nep-dev New Economics Papers
on Development
Issue of 2011‒03‒26
25 papers chosen by
Mark Lee
Towson University

  1. The Impact of Microfinance on the Informal Credit Market: an Adverse Selection Model By Timothée Demont
  2. Self-Employment and Conflict in Colombia By Carlos Bozzoli; Tilman Brück; Nina Wald
  3. Housing Policies in China: Issues and Options By Zenou, Yves
  4. Informal Sector and Corruption: An Empirical Investigation for India By Dutta, Nabamita; Kar, Saibal; Roy, Sanjukta
  5. Prenatal Sex Selection and Girls' Well-Being: Evidence from India By Hu, Luojia; Schlosser, Analia
  6. Why Do African Banks Lend so Little? By Svetlana Andrianova; Badi H. Baltagi; Panicos O. Demetriades; David Fielding
  7. Gender Differences, HIV Risk Perception and Condom Use By Judith Lammers; Sweder van Wijnbergen; Daan Willebrands
  8. Kenya's infrastructure: a continental perspective By Briceno-Garmendia, Cecilia M.; Shkaratan, Maria
  9. Ghana's infrastructure : a continental perspective By Foster, Vivien; Pushak, Nataliya
  10. The Democratic Republic of Congo's infrastructure : a continental perspective By Foster, Vivien; Benitez, Daniel Alberto
  11. Zambia's infrastructure : a continental perspective By Foster, Vivien; Dominguez, Carolina
  12. Impacts of international migration and remittances on child outcomes and labor supply in Indonesia : how does gender matter ? By Nguyen, Trang; Purnamasari, Ririn
  13. Ethiopia's infrastructure: a continental perspective By Foster, Vivien; Morella, Elvira
  14. Cote d'Ivoire's infrastructure : a continental perspective By Foster, Vivien; Pushak, Nataliya
  15. Malawi's infrastructure: a continental perspective By Foster, Vivien; Shkaratan, Maria
  16. Liberia's infrastructure: a continental perspective By Foster, Vivien; Pushak, Nataliya
  17. The Effect of Childhood Migration on Human Capital Accumulation: Evidence from Rural-Urban Migrants in Indonesia By Budy Resosudarmo; Daniel Suryadarma
  18. Child Poverty and Compulsory Elementary Education in India: Policy Insights from Household Data Analysis By D.P. Chaudhri; Raghbendra Jha
  19. Body Mass Index, Participation, Duration of Work and Earnings under NREGS: Evidence from Rajasthan By Raghbendra Jha; Raghav Gaiha; Manoj K. Pandey
  20. Industry and the Urge to Cluster: A Study of the Informal Sector in India By Megha Mukim
  21. Who has been affected, how and why? The spillover of the global financial crisis to Sub-Saharan Africa and ways to recovery By Sophie Chauvin; André Geis
  22. Does the system of allocation of intergovernmental transfers in Senegal eliminate politically motivated targeting? By Emilie CALDEIRA
  23. Income and Consumption Smoothing and Welfare Gains Across Pacific Island Countries: The Role of Remittances and Foreign Aid By Balli, Faruk; Balli, Hatice, O.
