; Mark Misselhorn; Teresa Munzi; Timothy Smeeding
  31. Intrahousehold Health Care Financing Strategy and the Gender Gap: Empirical Evidence from India By Abay Asfaw; Stephan Klasen; Francesca Lamanna
  32. How do Heterogeneous Social Interactions affect the Peer Effect in Rural–Urban Migration?:Empirical Evidence from China By Zhao Chen; Shiqing Jiang; Ming Lu; Hiroshi Sato

  1. By: AZAM, Jean-Paul; BERLINSCHI, Ruxanda
    Date: 2008–11
  2. By: Hassan Essop (Department of Economics, University of Stellenbosch); Derek Yu (Department of Economics, University of Stellenbosch)
    Abstract: Before the introduction of the Quarterly Labour Force Survey (QLFS) in 2008, Statistics South Africa (Stats SA) has been using the same methodology to derive the informal sector employment throughout the years, focusing on the enterprise registration status to classify workers (which include both self-employed and employees) as either formal or informal sector workers. Although there are difficulties with attempting to provide any consistent trend data (Yu, 2007 & Essop & Yu, 2008), it is generally accepted that informal sector employment grew relatively more rapidly in the late 1990s, and then stabilized at about 2 million in the early 2000s before it increased (albeit more slowly) again since 2005. Nonetheless, recent papers by Devey, Skinner & Valodia (2006) as well as Heintz & Posel (2008) argue that the current classifications used by Stats SA hide a significant degree of informality in the formal economy, as some formal jobs are characterized by conditions that are typical of informal work. Therefore, they propose alternative definitions of informal sector employment, focusing on worker characteristics instead of enterprise characteristics. This paper aims to address the reliability or otherwise of these recent approaches, as well as to suggest better ways to define informal sector employment.
    Keywords: South Africa, Household survey, Labour market trends, Informal sector
    JEL: J00
    Date: 2008
  3. By: Gustafsson, Björn (Göteborg University); Sai, Ding (Chinese Academy of Social Sciences)
    Abstract: While some workers in China attain senior professional level and senior cadre level status (Chuzhang and above), others attain middle rank including middle rank of professional and cadre (Kezhang). This aspect of the Chinese labor force has attracted surprisingly little attention in the literature, a fact which this paper aims to rectify. We define various segments of the urban population in work-active ages and use data from the Chinese Income Project (CHIP) covering eastern, central and western China for 1995 and 2002. For 2002, persons of high rank make up 3 percent and persons of middle rank make up 14 percent of persons in work-active ages. Factors that affect a person's likelihood of having high or middle rank are investigated by estimating a multinomial probit model. We find that education, age and gender strongly affect the probability of being employed as a worker of high rank. There is relatively little income inequality among workers of high rank as well as among workers of middle rank. Mean income and household wealth per capita of highly-ranked workers developed more favorably than for other segments of the population studied, and personal income is more polarized by segment in 2002 than in 1995. Workers of high rank, and to a lesser degree, workers of middle rank, are among the winners in economic terms while the increasingly large category of non-workers are the losers. Rates of return to education have increased but income function analysis indicates that this provides only a partial explanation for the increased favorable income situation for workers of high and middle ranks.
    Keywords: China, rank, income, income inequality
    JEL: J21 J31 J41 P31
    Date: 2008–11
  4. By: Machin, Stephen (University College London); Pelkonen, Panu (London School of Economics); Salvanes, Kjell G. (Norwegian School of Economics and Business Administration)
    Abstract: We show that the length of compulsory education has a causal impact on regional labour mobility. The analysis is based on a quasi-exogenous staged Norwegian school reform, and register data on the whole population. Based on the results, we conclude that part of the US-Europe difference, as well as the European North-South difference in labour mobility, is likely to be due to differences in levels of education in the respective regions.
