nep-dev New Economics Papers
on Development
Issue of 2010‒02‒13
ten papers chosen by
Mark Lee
Towson University

  1. Discrimination by Microcredit Officers: Theory and Evidence on Disability in Uganda By Marc Labie; Pierre-Guillaume Méon; Roy Mersland; Ariane Szafarz
  2. Pro-Poor Tax Reforms, with an Application to Mexico By Jean-Yves Duclos; Paul Makdissi; Abdelkrim Araar
  3. Is Informality Bad? Evidence from Brazil, Mexico and South Africa By Bargain, Olivier; Kwenda, Prudence
  4. In School or at Work? Evidence from a Crisis By López Bóo, Florencia
  5. Do Natural Disasters Have Long-term Effects on Growth? By Christian R. Jaramillo H.
  6. Institutions and economic development: panel evidence By Luis Angeles
  7. Snakes, Ladders and Traps: Changing Lives and Livelihoods in Rural Bangladesh (1994-2001) By Naila Kabeer
  8. Global Production Sharing, Trade Patterns, and Determinants of Trade Flows in East Asia By Athukorala, Prema–Chandra; Menon, Jayant
  9. Immigration Policies and the Ecuadorian Exodus By Simone Bertoli; Jesús Fernández-Huertas Moraga; Francesc Ortega
  10. Nigeria: A Prime Example of the Resource Curse? Revisiting the Oil-Violence Link in the Niger Delta By Annegret Maehler

  1. By: Marc Labie (Centre Emile Bernheim, CERMi, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and Faculté Warocqué, Université Mons-Hainaut.); Pierre-Guillaume Méon (Centre Emile Bernheim, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and DULBEA, Université Libre de Bruxelles, Brussels.); Roy Mersland (University of Agder, Norway and Centre Emile Bernheim, CERMi, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels.); Ariane Szafarz (Centre Emile Bernheim, CERMi, Solvay Brussels School of Economics and Management, Université Libre de Bruxelles, Brussels and DULBEA, Université Libre de Bruxelles, Brussels.)
    Abstract: This paper studies the relationship between a microfinance institution and its credit officers when the latter are biased against a subgroup of the clientele. Using survey data from Uganda, we provide evidence that credit officers are more biased against disabled borrowers than other employees. In line with the evidence, we then build an agency model of a non-profit MFI and a discriminatory credit officer. Since incentives are costly, and the MFI’s budget is limited, even a non discriminating welfare-maximizing MFI may prefer paying smaller incentives, and letting its credit officer discriminate to some extent.
    Keywords: Microfinance, Discrimination, Credit Officers, Incentives.
    JEL: G21 O16 J33 L3
    Date: 2010–02
  2. By: Jean-Yves Duclos; Paul Makdissi; Abdelkrim Araar
    Abstract: This paper proposes a methodology for testing for whether tax reforms are pro-poor. This is done by extending stochastic dominance techniques to help identify tax reforms that will necessarily be deemed absolutely or relatively pro-poor by a wide spectrum of poverty analysts. The statistical properties of the various estimators are also derived in order to make the method implementable using survey data. The methodology is used to assess the pro-poorness of possible reforms to Mexico’s indirect tax system. This leads to the identification of several possible pro-poor tax reforms in that country. It also shows how the pro-poorness of a tax reform depends on one’s conception of poverty as well as on the revenue and efficiency impact of the reform.
    Keywords: Stochastic dominance, pro-poor changes, tax reforms, Mexico
    JEL: D12 D63 H21 I32
    Date: 2010
  3. By: Bargain, Olivier (University College Dublin); Kwenda, Prudence (University College Dublin)
    Abstract: The informal sector plays an important role in the functioning of labor markets in emerging economies. To characterize better this highly heterogeneous sector, we conduct a distributional analysis of the earnings gap between informal and formal employment in Brazil, Mexico and South Africa, distinguishing between dependent and independent workers. For each country, we use rich panel data to estimate fixed effects quantile regressions to control for (time-invariant) unobserved heterogeneity. The dual nature of the informal sector emerges from our results. In the high-tier segment, self-employed workers receive a significant earnings premium that may compensate the benefits obtained in formal jobs. In the lower end of the earnings distribution, both informal wage earners and independent (own account) workers face significant earnings penalties vis-à-vis the formal sector. Yet the dual structure is not balanced in the same way in all three countries. Most of the self-employment carries a premium in Mexico. In contrast, the upper-tier segment is marginal in South Africa, and informal workers, both dependent and independent, form a largely penalized group. More consistent with the competitive view, earnings differentials are small at all levels in Brazil.