  24. Foreign Aid-Growth Nexus in Pakistan: Role of Macroeconomic Policies By Muhammad, Javid; Qayyum, Abdul
  25. Mexico’s Progresa-Oportunidades and the emergence of social assistance in Latin America By Niño-Zarazúa, Miguel

  1. By: Timothée Demont (Center for Research in the Economics of Development, University of Namur)
    Abstract: This paper looks at ‘the other side’ of the much-celebrated microfinance revolution, namely its potential impact on the conditions of access to credit for nonmembers (the residual market). It uses a standard adverse selection framework to show the advantage of group lending as a single innovative lending technology, and then to assess how the apparition of this new type of lenders might change the equilibria on rural credit markets, taking into account the reaction of other lenders. We find that two antagonist effects coexist: a standard competition effect and a selection effect. While the former tends to lower the residual market rate, the latter raises the cost of borrowing outside microfinance institutions (MFIs) due to a worsening of the pool of borrowers. The relative weights of the two effects depend on the market structure, the heterogeneity of the population and the actual distance between lending technologies. If the individuallending market is competitive, then the only possible effect is the increase of the interest rate charged by moneylenders, which will happen as soon as the pool of borrowers of the two types of lenders are overlapping. If traditional moneylenders have market power, then the two effects are at work. Even then, whenever a group-lending institution is present in the market, a monopolistic moneylender has to give up supplying credit to relatively safe borrowers, which can allow it to raise its interest rate (though making a lower profit). This arguably less intuitive impact of microfinance, which has been overlooked until now, is important given the nearly-universal coexistence of MFIs and traditional lenders in developing countries. Moreover, it is not only theoretically likely, but seems to match some empirical evidence presented in the paper. Our paper is thus a contribution in the understanding of the redistributive impact of the microfinance revolution that has been occurring in the last years.
    Keywords: Microfinance, Rural credit market, Adverse selection, Group lending, Competition.
    JEL: D82 G21 L1 O12 O16
    Date: 2010–03
  2. By: Carlos Bozzoli; Tilman Brück; Nina Wald
    Abstract: Many Colombians are confronted with the ongoing conflict that influences their decision making in everyday life, including their behavior in labor markets. This study focuses on the impact of violent conflict on self-employment, enlarging the usual determinants with a set of conflict variables. In order to estimate the effect of conflict on selfemployment, we employ fixed effects estimation. Three datasets are combined for estimation: the Familias en Acción dataset delivers information about individuals, a second dataset contains different indicators of the Colombian conflict at the municipality level and the third dataset includes taxes to measure a municipality’s economic situation. Our results show that high homicide and displacement rates in the community of origin reduces self-employment, while a high influx of displaced increases the probability of self-employment in the destination municipality.
    Date: 2011
  3. By: Zenou, Yves (Stockholm University)
    Abstract: This article consists in three parts. The first part deals with theory. We evaluate the pros and cons of government involvement in urban housing and of renting versus ownership. In the second part, we summarize the different housing policies that have been implemented in the United States, Europe, and Asia. We draw some conclusions. In particular, we show that there is a tradeoff between encouraging home ownership and social housing since countries that have favor the former have neglected the latter (like Japan, Spain, etc.). In the third part, we use the theory and the international policy parts to address housing policy issues in China. One of the main concerns in Chinese cities is the raise of poverty mainly by "illegal" migrants (who are Chinese rural residents) living in "urban villages". We propose two steps to fight against poverty in Chinese cities. The first one is to require that the Chinese government recognizes these "illegal" migrants by helping them becoming "legal". The second step is to encourage social housing that directly or indirectly subsidizes housing for the poor. In that case, to fight against poverty, one can either implement place-targeted policies (like the enterprise zone programs in the US and Europe and/or housing projects in the US, UK, or France) or people-targeted policies (like the MTO programs in the US). We also discuss other issues related to poverty. In particular, we suggest that the government could also try to keep migrants in rural areas by attracting firms there and/or introduce a microfinance system that helps them become entrepreneurs.
    Keywords: urban villages, social housing, poverty, place-targeted policies, people-targeted policies, China
    JEL: H5 O53
    Date: 2011–02
  4. By: Dutta, Nabamita (University of Wisconsin, La Crosse); Kar, Saibal (Centre for Studies in Social Sciences, Calcutta); Roy, Sanjukta (World Bank)
    Abstract: India is a country characterized by a huge informal sector. At the same time, it is a country where the extent of corruption in every sector is remarkably high. Stifling bureaucratic interference and corruption at every stage of economic activities is one of the main reasons behind high participation in informal and unregulated sectors. For economies characterized by high inequality and poverty, a useful tool for the government to pacify social unrest, is to choose a lower level of governance allowing substantial corruption in the system. Based on a study of 20 Indian states, we empirically show that higher corruption increases level of employment in the informal sector. Further, our analysis also shows that for higher levels of lagged state domestic product, the positive impact of corruption on the size of the informal sector is nullified.
