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on Development |
| By: | Arias, Javier (University of Chicago); Azuara, Oliver (University of Chicago); Bernal, Pedro (University of Chicago); Heckman, James J. (University of Chicago); Villarreal, Cajeme (University of Chicago) |
| Abstract: | This paper discusses the problems facing the Mexican economy. It operates under a heavy burden of monopoly and regulation. We focus on two issues that should receive more attention in discussions of Mexican policy. (1) The family is under stress in Mexico and this retards the growth of skills of workforce. (2) The informal sector is large, mostly due to the heavy burden of monopoly and regulation. We find little evidence that the introduction of social protection programs for workers outside the formal sector have promoted the growth of the informal sector. |
| Keywords: | Mexico, family policy, informality, regulation |
| JEL: | J13 L51 O17 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp4740&r=dev |
| By: | Eugene Hristev; Georgeta Mincu; Maya Sandu; Mateusz Walewski |
| Abstract: | Remittances in Moldova reach 36% of GDP, hence they constitute an essential part of the Moldovan economy. The most visible characteristic of remittances is their unequal distribution. The analysis applying the standard Lorenz Curve proves that 75% receiving households gets only 25% of total amount being sent to the country. The way remittances are distributed does not seem to be random. Higher amounts go in general to younger and more educated households. Remittances strongly influence the economic potential of households, especially if they are high enough. They often constitute the main source of households' income, but they not discourage the members of receiving households from economic activity. It indicates that migration and working abroad is the manifest of economic activity, on the other hand it suggest that lack of employment opportunities in the country is an important reason for migration. Those who obtain remittances tend to have higher share of investments in their total household spending. Significant share of remittances for all groups is spent on education - the basic investment increasing the future competitiveness. In rural areas remittances are much more often used to improve the quality of farms than to start running other businesses. It seems that lack of infrastructure and good governance is the main reason for which educated and young emigrants sending significant amounts of money do not decide to invest them in entrepreneurial activities. Eradicating these impediments for local development should be become a highest priority. |
| Keywords: | Moldova, migrations, remittances, labor market, welfare, rural areas |
| JEL: | F22 F24 I31 J21 J61 R23 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:sec:cnstan:0389&r=dev |
| By: | Richard Herd |
| Abstract: | In recent years, policymaking in China has put increasing emphasis on stemming the growth in inequality, which had been fairly steep since the 1980s. Policy action has taken the form of regional development measures and of reforms of various aspects of the social safety net broadly defined. The Western Development Plan has aimed at narrowing the income gap between the sparsely populated and under-developed West and the more prosperous and faster-growing East. The bulk of the expenditure, however, has been on large capital-intensive projects rather than on education and other social spending. More emphasis on education would help reduce the income gap, since human capital is a key determinant of income. Government policies to improve conditions in rural areas nationwide have involved a substantial reduction in the burden of regressive taxes and fees. Welfare assistance has also evolved: a minimum living allowance has been introduced in urban and more recently in rural areas, but it has not reduced poverty that much, not least because of how it is administered. Moreover, the financing of this allowance ought to rely more on national solidarity and its delivery needs to be better co-ordinated with that of other social benefits. A set of new indicators of nationwide inequality, based on household survey data, suggests that overall inequality has ceased to increase in recent years, and may even have inched down. Alternative measures of income inequality across provinces show that, if migration is taken into account, disparities are markedly less, and have tended to decline somewhat in recent years. Even so, geographical inequality remains very high by international standards. It reflects intra- more than inter-provincial differences, pointing to persistent, if diminishing, labour market segmentation.<P>Une pause dans le creusement des inégalités en Chine ?<BR>Ces dernières années, la volonté d’endiguer l’accentuation des inégalités, qui tendaient à se creuser depuis les années 1980, a pris une place grandissante dans les grandes orientations chinoises. L’action publique s’est traduite par des mesures de développement régional et des réformes de divers aspects du filet de sécurité sociale au sens large. La stratégie de mise en valeur de l’Ouest a visé à réduire l’écart de revenu entre cette partie du pays peu peuplée et insuffisamment développée et l’Est plus prospère où la croissance est plus rapide. Toutefois, les dépenses ont, pour l’essentiel, privilégié les grands projets à forte intensité de capital par rapport à l’éducation et à d’autres préoccupations sociales. Un recentrage sur l’éducation contribuerait à réduire les disparités en termes de revenu, celui-ci étant largement déterminé par le capital humain. Les politiques menées par le gouvernement pour améliorer la situation des campagnes dans