    Keywords: quantile regression, earnings differential, informal sector, salary work, self-employed, fixed effects model
    JEL: J21 J23 J24 J31 O17
    Date: 2010–01
  4. By: López Bóo, Florencia (Inter-American Development Bank)
    Abstract: This paper examines the effect of labor market opportunities on schooling-employment decisions in 12 urban areas in Argentina over 12 years, emphasizing the recession/crisis years 1998-2002. The effects of macroeconomic swings on schooling decisions are examined with a focus on whether the income or substitution effect dominates as macroeconomic conditions change. I demonstrate that over "typical" years deteriorating job rates (or wages) increase the probability of attending school and decrease the probability of combining work and school, particularly for boys. After controlling for household and individual characteristics I find that the probability of being in school for secondary school youth was about 6 percentage points higher in 2002 than in 1998 (before the recession started). In fact, a 10 percent decrease in the job rate alone has been responsible for a 5.4 percentage point rise in the probability of school attendance since 2000. This effect is attenuated during the 2002 crisis when household expectations change in response to shocks. These estimates allow for the fact that a new Federal Education Law (FEL) in 1996 extended mandatory education to 10 years and might have affected schooling outcomes.
    Keywords: schooling decision, macroeconomic shocks, local labor market opportunities
    JEL: I21 J31
    Date: 2010–01
  5. By: Christian R. Jaramillo H.
    Abstract: Large natural disasters (LNDs) are ubiquitous phenomena with potentially large impacts on the infrastructure and population of countries and on their economic activity in general. Using a panel of 113 countries and 36 years of data, I examine the relationship between different measures of natural disaster impact and long-run economic growth. The sample is partitioned in two separate ways: according to the amount and type of disasters that countries have experienced and to the size of those disasters. For each partition, I present two sets of econometric estimations. The first regressions identify short-run and longer-lasting effects of LNDs. However, these first estimations do not distinguish between temporary but persistent effects and truly permanent ones. I thus estimate a structural model that allows me to identify permanent changes. The results of the first regressions show that for some of the groups of countries the disaster impact persists beyond the 2-5 years in which reconstruction and adaptation are expected to have an effect on the economy. However, the estimates using the structural model show that only for a very small number of countries which share a history of highly devastating natural disasters the negative effects are truly permanent.
    Date: 2009–11–01
  6. By: Luis Angeles
    Abstract: In this paper we search for empirical support for the thesis that institutions are a major driver of economic development. While most of the literature uses cross-country regressions (and thus limits itself to the between-country variation in the data), this paper uses pooled OLS, panel regressions with fixed effects, and country by country re- gressions taking advantage of both the within- and between-country variation in the data. Results can be summarized as follows: (a) When using both the within- and between-country variation we find a limited effect of institutions on economic development. The effect disappears once countries leave the lowest level of institutional quality. (b) When using only the within-country variation we find no effect of institutions on economic development.
    Date: 2010–01
  7. By: Naila Kabeer
    Abstract: This paper examines national-level explanations for poverty decline in Bangladesh in micro-level detail, in order to better understand the nature of the causalities at work and why some households have gained, while others have failed to gain, in the processes of change involved. The analysis is based on empirical data on the lives and livelihoods of rural households in two locations: Chandina thana in Comilla district and Modhupur thana in Tangail district. The data is drawn from panel data on 1184 household in 1994 and 2001, and qualitative data collected by the author at various points during the period covered by the study. The paper demonstrates that the distribution of ‘winners’ and ‘losers’ is not determined purely by chance; it also reflects differences in endowments and efforts.