    Keywords: informal sector, corruption, state domestic product, governance, India
    JEL: C12 C31 D23 J21
    Date: 2011–03
  5. By: Hu, Luojia (Federal Reserve Bank of Chicago); Schlosser, Analia (Tel Aviv University)
    Abstract: In this paper, we study the impact of prenatal sex selection on the well-being of girls by analyzing changes in children's nutritional status and mortality during the years since the diffusion of prenatal sex determination technologies in India. We further examine various channels through which prenatal sex selection might affect girls’ outcomes. Using repeated cross-sections from a rich survey dataset, we show that high sex ratios at birth reflect the practice of sex selective abortion. We then exploit the large regional and time variations in the incidence of prenatal sex selection to analyze whether changes in girls' outcomes relative to boys within states and over time are associated with changes in sex ratios at birth. We find that an increase in the practice of prenatal sex selection appears to be associated with a reduction in the incidence of malnutrition among girls. The negative association is stronger for girls born in rural households and at higher birth parities. An examination of the various mechanisms linking between prenatal sex selection and children outcomes suggests that prenatal sex selection does not lead to a selection of girls into better endowed families, but there is some evidence of a larger reduction in family size for girls relative to boys. We also find an increase in girls' breastfeeding duration suggesting an improvement in parental care and treatment. On the other hand, prenatal sex selection does not appear to be associated with a reduction in excess female child mortality, or a reduction in son preference.
    Keywords: son preference, prenatal sex selection, ultrasound, sex ratio at birth, gender discrimination, child health
    JEL: J13 J16 I1 O12
    Date: 2011–03
  6. By: Svetlana Andrianova; Badi H. Baltagi; Panicos O. Demetriades; David Fielding
    Abstract: We put forward a plausible explanation of African financial under-development in the form of a bad credit market equilibrium. Utilising an appropriately modified IO model of banking, we show that the root of the problem could be unchecked moral hazard (strategic loan defaults) or adverse selection (a lack of good projects). Applying a dynamic panel estimator to a large sample of African banks, we show that loan defaults are a major factor inhibiting bank lending when the quality of regulation is poor. We also find that once a threshold level of regulatory quality has been reached, improvements in the default rate or regulatory quality do not matter, providing support for our theoretical predictions.
    Keywords: Dynamic panel data; African financial under-development; African credit markets
    JEL: G21 O16
    Date: 2011–03
  7. By: Judith Lammers (University of Amsterdam); Sweder van Wijnbergen (University of Amsterdam); Daan Willebrands (Amsterdam Institute for International Development (AIID))
    Abstract: We analyze how HIV-knowledge influences condom use across the sexes. The empirical work is based on a household survey conducted among 1,979 households of a representative group of market persons in Lagos in 2008. Last-time-condom-use is analyzed based on a Probit model while correcting for clustering effects. Next to socioeconomic characteristics, the data includes questions on knowledge of the existence of HIV, HIV prevention, HIV stigma, intended pregnancy, and risk perceptions of engaging in unprotected sex. We observe a large HIV knowledge gap between males and females. Moreover, across the sexes different type of knowledge are important in condom use. Low risk perceptions of engaging in unprotected sex and not knowing that condoms prevent HIV infection appear to be the best predictors for risky sexual behavior among men. The latter is also important in condom use among single females. Both factors, however, do not explain sexual behavior of married women, suggesting a lack of bargaining power in HIV prevention decisions among married females. Our results call for programmatic approaches to differentiate the focus of HIV prevention campaigns for males and females including a separate focus for married men and women. Moreover, the large predictive power of high-risk perceptions of engaging in unprotected sex (while correcting for other HIV knowledge indicators) calls for further exploration of influencing these risk perceptions in HIV prevention programs.