tout le pays ont veillé à alléger sensiblement le poids des impôts et prélèvements régressifs. L’aide sociale a également évolué : une garantie de minimum vital a été instaurée dans les zones urbaines puis, il y a peu, dans les zones rurales, sans pour autant faire véritablement reculer la pauvreté, ne serait-ce qu’en raison de ses modalités administratives. Par ailleurs, le financement de cette garantie de minimum vital devrait reposer davantage sur la solidarité nationale, et une coordination plus étroite s’impose avec l’attribution d’autres prestations sociales. D’après un ensemble de nouveaux indicateurs nationaux, conçus à partir de données d’enquêtes sur les ménages, les inégalités globales n’augmentent plus depuis quelques années ; peut être même ont-elles diminué. Il ressort d’autres mesures des inégalités de revenu entre provinces que si les migrations entrent en ligne de compte, le fossé est nettement moins grand, et tend à se combler quelque peu. Les inégalités géographiques n’en restent pas moins très fortes par rapport aux normes internationales. Le phénomène s’explique par des différences plus intra qu’interprovinciales, et renvoie à une segmentation du marché du travail persistante, bien qu’elle aille en s’estompant. |
| Keywords: | human capital, education, migration, social assistance, China, poverty, income inequality, hukou, labour market segmentation, capital humain, éducation, pauvreté, inégalité des revenus, Chine, migration, assistance sociale, hukou, segmentation du marché du travail |
| JEL: | D31 D63 E24 E64 H52 H53 H54 H55 H75 I28 I32 I38 J42 J61 O15 O53 P25 P36 R58 |
| Date: | 2010–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:748-en&r=dev |
| By: | Richard Herd; Vincent Koen; Anders Reutersward |
| Abstract: | Over the past decade, the share of jobs not controlled by the state has increased considerably, whilst employment in agriculture has declined, against the backdrop of ongoing urbanisation. Over 200 million people have been drawn into urban areas through official or unofficial migration, despite various obstacles to labour mobility, including the registration system and the associated restrictions to social service access. New labour laws were introduced in 2008 to better protect employees in a market now dominated by private-sector employers, notably via more systematic use of and adherence to written labour contracts, in particular of indefinite duration ones. To what extent the new legislation and implementing regulations will be enforced remains to be seen. For the time being, de facto employment protection is far less than de jure, with an enduring preponderance of fixed-term contracts, involving few restrictions. Minimum wages are set locally and have not kept up with average wages, nor are they effectively enforced. During the recent slowdown, average wages adjusted rapidly and employment was soon on the rise again. However, this episode also highlighted the need to integrate migrants better, not least by relaxing registration rules.<P>Le marché du travail chinois en transition : création d’emplois, migrations et régulation<BR>Au cours des dix dernières années, la proportion d’emplois non contrôlés par l’État a augmenté considérablement, tandis que les possibilités de travail dans le secteur de l’agriculture s’amenuisaient sur fond d’urbanisation ininterrompue. Plus de 200 millions de personnes ont migré – officiellement ou non – vers des zones urbaines, en dépit des nombreux obstacles qui freinent la mobilité de la main-d’oeuvre, notamment le système d’enregistrement et les contraintes qu’il impose en matière d’accès aux services sociaux. Depuis 2008, le marché du travail est soumis à de nouvelles réglementations, visant à assurer aux employés une meilleure protection sur un marché aujourd’hui dominé par les employeurs du secteur privé : on soulignera le recours plus systématique au contrat de travail écrit, et en particulier au contrat de durée indéterminée. On ignore encore dans quelle mesure seront respectées la nouvelle législation et les modalités d’application. Pour l’heure, la protection réelle des employés est très inférieure à ce que prévoit le droit, et les contrats les plus répandus restent les contrats de durée déterminée qui offrent peu de protection. Le montant du salaire minimum est fixé au niveau local, sans référence au salaire moyen, et n’est d’ailleurs pas effectivement respecté. Dans la récente période de ralentissement économique, les salaires moyens ont été ajustés rapidement et l’emploi a connu une embellie. Toutefois, cet épisode a également mis en lumière la nécessité d’une meilleure intégration des migrants, notamment par un assouplissement des modalités d’enregistrement. |
| Keywords: | unemployment, employment, social services, China, minimum wage, labour market, access, hukou, contracts, urbanisation, chômage, marché du travail, emploi, salaire minimum, Chine, hukou, contrats, urbanisation, accès aux services sociaux |
| JEL: | E24 J21 J23 J24 J31 J41 J42 J61 J63 J65 J71 J82 J83 K31 O53 P23 R23 |
| Date: | 2010–02–01 |
| URL: | http://d.repec.org/n?u=RePEc:oec:ecoaaa:749-en&r=dev |
| By: | Vegard Iversen et al (Institute for Development Policy and Management, University of Manchester) |
