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on Development |
| By: | Badi H. Baltagi (Center for Policy Research, Maxwell School, Syracuse University, Syracuse, NY 13244-1020); Panicos O. Demetriades; Siong Hook Law |
| Abstract: | This paper addresses the empirical question of whether trade and financial openness can help explain the recent pace in financial development, as well as its variation across countries in recent years. Utilizing annual data from developing and industrialized countries and dynamic panel estimation techniques, we provide evidence which suggests that both types of openness are statistically significant determinants of banking sector development. Our findings reveal that the marginal effects of trade (financial) openness are negatively related to the degree of financial (trade) openness, indicating that relatively closed economies stand to benefit most from opening up their trade and/or capital accounts. Although these economies may be able to accomplish more by taking steps to open both their trade and capital accounts, opening up one without the other could still generate gains in terms of banking sector development. Thus, our findings provide only partial support to the well known Rajan and Zingales hypothesis, which stipulates that both types of openness are necessary for financial development to take place. |
| Keywords: | Financial development, trade openness, financial openness, financial liberalization, dynamic panel data analysis |
| JEL: | F19 G29 |
| Date: | 2008–06 |
| URL: | http://d.repec.org/n?u=RePEc:max:cprwps:107&r=dev |
| By: | Cudjoe, Godsway; Breisinger, Clemens; Diao, Xinshen |
| Abstract: | "This paper takes a local perspective on global food price shocks by analyzing food price transmission between regional markets in Ghana. It also assesses the impacts of differential local food price increases on various household groups. Taking the recent global food crisis as an example, we find that prices for domestic staples within all regional markets are highly correlated with prices for imported rice. However, price transmission between pairs of regional markets is limited; it is complete for local rice and maize only when more rigorous cointegration analysis is applied. Our findings also show the important role of seasonality in the determination of market integration and price transmission. The welfare effect for households as consumers appears relatively modest at the aggregate national level due to relatively diverse consumption patterns. However, the national average hides important regional differences, both between regions and within different income groups. We find that the poorest of the poor—particularly the urban poor—are the hardest hit by high food prices. The negative effect of the food crisis is particularly strong in the north of Ghana. Different consumption patterns, in which grains account for a larger share of the consumption basket in the north compared to the rest of the country, together with much lower initial per capita income levels, are the main explanations for this regional variation in the price effect. " from authors' abstract |
| Keywords: | Food crisis, Price transmission, Poverty, Development strategies, |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:842&r=dev |
| By: | Resnick, Danielle; Birner, Regina |
| Abstract: | "Participatory approaches are an increasingly prominent technique for designing agricultural strategies within Sub-Saharan Africa. However, such approaches are frequently criticized for either not involving enough stakeholders or limiting the scope of their participation. By analyzing the role of stakeholder participation in the formulation of agricultural and rural development strategies in West Africa, this paper finds that a lack of broad-based participation in these strategies was not a major problem. Rather, the real challenge lies in transforming the outcomes of participatory processes into policies that can be feasibly implemented. The paper highlights why an emphasis on participatory processes can sometimes result in disappointment among stakeholders and discusses a range of measures to help overcome this dilemma. " from authors' abstract |
| Keywords: | Agricultural and rural development strategies, Policy process, Participation, Representative democracy, Governance, |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:fpr:ifprid:844&r=dev |
| By: | John Gilbert (Department of Economics and Finance, Utah State University) |
| Abstract: | We review the literature on the relationship between trade policy reform and poverty, and recent approaches in the numerical simulation literature to estimating the impact of alternative trade reform scenarios. The GTAP model is then used to simulate the effect of the trade cooperation among the economies of BIMSTEC and Japan on aggregate welfare and poverty in the BIMSTEC member economies. As a case study, the results of the global model simulations are then used as an input to a more detailed model of simulation model of India, which identifies nine household groups classifed by their source of income and consumption pattern. Detailed estimates of the effect of trade reform at the household level are presented for India. |