    Keywords: prevention; knowledge; HIV/AIDS; risk perception; gender; condom use
    JEL: I1 I2
    Date: 2011–03–11
  8. By: Briceno-Garmendia, Cecilia M.; Shkaratan, Maria
    Abstract: In the past decade, infrastructure contributed 0.5 percentage points to Kenya's annual per capita GDP growth. Raising the country’s infrastructure endowment to that of Africa's middle-income countries could increase that contribution by 3 percentage points. Several accomplishments are notable. More than 90 percent of the population has access to GSM cell signals. A successful public-private partnership in air transport has made Kenya's airline a top carrier in the region and its international airport a key gateway to Africa. Institutional reforms in the power sector have reduced the burden of subsidies on the public by approximately 1 percent of GDP. But the power sector continues to pose Kenya's greatest infrastructure challenge. Over the next decade, current capacity will have to double. A second challenge is to improve the efficiency of operations at the Port of Mombasa. Other concerns include low levels of access to household services, underfunding of road maintenance, and negative progress on the Millennium Development Goals for water supply and sanitation. Addressing Kenya's infrastructure deficit will require sustained expenditures of approximately $4 billion per year (20 percent of GDP) over the next decade. As of 2006, Kenya needed and additional $2.1 billion per year (11 percent of GDP) to meet that funding goal. The gap could be halved through the use of more efficient technologies to meet infrastructure targets in the transport and WSS sectors. If Kenya is unable to increase infrastructure spending, it could nevertheless meet infrastructure targets in 18 years by eliminating existing inefficiencies in infrastructure sectors.
    Keywords: Transport Economics Policy&Planning,Infrastructure Economics,Town Water Supply and Sanitation,Public Sector Economics,Water Supply and Systems
    Date: 2011–03–01
  9. By: Foster, Vivien; Pushak, Nataliya
    Abstract: Infrastructure contributed just over one percentage point to Ghana's annual per capital GDP growth during the 2000s. Raising the country’s infrastructure endowment to that of the region's middle-income countries could boost the annual growth rate by more than 2.7 percentage points. Ghana has an advanced infrastructure platform when compared with other low-income countries in Africa. The country’s coverage levels for rural water, electricity, and GSM signals are impressive. A large share of the road network is in good or fair condition. Institutional reforms have been adopted in the ICT, ports, roads, and water supply sectors. Ghana’s most pressing challenges lie in the power sector, where outmoded transmission and distribution assets, rapid demand growth, and periodic hydrological shocks leave the country reliant on high-cost oil-based generation. Exceptionally high losses in water distribution leave little to reach end customers, who are thus exposed to intermittent supplies. Addressing Ghana's infrastructure challenges will require raising annual expenditures to $2.3 billion. The country already spends about $1.2 billion per year on infrastructure, equivalent to about 7.5 percent of GDP. A further $1.1 billion is lost each year to inefficiencies, notably underpricing of power.Ghana's annual infrastructure funding gap is about $0.4 billion per year, chiefly related to power and water. Following its recent oil discoveries, Ghana can raise additional public funding from increased tax receipts. The country has several strong areas on which to build and a solid economic base from which to fund incremental efforts.