    Keywords: labour market, mobility, education
    JEL: I28 J24 J61
    Date: 2008–11
  5. By: Edward F. Buffie (Department of Economics, Indiana University); Manoj Atolia (Department of Economics, Florida State University)
    Abstract: Many LDCs suffer from low levels of private investment, from acute shortages of social and physical infrastructure, and from widespread poverty and underemployment. How can trade policy help combat these problems? Neoclassical trade theory objects that the premise of the question is incorrect. According to the Principle of Targeting, it is better to use other policy instruments to counteract market imperfections and to target social objectives. Instead of interfering with free trade, the government should increase domestic taxes to pay for employment subsidies, investment subsidies, transfers to the poor, and additional public investment in infrastructure. Policy makers reject this advice as impractical. Our objective in this paper is to restart the policy dialogue. We build a dynamic general equilibrium trade model that is rich in structural detail and policy instruments but not a black box. We use the model to investigate how trade policy affects poverty, underemployment, aggregate capital accumulation, and real output in Zambia. The results consistently recommend policy packages that combine an escalated structure of protection with an escalated structure of export promotion. There is no support for the view that free trade or a low uniform tariff is approximately optimal.
    Date: 2008–01
  6. By: Manoj Atolia (Department of Economics, Florida State University); Yoshinori Kurokawa (Department of Economics, SUNY, Buffalo)
    Abstract: It can be theoretically shown that variety trade can be a possible source of increased skill premium in wages. No past studies, however, have empirically quantified how much of the increase in skill premium can be accounted for by the increase in variety trade. This paper now formulates a static general equilibrium model and then calibrates it to the Mexican input-output matrix for 1987. In the calibrated model, our numerical experiments show that the increase in U.S.-Mexican variety trade can explain approximately 12 percent of the actual increase in skill premium in Mexico from 1987 to 2000.
    Keywords: Variety Trade, Skill Premium, Variety-Skill Complementarity, Calibrated General Equilibrium Model, Mexico
    JEL: F12 F16
    Date: 2008–10
  7. By: Manoj Atolia (Department of Economics, Florida State University); Kislaya Prasad (Robert H. Smith School of Business, University of Maryland)
    Abstract: We develop a model of occupational choice and entrepreneurship in the presence of relative wealth concerns. A concern for relative standing arises even though individuals care only about consumption of standard commodities. We assume that entrepreneurial returns are not diversifiable, which results in less entrepreneurship than would be the case with complete markets. Relative wealth concerns are shown to lead to an increase in entrepreneurship and risk-taking, mitigating this difficulty substantially. When we change the profile of the economy to include more risk-averse people, we find that there is a greater increase in entrepreneurship. We examine the effects of uncertainty about economic policies such as market-based reforms on entrepreneurship.
    Keywords: Entrepreneurship, risk, occupational choice, policy uncertainty, relative wealth concerns
    JEL: D84 J24 O11 O12
    Date: 2007–08
  8. By: B, Ranjula (Department of Economics); Wallentin, Fan Yang (Department of Information Science, Division of Statistics, Uppsala University)
    Abstract: Microfinance programs like Self Help Group Bank linkage program (SHG), aim to empower women through provision of financial services. We investigate this further to determine whether it is the economic or the non-economic factors that have a greater impact on empowering women. Using household survey data on SHG from India, a general structural model is adopted where the latent women empowerment and its latent components (economic factors and financial confidence, managerial control, behavioural changes, education and networking, communication and political participation and awareness) are measured using observed indicators. The results show that for SHG members, economic factors, managerial control and behavioural changes are the most significant factors in empowering women.
    Keywords: microfinance; impact; women empowerment
    JEL: D12 D63 D91 J16 O12 O16
    Date: 2008–11–23
  9. By: Sahlén, Linda (Department of Economics, Umeå University)
    Abstract: The recent increases in international food and oil prices have raised concerns about how these exogenous shocks will affect the economic activity as well as poverty in developing countries. In this paper, the effects of international food and oil price increases on the Namibian economy are studied by means of a Computable General Equilibrium model. As a corn and oil importing Sub-Saharan African country, Namibia is among the countries considered to be particularly vulnerable to these price shocks. Besides, since Namibia is also one of the driest Sub-Saharan countries, the role of water scarcity is explicitly addressed in this particular context. The results show that the Namibian economy will be negatively affected by the food and oil price increases. In the case where the supply of water is assumed to be constant, it is shown that there will be even less ability to adapt for the economy, thus resulting in a more significant decrease in GDP than in the case where additional water sources are assumed to be available.