| Keywords: | Trade reform, CGE, regional trading agreements, poverty, India, BIMSTEC |
| JEL: | F13 F17 C68 O53 |
| Date: | 2008–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:uth:wpaper:200803&r=dev |
| By: | John Gilbert (Department of Economics and Finance, Utah State University) |
| Abstract: | We describe a new CGE model of South Asia, and its application to understanding the socio-economic aspects of SAFTA. The model currently covers India, Sri Lanka and Bangladesh, and the rest of South Asia. It is being expanded to include Nepal and Pakistan. The model incorporates modifications to the household structure to capture implications of reform for intra-household income changes. |
| Keywords: | SAFTA, CGE, Poverty |
| JEL: | F13 F17 C68 O53 |
| Date: | 2008–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:uth:wpaper:200802&r=dev |
| By: | Antonio Accetturo (Bank of Italy, Milan Branch); Luigi Infante (Bank of Italy, Economic and Financial Statistics Department) |
| Abstract: | The aim of this paper is to assess the relationship between individual skills and labour market performance of immigrants residing in Lombardy during the period 2001-2005. We use a recent dataset collected by the NGO ISMU, which includes information on individual characteristics and the legal status of each immigrant. Our results show that returns on schooling are positive and range from 0.8 per cent to 0.9 per cent, a figure that is much lower than the one estimated for native Italians. This result is robust to a number of specifications and tests. In particular, it is not influenced by the legal status of the alien or by a possible self-selection in the labour supply. Moreover, although more talented immigrants tend to self-select in the Lombardy region compared with the other Italian regions, their return on schooling remains low compared with natives. We also show that a certain heterogeneity exists across educational levels and countries of origin: immigrants from Eastern Europe are better able to exploit their human capital, especially when they hold a university degree, while the school-wage profile of Latin Americans and Asians is basically flat. Finally, there is some evidence of a cohort effect in migration, but this tends to impact on the return on experience rather than on the return on schooling. |
| Keywords: | Immigration, return on schooling, return on experience |
| JEL: | J31 O15 |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_695_08&r=dev |
| By: | Emmanuel Frot; Javier Santiso |
| Abstract: | This paper presents stylised facts about development aid and capital flows to developing countries. It compares their volumes and volatilities and finds that foreign aid is not the major source of finance for these countries any more, though not for all regions. The expansion of private flows has usually come at the cost of an increased volatility that adds up to aid volatility, already considered to be an issue. We do not find any negative and significant correlations between aid shocks and capital flow shocks. Investigating complementarity between flows, we show that in a cross section of countries official development aid (ODA) and capital flows are substitutes but not within countries. On the other hand capital flows are complements both across and within countries. We also make use of a private funds database in order to underline the differences between portfolio investors to emerging markets and aid donors. To our knowledge this paper is the first to use such data in comparison with aid flows. We find that private portfolio equity is more volatile than ODA, and that it is neither a substitute nor a complement of ODA, both across and within countries. We argue that these results reinforce the calls for a new stabilising role of ODA. We then study aid donors and private funds portfolios to contribute to the current debate on aid fragmentation by providing trends for the last 50 years. We show that aid donors have constantly been fragmenting their portfolios by giving aid to an increasing number of countries, but also by making asset allocations more equal across countries. Private portfolio equity funds, on the other hand, have done the opposite for ten years and put a heavy weight on few countries in their portfolios. These observations complement the existing results about the progressive nature of aid flows and the regressive nature of private flows. |
| Date: | 2008–12 |
| URL: | http://d.repec.org/n?u=RePEc:oec:devaaa:275-en&r=dev |
| By: | Sebastián Nieto Parra; Javier Santiso |
| Abstract: | Political cycles represent a core issue for capital markets in developing and emerging countries. This paper analyses the intricate links between financial markets and emerging democracies and highlights changes in the ways analysts and investors react to political cycles in emerging markets. Financial markets have, in the past, been particularly sensitive to political events. All the major financial crises in Latin America of the past decade and a half took place during an election year. Even in 2006, an unusually calm period in light of the number of presidential elections, markets remained highly sensitivity to elections: the day following Felipe Calderón's narrow victory in July's 2006 Mexican presidential elections, the stock market gained almost 5 per cent in a day, bond prices soared and the peso saw its biggest one-day appreciation in six years. |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:oec:devaaa:272-en&r=dev |