    Keywords: Transport Economics Policy&Planning,Infrastructure Economics,Town Water Supply and Sanitation,Energy Production and Transportation,Water Supply and Systems
    Date: 2011–03–01
  10. By: Foster, Vivien; Benitez, Daniel Alberto
    Abstract: The Democratic Republic of Congo (DRC) faces possibly the most daunting infrastructure challenge on the African continent. Conflict has seriously damaged most infrastructure networks. Vast geography, low population density, extensive forestlands, and criss-crossing rivers complicate the development of new networks. Progress has been made since the return of peace in 2003. A privately funded GSM network now provides mobile telephone signals to two-thirds of the population. External funding has been secured to rebuild the country's road network, and domestic air traffic has grown. Modest investments could harness inland waterways for low-cost transport. Much more substantial investments in hydropower would enable the DRC to meet its own energy demands cheaply while exporting vast quantities of power. One of the country's most immediate infrastructure challenges is to reform the national power utility and increase power generation and delivery. Capacity must increase by 35 percent over the period 2006-15 to meet domestic demand. The dilapidated condition of both road and rail infrastructure presents another challenge. To meet the target defined in the report, investment in the country's infrastructure must increase from $700 million to $5.3 billion per year over the next decade, a staggering 75 percent of 2006 GDP. New infrastructure technologies, the elimination of inefficiencies, and cross-border finance (for hydropower development) could cut the annual funding gap in half. Recently, the country secured $4 billion in external finance commitments for infrastructure, enabling increases in budget allocations for public investment.
    Keywords: Transport Economics Policy&Planning,Infrastructure Economics,Public Sector Economics,Banks&Banking Reform,Energy Production and Transportation
    Date: 2011–03–01
  11. By: Foster, Vivien; Dominguez, Carolina
    Abstract: Infrastructure improvements contributed 0.6 percentage points to Zambia's annual per capital GDP growth over the past decade, mostly because of exponential growth in information and communication services. The power sector, by contrast, pulled the growth rate down by more than 0.1 percentage points. Improving Zambia's infrastructure endowment could boost growth by up to 2 percentage points per year. Zambia's relatively high generation capacity and power consumption are accompanied by fewer power outages than elsewhere in the region. But Zambia's power sector emphasizes the mining industry, while household electrification is about half that in other resource-rich countries. Zambia's power tariffs, among the lowest in Africa, are less than half the level needed to accelerate electrification and keep pace with mining sector demands. In power as in just about every other aspect of infrastructure, rural Zambians lag well behind their African peers. In a country where 70 percent of the population depends on agriculture for its livelihood, this represents a huge drag on the economy. Zambia would need to spend an average of $1.6 billion a year over the decade 2006-15 to develop the infrastructure found in the rest of the developing world. This is equivalent to 20 percent of Zambia's GDP and about double the country's rate of investment in recent years. Closing the country's annual infrastructure funding gap of $500 million requires raising more funds, looking for more cost-effective ways to meet infrastructure targets, and eliminating the inefficiencies that cause the loss of $300 million annually.
    Keywords: Transport Economics Policy&Planning,Infrastructure Economics,Energy Production and Transportation,Town Water Supply and Sanitation,Banks&Banking Reform
    Date: 2011–03–01
  12. By: Nguyen, Trang; Purnamasari, Ririn
    Abstract: This paper aims to investigate empirically how international migration and remittances in Indonesia, particularly female migration, affect child outcomes and labor supply behavior in sending households. The authors analyze the Indonesia Family Life Survey data set and apply an instrumental variable estimation method, using historical migration networks as instruments for migration and remittance receipts. The study finds that, in Indonesia, the impacts of international migration on sending households are likely to vary depending on the gender of the migrants. On average, migration reduces the working hours of remaining household members, but this effect is not observed in households with female migrants. At the same time, female migration and their remittances tend to reduce child labor. The estimated impacts of migration and remittances on school enrollment are not statistically significant, but this result is interesting in that the directions of the effects can be opposite when the migrant is male or female
    Keywords: Population Policies,Gender and Development,Anthropology,Housing&Human Habitats,International Migration
    Date: 2011–03–01
  13. By: Foster, Vivien; Morella, Elvira
    Abstract: Infrastructure contributed 0.6 percentage points to Ethiopia's annual per capita GDP growth over the last decade. Raising the country's infrastructure endowment to that of the region's middle-income countries could add an additional 3 percentage points to infrastructure's contribution to growth. Ethiopia's infrastructure successes include developing Ethiopia Airlines, a leading regional carrier; upgrading its network of trunk roads; and rapidly expanding access to water and sanitation.The country's greatest infrastructure challenge lies in the power sector, where a further 8,700 megawatts of generating plant are needed over the next decade, implying a doubling of current capacity. The transport sector faces the challenges of low levels of rural accessibility and inadequate road maintenance. Ethiopia’s ICT sector currently suffers from a poor institutional and regulatory framework. Addressing Ethiopia's infrastructure deficit will require a sustained annual expenditure of $5.1 billion over the next decade. The power sector alone requires $3.3 billion annually, with $1 billion needed to facilitate regional power trading. That level of spending represents 40 percent of the country's GDP and a tripling of the $1.3 billion spent annually in the mid-2000s. As of 2006, there was an annual funding gap of $3.5 billion. Improving road maintenance, removing inefficiencies in power (notably underpricing), and privatizing ICT services could shrink the gap. But Ethiopia needs a significant increase in its already proportionally high infrastructure funding and careful handling of public and private investments if it is to reach its infrastructure targets within a reasonable time.