    Keywords: computable general equilibrium model; food prices; oil prices; water scarcity
    JEL: D58 Q18 Q25
    Date: 2008–11–27
  10. By: Tommaso Ciarli; André Lorentz; Maria Savona; Marco Valente
    Abstract: The paper contributes to the literature on the relation between structural changes in demand and supply and growth. We develop a macro-economic model with agent-based micro-foundations that articulates the links between production and organisational structures on the supply side, and the endogenous evolution of income distribution on the demand side. The model contains a simplified, though robust, representation of individual firms in the final goods and capital sectors and classes of workers/consumers. The results, in addition to addressing the technical issue of the model's robustness, illustrate the micro- and meso-properties of the simulated growth patterns. In particular, we observe and explain the interactions between technological change, firm organisation, income distribution, consumption behaviour and growth. The analysis performed on the simulated results broadly confirms and further extends the empirical evidence presented in the literature.
    Keywords: Structural change, consumption, earnings distribution, growth Length 41 pages
    JEL: D11 J31 L23 O12 O41
    Date: 2008–12
  11. By: Pierre van der Eng
    Abstract: This paper presents long-term estimates of gross fixed capital formation for 1951-2007 that are disaggregated by categories of productive assets. These data, combined with approximations of probable average asset lives and a feasible asset retirement method are used in a Perpetual Inventory Method to estimate gross fixed capital stock in Indonesia for 1950-2007 disaggregated by productive assets. Most of Indonesia’s capital stock long consisted of residential and non-residential structures. Total capital stock grew significantly since the late-1960s at about 10% per year, until the 1997-98 economic crisis. The high capital-output ratio in 1997 suggests that part of Indonesia’s high economic growth during the 1990s was due to unsustainable resource accumulation.
    Keywords: investment, capital formation, capital stock, economic growth, Indonesia
    JEL: E22 E43 N15 O11 O47
    Date: 2008
  12. By: Raghbendra Jha; Katsushi S. Imai; Raghav Gaiha
    Abstract: This paper analyses the effects of access to Rural Public Works (RPW) and Public Distribution System (PDS), a public food subsidy programme, on consumption poverty, vulnerability and undernutrition in India drawing upon the large household data sets constructed by National Sample Survey (NSS) data, 50th round in 1993-1994 and 61st round in 2004-2005. Treatment-effects model and Propensity Score Matching (PSM) model are used to take account of the sample selection bias in evaluating the effects of RPW or PDS on poverty. We have found significant and negative effects of the household participation in RPW and Food for Work Programmes on poverty, undernutrition (e.g. protein) and vulnerability in 1993 and 2004. On the contrary, poverty and undernutrition are significantly higher for the households with access to PDS than those without, whilst PDS has significant effects on reducing vulnerability of households in 1993 and 2004. We also applied the pseudo panel model which confirms that PDS decreased the vulnerability based on 80% of the poverty threshold. However, state-wise results of treatment effects model show considerable diversity of policy effects among different states.
    Keywords: Poverty, Undernutrition, Vulnerability, Rural Public Works (RPW), Public Distribution System (PDS), Poverty Reduction Policy, Treatment Effects Model, Propensity Score Matching (PSM) Model, India
    JEL: C21 C23 C31 I32 I38 O15 O22
    Date: 2008
  13. By: Abdel Karim, Imad Eldin Elfadil; Abler, David
    Abstract: The latest round of multilateral trade negotiations was launched at the ministerial meeting of the World Trade Organization in Doha, Qatar, in November 2001. Agriculture is a major item on the agenda for the Doha Round. The primary focus is on the three €ܰillars€ݠof the Uruguay Round agreement€Ԥomestic support, market access, and export competition. The framework for a final agreement was finalized at a Ministerial meeting in Geneva in July 2004, but contains few details on modalities (e.g., the formula to be used for reductions in tariffs/increases in tariff-rate quotas, quantitative limitations on domestic support, and the schedule for the elimination of export subsidies). Detailed proposals on a number of these issues were put forward in October 2005 by the European Union and the United States, in addition to the G10 and G20 groups of countries. The Doha Round negotiations have since run into several major hurdles, and it is unclear at this time if, or when, an agreement might be reached. Nevertheless, the range of alternatives for key parameters is becoming increasingly clear. In this paper we analyze empirically the implications of the provisions of a Doha agreement for agricultural markets in Sudan. The analysis is based on the PEATSim model (Partial Equilibrium Agricultural Trade Simulator) developed by the Penn State University in collaboration with the Economic Research Service of the U.S. Department of Agriculture. This dynamic, multi-country, multi-commodity model covers 35 of the major traded agricultural commodities and contains a detailed representation of markets and policies in twelve countries/regions that are particularly significant for world agricultural trade. The model is used to analyze the US, EU, and G20 negotiating proposals from October 2005. The PEATSim model has previously been used to analyze a number of agricultural trade and policy reform scenarios, including global agricultural trade liberalization in all commodities, trade liberalization in global dairy markets, and trade liberalization in coarse grain markets. Sudan is not a currently member of the WTO although it has been in the accession process since 1994. Assuming that Sudan continues outside of WTO membership, its trade policies will not be directly affected by a Doha agreement. But Sudan could be affected significantly by changes in global agricultural markets. Preliminary results using PEATSim indicate an increase in Sudanese production and exports of course grains, peanuts, cotton, sunflowers, and beef due to increases in world prices. Imports of several products increase, especially wheat, rice, and poultry meat. On the whole the preliminary results suggest that Sudanese agriculture should benefit from a Doha agreement.