| By: | Eduardo Borensztein; Julia Cagé; Daniel Cohen; Cécile Valadier |
| Abstract: | The report argues that aid volatility is an important source of volatility for the poorest countries. Following a method already applied by the Agence Française de Développement, the report argues that loans to LICs should incorporate a floating grace period, which the country could draw upon when hit by a shock. The definition of a shock should include aid uncertainty, along with others such as commodity shocks and natural disasters. The idea is calibrated to a key IMF policy instrument towards Low-Income Countries, the Poverty-Reducing and Growth Facility (PRGF). |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:oec:devaaa:273-en&r=dev |
| By: | Sebastián Nieto Parra |
| Abstract: | This paper studies sovereign debt crises during the period 1993-2006 through the prism of the primary sovereign bond market. Two conclusions emerge. First, investment banks price sovereign default risk well before crises occur and before investors detect default risk. Between three and one years prior to the onset of a crisis, sovereign default risk countries paid to investment banks on average 1.10 per cent of the amount issued, close to double the average paid by emerging countries overall in the same period (0.56 per cent). In contrast, the level of sovereign bond spreads prior to crises is on average only slightly higher than for emerging countries (385 vs. 319 basis points), suggesting that investment banks have an information advantage with respect to investors and are the only parties compensated for the risk of sovereign debt crises. Second, investment banks’ behaviour differs depending on the type of sovereign debt crisis. Before crises, investment banks charged on average a higher underwriting fee to countries presenting public finances difficulties than to other sovereign debt crisis countries. The robustness of these results is verified through panel data analysis. The results are puzzling in that they indicate that valuable, publicly available information is not tracked by investors to help improve allocation of their emerging market fixed income assets. |
| Date: | 2008–11 |
| URL: | http://d.repec.org/n?u=RePEc:oec:devaaa:274-en&r=dev |
| By: | Mathias Czaika (Department of International Economic Policy, University of Freiburg) |
| Abstract: | This article examines the driving forces of the magnitude, composition and duration of refugee movements caused by conflict and persecution. The decision to seek temporary or permanent refuge in the region of origin or in a more distant asylum destination is based on inter-temporal optimization. We find that asylum seeking in Western countries is rather a phenomenon of comparatively less persecuted people. In an attempt to reduce their respective asylum burdens, Western countries and host countries in the region of origin are likely to end up in a race to the bottom of restrictive asylum policies. As an alternative, this study shows that proactive refugee-related aid transfers are, under certain circumstances, an effective instrument to relieve Western countries from asylum pressure. |
| Keywords: | Refugee Movements, Asylum Policy, Foreign Aid |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:fre:wpaper:7&r=dev |
| By: | José E. Gómez González; Paola Morales Acevedo |
| Abstract: | In this paper we find empirical evidence of bank lending channel for Colombia, using a balanced panel data of about four thousand non-financial firms. We find that increases in the interest rate, proxiing for the monetary policy instrument, lead to a reduction in the proportion of bank loans, out of total debt, of the .rms. This bank lending channel amplifies the effect of the traditional interest rate channel, which leads to a reduction in total debt and spending when monetary policy tightens. Our result agrees with, and complements, those obtained by Gómez González and Grosz (2007), who provide evidence of the existence of a bank lending channel in Colombia using bank-specific financial variables. |
| Date: | 2009–01–07 |
| URL: | http://d.repec.org/n?u=RePEc:col:000094:005219&r=dev |
| By: | Zachariah KC |
| Abstract: | The focus of this study is to analyze the pattern and costs of services in four areas, which critically affect most households in Kerala . The major concerns of this paper include answers to questions such as: How much did Kerala households spend for education of their children, for treatment of common and chronic diseases among their members, and for securing medical services related to pregnancy and childbirth? What is the extent of household indebtedness in Kerala? At what cost households secure loans for household and personal needs from banks and other financial institutions? [CDS WP 406]. |
| Keywords: | religion, India, chronic diseases, health, hospitals, marriage, education, migration, schools, costs, households, Kerala, education, childbirth, pregnancy, medical services, indebtness, services, children, population |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:1837&r=dev |