| Abstract: | We test core theories of the household using variants of a public good game and experimental data from 240 couples in rural Uganda. Spouses do not maximise surplus from cooperation and realise a greater surplus when women are in charge. This violates assumptions of unitary and cooperative models. When women control the common account, they receive less than when men control it; this contradicts standard bargaining models. Women contribute less than men and are rewarded more generously by men than vice versa. This casts doubt on postulates in Sen (1990). We also find strong evidence for opportunism. The results are put in a socioeconomic context using survey data and follow-up interviews, which provides hints of the external validity of our findings; more so for contribution than for allocation behaviour. Taken together, our findings suggest that a `one-size fits all' model of the household is unlikely to be satisfactory. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:ind:isipdp:09-04&r=dev |
| By: | Ulf von Lilienfeld-Toal (Department of Finance, Stockholm School of Economics); Dilip Mookherjee (Department of Economics, Boston University); Sujata Visaria (Department of Economics, Boston University) |
| Abstract: | It is generally presumed that strengthening the enforcement of lender rights expands the set of incentive compatible loan contracts, resulting in increased access to credit for all types of borrowers. This is based on an implicit assumption of inlnitely elastic supply of loans. With inelastic supply, strengthening enforcement can result in greater exclusion of poor borrowers from credit markets and a reallocation of credit from poor to wealthy borrowers. Using a dataset of capital project loans given by a large Indian bank to lrms of varying asset sizes, we lnd evidence of such adverse distributional impacts of a reform to strengthen lender rights implemented across Indian states in the 1990s. |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:ind:isipdp:09-03&r=dev |
| By: | Micheline Goedhuys (UNU-MERIT and Maastricht University); Martin Srholec (Centre for Technology, Innovation and Culture, University of Oslo) |
| Abstract: | National framework conditions mediate the effect of technological capabilities of firms on their productivity. Although this has been recognized in the literature for a long time, a quantitative test that explicitly considers this hypothesis has been lacking. Using a World Bank datasets of about 19,000 firms in 42 countries, most of which are developing, we estimate a multilevel production function with effects of firm’s technological capabilities nested in the national framework conditions. Our results confirm that various facets of firm’s technological capabilities and national economic, technological and institutional conditions influence total factor productivity of firms. Furthermore, we find that the effects of the national conditions and firm’s technological capabilities are closely intertwined with each other. Adherence to international standards, formal training of workers and access to technology through foreign ownership make more difference for productivity of firms in less developed countries, while R&D capabilities on the contrary boost significantly more performance of firms in countries at the technological frontier. Different features of the national framework are shown to be responsible for this. |
| Keywords: | Productivity, innovation, technological capability, institutions, multilevel modeling |
| JEL: | C39 D24 O12 O14 O31 O43 |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:tik:inowpp:20100208&r=dev |
| By: | Raihan, Selim (University of Dhaka); H. Khondker, Bazlul (University of Dhaka); Sugiyarto, Guntur (Asian Development Bank); Jha, Shikha (Asian Development Bank) |
| Abstract: | This paper examines the impacts of international remittances on household consumption expenditure and poverty in Bangladesh using computable general equilibrium modeling of the Bangladesh economy and microeconometric analysis at the household level. The former assesses the economic effects and distributional implications of remittances at the macro, sectoral, and household group levels, while the latter shows the association between remittances and household consumption expenditure, including poverty status. The first results show that remittances have positive effects on the economy and reduce poverty. It is estimated that 1.7 out of the 9 percentage point reduction in the headcount ratio during 2000–2005 was due to the growth in remittances. A closer look at the household level further reveals the positive and significant impacts of remittances on the household’s food and housing-related expenditures. The impacts on education and health expenditures are also positive but insignificant. Moreover, the logit regression results suggest that the probability of the household becoming poor decreases by 5.9% if it receives remittances, which further confirms the positive impact of remittances. Given that migration and remittances also bring costs to the society, the study findings call for policies to maximize their benefits. This includes attracting more remittances through formal channels and increasing their productive use. |
| Keywords: | International migration and remittances; Household welfare; Poverty; CGE Model; Microeconometrics; Bangladesh |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0189&r=dev |
| By: | P. Ang, Alvin (University of Santo Tomas); Sugiyarto, Guntur (Asian Development Bank); Jha, Shikha (Asian Development Bank) |
| Abstract: | As one of the world’s largest recipients of remittances, the Philippines received remittances roughly 12% of its gross domestic product in 2008. Remittances have become the single most important source of foreign exchange to the economy and a significant source of income for recipient families. Using the instrument variable estimation technique, this study examines the role of remittances in increasing household consumption and investment and thereby their potential for rebalancing economic growth and creating long-term human and capital investment. The results indicate that remittances negatively influence the share of food consumption in the total expenditure. However, unlike previous studies, the estimations show that remittances to the Philippines do not have a significant influence on other key items of consumption or investment such as spending on education and health care. A further analysis using logistical regression shows that remittances help to lift households out of poverty. Remittances thus may help in fighting poverty in the Philippines but not in rebalancing growth, especially in the long run. |