    Keywords: Doha Agreement, Sudan, agricultural markets, trade policy, Agricultural and Food Policy, International Development, International Relations/Trade, Political Economy,
    Date: 2008–06
  14. By: Gerber, Nicolas
    Abstract: Four broad types of studies on rural development and bioenergy technologies are identified. Within these four types, this discussion paper presents a number of existing studies which are most relevant in the context of developing a research focus on the role, feasibility and issues associated with bioenergy, and in particular biofuels, as engine for rural development in developing countries. The results and recommendations of the referenced studies, reflecting the global trends of the current literature, highlight the importance of bioenergy technologies in the development process of poor rural communities. The surge of biofuels and in particular of their feedstocks on the international agricultural markets has recently commended a lot of attention. However, whilst biofuels hold a huge economic potential as internationally traded commodities, the various issues and challenges facing biofuel production systems could indicate that in the context of developing economies, they are better suited for the domestic energy markets. In any case, the analysis necessary to formulate policy recommendations on how, where and when to implement which bioenergy technology calls for a differentiated €Ӡper region and/or technology €Ӡand integrated €Ӡwithin and alongside other rural production systems €Ӡapproach. In this context, this review of existing studies exposes some unanswered questions and research gaps.
    Keywords: International Development, Research and Development/Tech Change/Emerging Technologies, Resource /Energy Economics and Policy,
    Date: 2008–06–30
  15. By: Nuru, Seid; Seebens, Holger
    Abstract: This paper attempts to demonstrate how location of an agricultural economic activity in relation to urban centers determines households' decision to allot their agricultural land to the production of either staple crop or a high value but risky cash crop. Analyzing household data from villages in North Eastern Ethiopia, we find that proximity to urban centers, access to road, and education along with other factors determine the crop choice in favor of the production of high value crops. Crop choices further significantly predict levels of per capita income across villages where the farthest with no access to road are the poorest.
    Keywords: Agricultural and Food Policy, Community/Rural/Urban Development, Consumer/Household Economics, Crop Production/Industries, International Development, Productivity Analysis,
    Date: 2008–07–17
  16. By: Arslan, Aslıhan; Taylor, J. Edward
    Abstract: Shadow prices guide farmers' resource allocations, but for subsistence farmers growing traditional crops, shadow prices may bear little relationship with market prices. We econometrically estimate shadow prices of maize using data from a nationally representative survey of rural households in Mexico. Shadow prices are significantly higher than the market price for traditional but not improved maize varieties. They are particularly high in the indigenous areas of southern and southeastern Mexico, indicating large de facto incentives to maintain traditional maize there.
    Keywords: Shadow prices, non-market values, supply response, traditional crops, onfarm conservation, Mexico, Agricultural and Food Policy, Community/Rural/Urban Development, International Development, O12, O13, Q12, Q39,
    Date: 2008–10
  17. By: Michelle Connolly; Kei-Mu Yi
    Abstract: South Korea’s growth miracle has been well documented. A large set of institutional and policy reforms in the early 1960s is thought to have contributed to the country’s extraordinary performance. In this paper, we assess the importance of one key set of policies, the trade policy reforms in Korea, as well as the concurrent GATT tariff reductions. We develop a model of neoclassical growth and trade that highlights two forces by which lower trade barriers can lead to increased per worker GDP: comparative advantage and specialization, and capital accumulation. We calibrate the model and simulate the effects of three sets of tariff reductions that occurred between the early 1962 and 1995. Our main finding is that the model can explain up to 32 percent of South Korea’s catch-up to the G7 countries in output per worker in the manufacturing sector. We find that the effects of the tariff reductions taken together are about twice as large as the sum of each reduction applied individually.