| By: | R N Pandey |
| Abstract: | An attempt has been made to discuss various aspects of unpaid household work such as its treatment in the system of National Accounts, and the methodologies of its valuation. With the help relevant data from Indian Time Use Survey, quantification of unpaid work in the Indian economy has been attempted for two states, namely Haryana and Gujarat. [NIpFP Discussion Paper No. 2]. |
| Keywords: | quantification, time use survey, national accounts, Indian economy, Haryana, Gujarat, household work, valuation, states, women's, data, unpaid, contribution |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:ess:wpaper:id:1836&r=dev |
| By: | Chris Manning; Alberto Posso |
| Abstract: | This paper seeks to explain different real wage outcomes in two groups of East Asian economies: two New Industrialising Economies (NIEs: Korea and Taiwan), and three Southeast Asian economies (ASEAN-3: Malaysia, Thailand and Indonesia), all of which grew rapidly for several decades prior to the Asian economic crisis. Drawing on international and national data sets, the paper examines dynamic interactions between manufacturing growth and labour market outcomes. It adopts the dualistic Lewis model, which highlights the role of ‘unlimited’ supplies of labour in economic development and the transition towards the turning point, as a heuristic device to inform the empirical analysis. A simple regression model is employed to examine the determinants of real wages over the first two decades of accelerated growth in the two groups of economies. This finds that while both demand and supply factors contributed to real wage growth, the supply variable which proxied surplus labour conditions was especially significant in the NIEs compared with the ASEAN-3. The model did not find any evidence for institutional factors having a significant impact on the different wage outcomes between the NIEs and the ASEAN-3. |
| Keywords: | China, global production sharing, U.S.-China trade imbalance |
| JEL: | F16 J20 O14 |
| Date: | 2008 |
| URL: | http://d.repec.org/n?u=RePEc:pas:papers:2008-23&r=dev |
| By: | Brian Duncan (Department of Economics, University of Colorado at Denver); Stephen J. Trejo (Department of Economics, University of Texas at Austin, and CReAM) |
| Abstract: | Using microdata from the 2000 U.S. Census, we analyze the responses of Mexican Americans to questions that independently elicit their “ethnicity” (or Hispanic origin) and their “ancestry.” We investigate whether different patterns of responses to these questions reflect varying degrees of ethnic attachment. For example, those identified as “Mexican” in both the Hispanic origin and the ancestry questions might have stronger ethnic ties than those identified as Mexican only in the ancestry question. How U.S.-born Mexicans report their ethnicity/ancestry is strongly associated with measures of human capital and labor market performance. In particular, educational attainment, English proficiency, and earnings are especially high for men and women who claim a Mexican ancestry but report their ethnicity as “not Hispanic.” Further, intermarriage and the Mexican identification of children are also strongly related to how U.S.-born Mexican adults report their ethnicity/ancestry, revealing a possible link between the intergenerational transmission of Mexican identification and economic status. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:0901&r=dev |
| By: | Christian Dustmann; Albrecht Glitz; Tommaso Frattini (Centre for Research and Analysis of Migration (CReAM), Department of Economics, UCL, Department of Economics, Universitat Pompeu Fabra) |
| Abstract: | In the first part of this paper, we present a stylised model of the labour market impact of immigration. We then discuss mechanisms through which an economy can adjust to immigration: changes in factor prices, output mix and production technology. In the second part, we explain the problems of empirically estimating how immigration affects labour market outcomes of the resident population and review some strategies to address these. We then summarise some recent empirical studies for the UK and other countries. We conclude with an outlook of what we believe are important avenues for future research. |
| Keywords: | Migration, Labour Market Impact, Wage Distribution |
| JEL: | J24 J31 J61 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:0811&r=dev |
| By: | Brian Duncan (Department of Economics, University of Colorado at Denver); Stephen J. Trejo (Department of Economics, University of Texas at Austin, and CReAM) |