    Keywords: households, qualitative data, population growth, agriculture, Green Revolution, cultivation, imports, endowments, economic change, poverty decline, Human resources, gender, mobility, per capita income, Bangladesh, livelihoods, rural
    Date: 2010
  8. By: Athukorala, Prema–Chandra (Australian National University); Menon, Jayant (Asian Development Bank)
    Abstract: Global production sharing—the breakup of a production process into vertically separated stages that are carried out in different countries—has become one of the defining characteristics of world trade over the past few decades. Any analysis of trade patterns or its determinants that ignores this phenomenon, and the trade in parts and components that it generates, is likely to result in erroneous conclusions. This study examines the extent and pattern of these flows, focusing on East Asia, and probes its implications for the analysis of the determinants of trade flows. World trade in parts and components increased from about 18.9% to 22.3% of total exports between 1992/93 and 2005/06. Most of this growth emanates from East Asia, with its share in total world exports increasing from 27% to 39% over the same period. There was a notable decline in Japan’s share toward the end of this period, but this was more than offset by the rising importance of the People's Republic of China (PRC). In East Asia, most of this trade is in electronics. The econometric analysis reveals that parts and components are remarkably less sensitive to changes in relative prices; as a result, the sensitivity of aggregate trade flows to relative price changes diminishes as its share increases. This implies that exchange rate policy may be less effective in balance of payments adjustment, in countries where component trade is high and growing.
    Keywords: Global production sharing; product fragmentation trade; determinants of trade flows; exchange rate policy
    JEL: F10 F13 F23
    Date: 2010–01–01
  9. By: Simone Bertoli (European University Institute); Jesús Fernández-Huertas Moraga (Institut d'Anàlisi Econòmica (Institute of Economics Analysis), Consejo Superior de Investigaciones Científicas (Higher Council of Scientific research)); Francesc Ortega (Universitat Pompeu Fabra)
    Abstract: Ecuador experienced an unprecedented wave of international migration since the late 1990s, triggered by a severe economic and financial crisis. This paper gathers individual-level data from Ecuador and the two main destinations of Ecuadorian migrants: the US and Spain. First, we provide a careful description of the main characteristics of migration flows, both in terms of their scale and skill composition. Second, we estimate Mincer regressions for Ecuadorians in the three countries, and attempt to reconcile the features of migration flows with our predictions for earnings by destination. We find that earnings differences can account for the higher share of college graduates among migrants to the US, but fail to explain the larger scale of the flows to Spain. We argue that the puzzle is explained by taking into account that (i) the options to migrate legally to either destination were slim, and (ii) the cost of illegally migrating to Spain was lower than to the US.
    Keywords: Migration, Selection, Sorting and Immigration policies.
    JEL: O15 J61 D31
    Date: 2010–02
  10. By: Annegret Maehler (GIGA Institute of Global and Area Studies)
    Abstract: This paper studies the oil-violence link in the Niger Delta, systematically taking into consideration domestic and international contextual factors. The case study, which focuses on explaining the increase in violence since the second half of the 1990s, confirms the differentiated interplay of resource-specific and non-resource-specific causal factors. With regard to the key contextual conditions responsible for violence, the results underline the basic relevance of cultural cleavages and political-institutional and socioeconomic weakness that existed even before the beginning of the “oil era.” Oil has indirectly boosted the risk of violent conflicts through a further distortion of the national economy. Moreover, the transition to democratic rule in 1999 decisively increased the opportunities for violent struggle, in a twofold manner: firstly, through the easing of political repression and, secondly, through the spread of armed youth groups, which have been fostered by corrupt politicians. These incidents imply that violence in the Niger Delta is increasingly driven by the autonomous dynamics of an economy of violence: the involvement of security forces, politicians and (international) businessmen in illegal oil theft helps to explain the perpetuation of the violent conflicts at a low level of intensity.
    Keywords: Nigeria, natural resources, oil, political economy, violence, context sensitivity
    Date: 2010–01

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