    Date: 2008
  18. By: Bugarin, Maurício; Portugal, Adriana; Sakurai, Sérgio
    Date: 2008–10
  19. By: Raluca E. Buia (Advanced School of Economics, University Of Venice Cà Foscari); M. Cristina Molinari (Department of Economics, University Of Venice Cà Foscari)
    Abstract: We consider the supply of a public good based on a publicly-owned facility. The Government has a choice between provision in-house and privatizing the facility and then outsourcing the production. In particular, we focus on corruption in the decision to privatize and on its effect on social welfare when there is asymmetric information on the public and private manager's efficiency. Our analysis shows that a corrupt Government, that chooses to privatize only in exchange for a bribe, makes a positive selection on the private firm's efficiency and, thus, may raise expected social welfare above what an honest Government could get.
    Keywords: Corruption, Privatization, Private vs. public provision.
    JEL: D73 H44 K42 L33
    Date: 2008
  20. By: Xiaoyun Liu (China Agricultural University); Terry Sicular (University of Western Ontario)
    Abstract: Non-agricultural income has become an important source of rural household income and has brought with a wide inequality in rural China. This paper investigates the determinants of non-agricultural employment as well as non-agricultural income and then assesses the contribution of these determinants to income inequality with the Chinese Academy of Social Science 2003 survey data and a three-step decomposition approach. Our results indicate that education inequality accounts for 9% and 36% wage and self-employment income inequality respectively which implies that education inequality plays substantial roles in non-agricultural income inequalities. The community characteristics collectively accounts for 46% and 32% of the wage and self-employment income inequality respectively which in turn suggests that regional development is of great importance in the determination of non-agricultural income inequality.
    Keywords: non-agricultural income; employment; inequality
    JEL: J23 J43 D63
    Date: 2008
  21. By: Thomas Masterson
    Abstract: Gender affects household spending in two areas that have been widely studied in the literature. One strand documents that greater female bargaining power within households results in a variety of shifts in household production and consumption. An important source of intrahousehold bargaining power is ownership of assets, especially land. Another strand examines gender bias in spending on children. This paper addresses both strands simultaneously. In it, differences in spending on education are examined empirically, at both the household and the individual level. Results are mixed, though the balance of evidence weighs toward pro-male bias in spending on education at the household level. Results also indicate that the relationship between asset ownership and female bargaining power within the household is contingent on the type of asset.
    Date: 2008–11
  22. By: Isabel Maria Bodas Freitas (Eindhoven Center for Innovation Studies (ECIS), Technische Universiteit, Eindhoven); Michiko Iizuka (UNU-MERIT, Maastricht & SPRU, University of Sussex)
    Keywords: globalization, technological infrastructures, certification, capability, Latin America, Chile
    JEL: O3
    Date: 2008–01–08
  23. By: Fabrizio Onida (CESPRI, Bocconi University- Italy)
    Abstract: The paper starts with a brief recollection of International Labor Office (ILO)’s historical milestones – ILO being the only tripartite international organization with representatives of labour, industry and governments - covering the main Conventions on labour standards (including the four “core labour standards”). Then the paper focuses on ILO’s main duties as a supervisor of labour markets conditions and as an agent and direct player with local governments: designing appropriate policies for a “decent work” agenda in the world, pushing for the widest possible adoption of the Conventions themselves by member countries, monitoring compliance of those standards, promoting bilateral and multilateral actions with governments aimed at correcting major violations of these standards. Special emphasis is given to possible improvements in the effectiveness of ILO’s procedures and initiatives, under the assumption that actions based on positive incentives are far more plausible and effective than negative sanctions, especially in view of greater coherence between ILO and WTO mission in promoting a better governance of globalization. Examples of such actions are moral suasion on policy makers aimed at affecting labour legislation, design of unilateral trade concessions and/or regional trade liberalization agreements conditional on actual commitment to improve labour and social conditions in the target country (such as GSP+), joint initiatives with multinational companies and local government in developing countries so as to diffuse school attendance and eradicate worst forms of child labour , training of public administrators-legal experts-union leaders trough the ILO’s special training office in Turin (Italy). Summary references are made to the ongoing debate about globalization, inequalities, “race to the bottom”, quality of institutions. The final section summarizes major conclusions and recommendations that have been approved by CNEL’s general assembly on June 5, 2008, also in view of the annual meeting of AICESIS (International Association of Economic and Social Councils) held in Rome on June 12, 2008.