| Abstract: | Using microdata from the 2000 U.S. Census and from recent years of the Current Population Survey (CPS), we investigate whether selective intermarriage and endogenous ethnic identification interact to hide some of the intergenerational progress achieved by the Mexican-origin population in the United States. First, using Census data for U.S.-born youth ages 16-17 who have at least one Mexican parent, we estimate how the Mexican identification, high school dropout rates, and English proficiency of these youth depend on whether they are the product of endogamous or exogamous marriages. Second, we analyze the extent and selectivity of ethnic attrition among second-generation Mexican-American adults and among U.S.-born Mexican-American youth. Using CPS data, we directly assess the influence of endogenous ethnicity by comparing an “objective” indicator of Mexican descent (based on the countries of birth of the respondent and his parents and grandparents) with the standard “subjective” measure of Mexican self-identification (based on the respondent’s answer to the Hispanic origin question). For third-generation Mexican-American youth, we show that ethnic attrition is substantial and could produce significant downward bias in standard measures of attainment which rely on ethnic self-identification rather than objective indicators of Mexican ancestry. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:0902&r=dev |
| By: | Giovanni Facchini (University of Essex, Università degli Studi di Milano, CEPR, LdA and CES-Ifo); Anna Maria Mayda (Georgetown University, CEPR, IZA, CReAM and LdA); Prachi Mishra (Research Department, International Monetary Fund) |
| Abstract: | While anecdotal evidence suggests that interest groups play a key role in shaping immigration policy, there is no systematic empirical analysis of this issue. In this paper, we construct an industry-level dataset for the United States, by combining information on the number of temporary work visas with data on lobbying activity associated with immigration. We find robust evidence that both pro- and anti-immigration interest groups play a statistically significant and economically relevant role in shaping migration across sectors. Barriers to migration are lower in sectors in which business interest groups incur larger lobby expenditures and higher in sectors where labor unions are more important. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:0904&r=dev |
| By: | John Gibson (University of Waikato and CGD); Stephen David McKenzie (World Bank, BREAD, CReAM, and IZA) |
| Abstract: | A unique survey which tracks worldwide the best and brightest academic performers from three Pacific countries is used to assess the extent of emigration and return migration among the very highly skilled, and to analyze, at the microeconomic level, the determinants of these migration choices. Although we estimate that the income gains from migration are very large, not everyone migrates and many return. Within this group of highly skilled individuals the emigration decision is found to be most strongly associated with preference variables such as risk aversion, patience, and choice of subjects in secondary school, and not strongly linked to either liquidity constraints or to the gain in income to be had from migrating. Likewise, the decision to return is strongly linked to family and lifestyle reasons, rather than to the income opportunities in different countries. Overall the data show a relatively limited role for income maximization in distinguishing migration propensities among the very highly skilled, and a need to pay more attention to other components of the utility maximization decision. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:0903&r=dev |
| By: | Giovanni Peri; Chad Sparber (University of California, Davis and NBER, Colgate University) |
| Abstract: | Economic debate about the consequences of immigration in the US has largely focused on how influxes of foreign-born labor with little educational attainment have affected similarly-educated native-born workers. Surprisingly few studies, however, analyze the effect of immigration within the market for highly-educated labor. We use O*NET data on job characteristics to assess whether native-born workers with graduate degrees respond to the presence of highly-educated foreign-born workers by choosing new occupations with different skill content. We find that immigrants with graduate degrees specialize in occupations demanding quantitative and analytical skills, whereas their native-born counterparts specialize in occupations requiring interactive and communication skills. Native employees leave occupations with a high proportion of highlyeducated immigrants for occupations with less analytical and more communicative content. For completeness, we also assess whether immigration causes highly-educated natives to lose their jobs or move across state boundaries. We no evidence that the former occurs, but mixed evidence for the latter response. |
| Date: | 2008–10 |
| URL: | http://d.repec.org/n?u=RePEc:crm:wpaper:0813&r=dev |
| By: | Eozenou, Patrick |
| Abstract: | We use panel data from a household survey conducted in Vietnam to analyze the effectiveness of informal risk sharing arrangements in protecting household consumption from idiosyncratic income shocks. We focus on the effects of reported harvest shocks and of estimated shocks to agricultural revenues on adult equivalent consumption. The full-insurance allocation is tested against a specified alternative under which contracts are not fully enforceable ex-post. We find that farmers hit by unfavorable events stabilize their consumption level below the village aggregate level, irrespective of the level of realized shocks. At the same time, farmers experiencing more favorable shocks enjoy higher consumption in proportion to the realized value of idiosyncratic shocks. Together, these finding are consistent with a simple 2-period model of optimal risk sharing with one-sided limited commitment. These results hold for total consumption and for non-durable consumption. We also find however some evidence supporting the full insurance hypothesis for food consumption. |