| Keywords: | Remittances; migrants; household consumption; investment; poverty; Philippines |
| Date: | 2009–12 |
| URL: | http://d.repec.org/n?u=RePEc:ris:adbewp:0188&r=dev |
| By: | Chaudhuri, Sarbajit |
| Abstract: | Using a three-sector specific-factor Harris-Todaro type general equilibrium model the paper demonstrates how an inflow of foreign capital might produce favourable effect on the incidence of child labour in a small open dual economy. The welfare of the working families is likely to improve due to the policy even though the urban unemployment situation of unskilled labour may not get better. |
| Keywords: | Child labour; general equilibrium; Harris-Todaro model; foreign capital; return to education; wage inequality |
| JEL: | J13 F10 J10 I28 |
| Date: | 2010–02–05 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:20610&r=dev |
| By: | Basu, Karna |
| Abstract: | Why do individuals borrow and save money at the same time? I present a model in which sophisticated time-inconsistent agents, when faced with a future investment opportunity, rationally choose to save their wealth and then borrow to fund the investment. The combination of savings and a loan generates incentives for future selves to invest optimally by punishing over-consumption. This paper contains two main results. First, I show that agents who simultaneously save and borrow can have higher lifetime welfare than those who don’t. Second, I show that agents who have access to a non-secure savings technology can be better off than those who only have access to secure savings. |
| Keywords: | saving; borrowing; microfinance; hyperbolic discounting |
| JEL: | O1 O12 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:20442&r=dev |
| By: | Mukherjee, Sacchidananda; Chakraborty, Debashis |
| Abstract: | Economic growth does not necessarily ensure environmental sustainability for a country. The relationship between the two is far more complicated for developing countries like India, given the dependence of a large section of the population on natural resources. Under this backdrop, the current study attempts to analyze the relationships among Environmental Quality (EQ), Human Development (HD) and Economic Growth (EG) for 14 major Indian States during post liberalisation period (1991-2004). Further, for understanding the changes in EQ with the advancement of economic liberalisation, the analysis is carried out by dividing the sample period into two: Period A (1990–1996) and Period B (1997–2004). For both the sub-periods, 63 environmental indicators have been clustered under eight broad environmental groups and an overall index of EQ has been constructed using the HDI methodology. The EQ ranks of the States exhibit variation over time, implying that environment has both spatial and temporal dimensions. Ranking of the States across different environmental criteria (groups) show that different States possess different strengths and weaknesses in managing various aspects of EQ. The HDI rankings of the States for the two periods are constructed by the HDI technique following the National Human Development Report 2001 methodology. We attempt to test for the Environmental Kuznets Curve hypothesis through multivariate OLS regression models, which indicate presence of non-linear relationship between several individual environmental groups and per capita net state domestic product. The relationship between EQ and economic growth however does not become clear from the current study. The regression results involving individual environmental groups and HDI score indicate a slanting N-shaped relationship. The paper concludes that individual States should adopt environmental management practices based on their local (at the most disaggregated level) environmental information. Moreover, since environmental sustainability and human well-being are complementary to each other, individual States should attempt to translate the economic growth to human well-being. |
| Keywords: | Environmental Quality Index (EQI); Human Development Index (HDI); Economic Liberalisation; Economic Growth; India. |
| JEL: | Q50 E21 K32 Q23 C43 I20 I0 O10 O15 Q24 O13 Q01 Q25 O40 I32 Q56 Q0 Q53 I10 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17207&r=dev |
| By: | Mazumdar, Surajit |
| Abstract: | This paper briefly presents an analytical description of the twin processes of growth of output and change in its composition in the Indian economy since independence, by looking at the time-paths of the two dimensions simultaneously. It suggests that three turning points located respectively in the mid-1960s, 1980, and the mid-1990s separate the entire period after independence into four sequential phases of growth and structural change. This periodization of India’s post-independence economic history points towards the need to go beyond relating the dynamics of the Indian economy to exclusively the degree to which the prevalent economic policy regime was interventionist or liberal in different periods |
| Keywords: | Growth; Structural Change; India |
| JEL: | O53 O10 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:20401&r=dev |
| By: | Chen, Xi; Zhang, Xiaobo |