    Keywords: Labour standards, ILO, WTO, globalization
    JEL: F16 I28 J5 J78 K33 O19
    Date: 2008–07
  24. By: Gabriele Deana (Bocconi University and University of Milan - Italy); Andrea Gamba (CESPRI Bocconi University, Milan - Italy)
    Abstract: We identify multiple structural breaks in a growth series using the econometric method developed by Bai and Perron (1998, 2003). We then regress the indicator of detected positive and negative breaks on three kinds of explanatory variables: external shocks, institutions and policies. Our results show that a change towards democratization fosters booms. Economic liberalizations act as an insurance against the probability of incurring into a crisis, while moves towards autarky undermine the chances of experiencing booms. We employ program evaluation to isolate single reforms and to assess the importance of reform sequencing: we find that democratization is a driver for growth and subsequent liberalization ensures stability.
    Keywords: political liberalization, democracy, economic reform, long-run economic growth
    JEL: O11 O43 E65
    Date: 2008–07
  25. By: Aslihan Arslan
    Abstract: Economic models of land allocation may lead to expectations for farmer response that “surprisingly" do not materialize, if market prices fail to reflect the value of farmers' product. “Shadow prices" rather than market prices explain resource allocation better for farmers who attach significant non-market values to their own crops. I extend the theoretical model in Arslan and Taylor (2008) to explain why the land allocation of such farmers may not respond to market signals even if transaction costs are not binding. I estimate the proportion of land subsistence maize farmers allocate to traditional versus modern maize varieties using nationally representative rural household data from Mexico – the center of diversity of maize. I conclude that shadow prices explain land allocation better than market prices and discuss the importance of non-market values in understanding both farmers' supply response and on-farm conservation of traditional crops with non-market values
    Keywords: Land allocation, shadow prices, non-market values, traditional crops, on-farm, conservation, Mexico
    JEL: O12 O13 Q12 Q39
    Date: 2008–12
  26. By: Dirk Dohse; Ingrid Ott
    Abstract: We develop an endogenous growth model which is focussed on entrepreneurial skills and their impact on growth and convergence. Our work is closely related to the model by Acemoglu et al. (2006) but extends their analysis in some important respects. Entrepreneurs in our model dispose of two different skills (technological and systemic skills) and we are able to show that it is not only the absolute skill level but also the aggregate distribution of different skills that drives growth and convergence of an economy towards the world technology frontier
    Keywords: growth, skills, innovation, selection, distance to frontier
    JEL: O31 O33 O38 J24 L26
    Date: 2008–11
  27. By: Pablo Selaya; Rainer Thiele
    Abstract: The paper examines empirically the proposition that aid to poor countries is detrimental for external competitiveness, giving rise to Dutch disease type effects. At the aggregate level, aid is found to have a positive effect on growth of labour productivity. A sectoral decomposition shows that the effect is significant and positive both in the tradables and the nontradables sectors. The paper thus finds no empirical support for the hypothesis that aid reduces external competitiveness in developing countries. Possible reasons are the existence of large idle labour capacity and high levels of dollarization in financial liabilities at the firm level
    Keywords: Foreign aid, sectoral labour productivity, Dutch disease
    JEL: F35 O47
    Date: 2008–11
  28. By: Lim, Jamus Jerome; Adams-Kane, Jonathon
    Abstract: This paper considers the interactions between governance, educational outcomes, and economic performance. More specifically, we seek to establish the linkages by which institutional quality affect growth by considering its mediating impact on education. While the contribution of both human capital and institutions to growth are often acknowledged, the channels by which institutions affect human capital and, in turn, growth, has been relatively underexplored. Our empirical approach adopts a two-stage strategy that estimates national-level educational production functions which include institutional governance as a covariate, and uses these estimates as instruments for human capital in cross-country growth regressions.