| Keywords: | Consumption; Risk-sharing; Informal Insurance;Vietnam |
| JEL: | O1 I3 D8 |
| Date: | 2008–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12688&r=dev |
| By: | van der Eng, Pierre |
| Abstract: | This paper investigates whether the ‘Kuznets hypothesis’, that economic growth from low levels of GDP per capita is initially associated with an increase in income inequality and later followed by a decline in inequality, is supported by evidence for a less-developed country, Indonesia. The paper outlines the relevant features of the process of rapid growth and structural change, in particular industrialisation since the 1960s. It notes the possible consequences of this process for changes in income distribution, and draws on disparate sets of statistical data to trace trends in income inequality in Indonesia. The paper concludes that the evidence for Indonesia suggests an increase in inequality during the 1970s and a subsequent decrease of inequality until 1997. A comparison of the evidence with historical data for the UK and Japan suggests that income inequality in Indonesia was relatively low. |
| Keywords: | income inequality; Kuznets hypothesis; Indonesia; economic development |
| JEL: | D31 N35 O15 R12 |
| Date: | 2009–01–14 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:12725&r=dev |
| By: | Albert Park; Dean Yang; Xinzheng Shi; Yuan Jiang |
| Abstract: | We ask how export demand shocks associated with the Asian financial crisis affected Chinese exporters. We construct firm-specific exchange rate shocks based on the pre-crisis destinations of firms' exports. Because the shocks were unanticipated and large, they are a plausible instrument for identifying the impact of exporting on firm productivity and other outcomes. We find that firms whose export destinations experience greater currency depreciation have slower export growth, and that export growth leads to increases firm productivity and other firm performance measures. Consistent with "earning-by-exporting", the productivity impact of export growth is greater when firms export to more developed countries. |
| JEL: | D24 F10 F31 L60 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14632&r=dev |
| By: | Angus Deaton; Jane Fortson; Robert Tortora |
| Abstract: | We use data from the Gallup World Poll and from the Demographic and Health Surveys to investigate how subjective wellbeing (SWB) is affected by mortality in sub-Saharan Africa, including mortality from HIV/AIDS. The Gallup data provide direct evidence on Africans' own emotional and evaluative responses to high levels of infection and of mortality. By comparing the effect of mortality on SWB with the effect of income on SWB, we can attach monetary values to mortality to illuminate the often controversial question of how to value life in Africa. Large fractions of the respondents in the World Poll report the mortality of an immediate family member in the last twelve months, with malaria typically more important than AIDS, and deaths of women in childbirth more important than deaths from AIDS in many countries. A life evaluation measure (Cantril's ladder of life) is relatively insensitive to the deaths of immediate family, which suggests a low value of life. There are much larger effects on experiential measures, such as sadness and depression, which suggest much larger values of life. It is not clear whether either of these results is correct, yet our results demonstrate that experiential and evaluative measures are not the same thing, and that they cannot be used interchangeably as measures of "happiness" in welfare economics. |
| JEL: | I12 J17 O15 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14637&r=dev |
| By: | Eric A. Hanushek; Ludger Woessmann |
| Abstract: | We provide evidence that the robust association between cognitive skills and economic growth reflects a causal effect of cognitive skills and supports the economic benefits of effective school policy. We develop a new common metric that allows tracking student achievement across countries, over time, and along the within-country distribution. Extensive sensitivity analyses of cross-country growth regressions generate remarkably stable results across specifications, time periods, and country samples. In addressing causality, we find, first, significant growth effects of cognitive skills when instrumented by institutional features of school systems. Second, home-country cognitive-skill levels strongly affect the earnings of immigrants on the U.S. labor market in a difference-in-differences model that compares home-educated to U.S.-educated immigrants from the same country of origin. Third, countries that improved their cognitive skills over time experienced relative increases in their growth paths. From a policy perspective, the shares of basic literates and high performers have independent significant effects on growth that are complementary to each other, and the high-performer effect is larger in poorer countries. |