| Abstract: | This paper reviews the recent literature on inequality and income distribution in rural China utilizing panel datasets. We begin by briefly summarizing and comparing available panel datasets for rural China that can be employed to explore issues on inequality and income distribution, and major data issues that might act as obstacles to research and policy enforcement are then analyzed. The paper then reviews the trend and spatial decompositions of rural income inequality, its major determinants, and its relationship with household welfare. Dimensions other than income inequality, such as income mobility and income polarization, are categorized and reviewed respectively. A recently developed branch of literature on inequality and health is summarized. On the basis of the review, this paper concludes by identifying new research areas with existing panel data sets and a new panel dataset that could shape future research. |
| Keywords: | Inequality；Income Distribution；Rural China；Panel Data |
| JEL: | D31 O53 O15 |
| Date: | 2009–10–25 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:20587&r=dev |
| By: | Fernanda Brollo; Tommaso Nannicini; Roberto Perotti; Guido Tabellini |
| Abstract: | The paper studies the effect of additional government revenues on political corruption and on the quality of politicians, both with theory and data. The theory is based on a version of the career concerns model of political agency with endogenous entry of political candidates. The evidence refers to municipalities in Brazil, where federal transfers to municipal governments change exogenously according to given population thresholds. We exploit a regression discontinuity design to test the implications of the theory and identify the causal effect of larger federal transfers on political corruption and the observed features of political candidates at the municipal level. In accordance with the predictions of the theory, we find that larger transfers increase political corruption and reduce the quality of candidates for mayor. |
| JEL: | D72 D73 H40 H77 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15705&r=dev |
| By: | Daron Acemoglu; Pierre Yared |
| Abstract: | Despite the major advances in information technology that have shaped the recent wave of globalization, openness to trade is still a political choice, and trade policy can change with shifts in domestic political equilibria. This paper suggests that a particular threat and a limiting factor to globalization and its future developments may be militarist sentiments that appear to be on the rise among many nations around the globe today. We proxy militarism by spending on the military and the size of the military, and document that over the past 20 years, countries experiencing greater increases in militarism according to these measures have had lower growth in trade. Focusing on bilateral trade flows, we also show that controlling flexibly for country trends, a pair of countries jointly experiencing greater increases in militarism has lower growth in bilateral trade. |
| JEL: | F01 F10 F52 |
| Date: | 2010–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:15694&r=dev |
| By: | NAKATA Hiroyuki; SAWADA Yasuyuki; TANAKA Mari |
| Abstract: | Asking retrospective questions about consumption and income has become an important part of household surveys and research in developing countries. While recall errors in retrospective data may generate estimation biases, the nature and the magnitude of the errors are largely unknown, especially in the context of developing countries. To fill this gap in the existing studies, we collect unique household data from Vietnam, a resurvey of respondents of the Vietnam Health and Living Standard Survey (VHLSS) 2006. This combined data allows us to investigate a variety of errors associated with recall surveys and the size of consumption categories in questionnaires. Our empirical results suggest that asking for total expenditure, rather than categorical expenditure, will cause fewer recall errors in a retrospective survey. This is especially true in the case of purchased or bartered consumption expenditure. Our results also suggest that while recall errors in the categorical sum of expenditure may exhibit mean-reverting patterns, retrospective total expenditure data is less likely to involve problems of mean reverting measurement error. |
| Date: | 2010–02 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:10008&r=dev |
| By: | Hernando Zuleta (Department of Economics, Universidad del Rosario American University in Bulgaria); Andrew T. Young (Department of Economics, West Virginia University) |
| Abstract: | The relative stability of aggregate labor's share constitutes one of the great macroeconomic ratios. However, relative stability at the aggregate level masks the unbalanced nature of sectoral labor's shares. We present a two-sector (manufacturing and services) model with induced innovation that can rationalize these phenomena as well as several other empirical regularities of actual economies. Specifically, along the transition path (i) manufacturing becomes increasingly capital-intensive over time while (ii) there is an increase in the relative price and production share of services and (iii) aggregate labor's share converges from above to a non-zero value. At the sectoral level (iv) labor’s share in manufacturing trends towards zero. Notably, (v) the model may transition to either a neoclassical steady-state or long-run endogenous growth, so it has the potential to account for a wide range of growth experiences. |
| Keywords: | Labor's Share, Factor Shares, Development, Biased Technical Change, Capital Intensity |
| JEL: | O11 O30 O41 |
| Date: | 2010 |
| URL: | http://d.repec.org/n?u=RePEc:wvu:wpaper:10-01&r=dev |