    Keywords: Institutions; human capital; education; economic growth
    JEL: O43 H11 O15
    Date: 2008–10–28
  29. By: Stephan Klasen (Georg-August-Universität Göttingen / Germany); Mark Misselhorn
    Abstract: In this paper we examine the mathematical relationship between growth and distributional change on absolute (i.e. percentage point) changes in FGT poverty measures assuming a log-normal income distribution, which we argue to be a conceptually superior and more policy-relevant measure than the much used ’regular’ growth elasticity of poverty reduction. We also test the empirical relationship of these semi-elasticities of growth and distributional change on poverty and find them to explain actual changes in poverty very well (in fact, much better than a related study by Bourguignon (2003) that studied the growth elasticity of poverty reduction). This is particularly the case when poverty depth and severity is considered. Using our results helps in interpreting past performance in poverty reduction and will allow a rapid and quite reliable prediction of the impact of growth and distributional change on (absolute) poverty reduction across countries, taking heterogeneity in country circumstances into account.
    Keywords: Poverty reduction, growth elasticity, growth semi-elasticity, income distribution
    JEL: O1 I32 O2
    Date: 2008–10–17
  30. By: Michael Grimm (ISS, The Hague / The Netherlands); Stephan Klasen (Georg-August-Universität / Göttingen); Ken Harttgen (Georg-August-Universität / Göttingen); Mark Misselhorn; Teresa Munzi; Timothy Smeeding
    Abstract: One of the most frequent critiques of the HDI is that it does not take into account inequality within countries in its three dimensions. We use a simple approach, which allows to compute the three components and the overall HDI for quintiles of the income distribution. This allows to compare the level in human development of the poor with the level of the non-poor within countries, but also across countries. This is an application of the method presented in Grimm et al. (2008) to a sample of 21 low and middle income countries and 11 industrialized countries. Our results show that inequality in human development within countries is high both in developed and industrialized countries. In fact, the HDI of the lowest quintiles in industrialized countries is often below the HDI of the richest quintile in many middle income countries. We also find, however, a strong overall negative correlation between the level of human development and inequality in human development.
    Keywords: Human Development, Income Inequality, Differential Mortality, Inequality in Education
    Date: 2008–10–17
  31. By: Abay Asfaw; Stephan Klasen (Georg-August Universität Göttingen / Germany); Francesca Lamanna (World Bank)
    Abstract: The “missing women” dilemma in India has sparked interest in investigating gender discrimination in the provision of health care in the country. No studies, however, have directly examined this discrimination in relation to household behavior in health care financing. We hypothesize that households who face tight budget constraints are more likely to spend their meager resources on hospitalization of boys rather than girls. We use the 60th Indian National Sample Survey and a multinomial logit model to test this hypothesis and to shed some light on this important but overlooked issue. The results reveal that while the gap in the probability of boys’ and girls’ hospitalization and usage of household income and savings is relatively small, the gender gap in the probability of hospitalization and usage of scarce resources is very high. Ceteris paribus, the probability of boys to be hospitalized by financing from relatively scarce sources such as borrowing, sale of assets, help from friends, etc., is much higher than that of girls. Moreover, the results indicate that the gender gap deepens as we move from the richest to poorest households.
    Keywords: gender discrimination, health care finance, hospitalization, India
    JEL: I12 O15 J71
    Date: 2008–10–17
  32. By: Zhao Chen; Shiqing Jiang; Ming Lu; Hiroshi Sato
    Abstract: In this paper, we use the “2002 Chinese Household Income Project Survey” (CHIPS2002) data to examine how heterogeneous social interactions affect the peer effect in the rural–urban migration decision in China. We find that the peer effect, measured by the village migration ratio, significantly increases the individual probability of outward migration. We also find that the magnitude of the peer effect is nonlinear, depending on the strength and type of social interactions with other villagers. Interactions in information sharing can increase the magnitude of the peer effect, while interactions in mutual help in labor activities, such as help in housing construction, nursing and farm work in busy seasons, will impede the positive role of the peer effect. Being aware of the simultaneity bias caused by the two-way causality between social interaction strengths and migration, we utilize “historical family political identity in land reform” as an instrumental variable for social interactions. However, the hypothesis that probit and instrumental-variable probit results are not significantly different is not rejected. The existence of a nonlinear peer effect has rich policy implications. For policy makers to encourage rural–urban migration, it is feasible to increase education investment in rural areas or increase information sharing among rural residents. However, only an increase in the constant term in the regression, i.e. a “big push” in improving institutions for migration, can help rural Chinese residents escape the low equilibrium in migration.
    Keywords: labor migration, urbanization, peer effect, social integration, social multiplier
    JEL: J61 O15 R23
    Date: 2008

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