| JEL: | H4 I2 J3 J61 O1 O4 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14633&r=dev |
| By: | Joseph P.H. Fan; Jun Huang; Randall Morck; Bernard Yeung |
| Abstract: | Where legal systems and market forces enforce contracts inadequately, vertical integration can circumvent these transaction difficulties. But, such environments often also feature highly interventionist government, and even corruption. Vertical integration might then enhance returns to political rent-seeking aimed at securing and extending market power. Thus, where political rent seeking is minimal, vertical integration should add to firm value and economy performance; but where political rent seeking is substantial, firm value might rise as economy performance decays. China offers a suitable background for empirical examination of these issues because her legal and market institutions are generally weak, but nonetheless exhibit substantial province-level variation. Vertical integration is more common where legal institutions are weaker and where regional governments are of lower quality or more interventionist. In such provinces, firms led by insiders with political connections are more likely to be vertically integrated. Vertical integration is negatively associated with firm value if the top corporate insider is politically connected, but weakly positively associated with public share valuations if the politically connected firm is independently audited. Finally, provinces whose vertical integrated firms tend to have politically unconnected CEOs exhibit elevated per capita GDP growth, while provinces whose vertically integrated firms tend to have political insiders as CEOs exhibit depressed per capita GDP growth. |
| JEL: | G38 L22 P14 P16 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:14650&r=dev |
| By: | James J. Heckman (University of Chicago, Chicago, Illinois 60637, USA; American Bar Foundation, Chicago, Illinois; Geary Institute, University College Dublin, Ireland) |
| Date: | 2008–12–15 |
| URL: | http://d.repec.org/n?u=RePEc:ucd:wpaper:200826&r=dev |
| By: | Julen ESTEBAN-PRETEL; SAWADA Yasuyuki |
| Abstract: | In this paper, we study the structural change occurring in Japan's post-World War II era of rapid economic growth. We use a two-sector neoclassical growth model with government policies to analyze the evolution of the Japanese economy in this period and to assess the role of such policies. Our model is able to replicate the empirical behavior of the main macroeconomic variables. Three findings emerge from our policy analysis. First, neither price and investment subsidies to the agricultural sector, nor industrial policy play a crucial role in the rapid postwar growth. Second, while a government subsidy for families in urban areas could have facilitated migration from the agricultural to the non-agricultural sector, such a policy would not have improved the overall performance of the Japanese economy. Finally, had there existed a labor migration barrier, the negative long-run level effect on output would have been substantial. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:09001&r=dev |
| By: | Thomas Gries (University of Paderborn); Magarete Redlin (University of Paderborn) |
| Abstract: | The paper explains the growth — inequality nexus for China’s provinces. The theoretical model of provincial development consists of two regions and studies the interactions of a mutually depending development process. Due to positive externalities, incoming trade and FDI induce imitation and hence productivity growth. The regional government can influence the economy by changing international transaction costs and providing public infrastructure. Due to mobile domestic capital, disparity effects are reinforced. The implications of the theoretical model are tested. As the central intention of the paper is to explain provincial disparity we directly relate income disparity (indicated by the contribution to the per capita income Theil index) to the disparity of selected income determining factors (indicated by the contribution to every other Theil index of the determinants). We examine the determinants of income and inequality for 28 Chinese provinces over the period 1991-2004 and apply a fixed effects panel estimation. Our analysis is based on revised GDP and investment data from Hsueh and Li (1999) and various sources of Chinese official statistics provided by the National Bureau of Statistics (NBS). The results confirm the theoretical framework and suggest a direct linkage between the factors that determine regional income and regional disparity. More specific, it is apparent that trade, foreign and domestic capital and government expenditure have an impact on the provincial inequality. Moreover, it is the success of the coastal regions and hence potentially geography with the low international transaction costs that drives the provincial inequality of China. |
| Keywords: | regional development, FDI, international integration, China |
| JEL: | J24 O14 O18 O33 O40 |
| Date: | 2008–08 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:wpaper:18&r=dev |