    Keywords: Transport Economics Policy&Planning,Infrastructure Economics,Public Sector Economics,Banks&Banking Reform,Town Water Supply and Sanitation
    Date: 2011–03–01
  14. By: Foster, Vivien; Pushak, Nataliya
    Abstract: Infrastructure contributed 1.8 percentage points to Cote d'Ivoire's annual per capita GDP growth over the mid-2000s before conflict began to erase the country's infrastructure and its growth contributions. Raising the country's infrastructure endowment to the level of the region's middle-income countries could boost the growth rate by a further 2 percentage points. Private sector contracts signed in the 1990s resulted in improved operational performance and funding for investments in the water, power, transport, and ICT sectors. Impressively, those contracts survived the crisis and delivered uninterrupted service. But private investment flows have decreased since the mid-2000s. Cote d'Ivoire's most pressing infrastructural challenge will be to regain the financial equilibrium needed to restore a reliable energy supply. Reestablishing the prominence of Abidjan's port will require investments in terminal capacity and road and rail infrastructure upgrades on hinterland linkages. The underfunding of road maintenance and poor sanitation are additional challenges. Cote d'Ivoire's annual infrastructure spending was $750 million in the mid-2000s, with going to power sector operations and maintenance. If the underpricing of power and other inefficiencies (valued at $200 million annually) were eliminated, the country’s annual infrastructure funding gap would amount to $1 billion, and infrastructure goals could be reached within 20 years. Cote d'Ivoire's has relatively good prospects for bridging its funding gap by raising public investment from its low current level, choosing more efficient technologies, and harnessing additional private investment for infrastructure.
    Keywords: Transport Economics Policy&Planning,Infrastructure Economics,Public Sector Economics,Energy Production and Transportation,Banks&Banking Reform
    Date: 2011–03–01
  15. By: Foster, Vivien; Shkaratan, Maria
    Abstract: Infrastructure contributed 1.2 percentage points to Malawi's annual per capital GDP growth over the past decade. Raising the country's infrastructure endowment to that of the region’s middle-income countries could increase that contribution by 3.5 percentage points. Malawi's successes in infrastructure development include reaching the Millennium Development Goals for water and making GSM telephone signals widely available without public subsidy. Challenges include improving the reliability and sustainability of the power sector, raising funding for road maintenance, preventing overengineering of roads, enhancing market access in agricultural areas, and lowering the cost of information and communications services. The latter goal may be achievable by securing competitive access to the new submarine infrastructure on the East African coast.Addressing Malawi's infrastructure deficit would require sustained expenditures of almost $600 million per year over the decade 2006-15. During the mid-2000s, the country spent close to $200 million per year, about half of which went to the transport sector. Because of widespread inefficiencies -- underpricing of power, improperly maintained roads, and utility distribution losses --about $200 million is wasted each year. But even if those inefficiencies were eliminated, Malawi would still face an annual infrastructure funding gap of almost $300 million. That gap could be cut to $100 million by engaging in regional trade of electricity, using lower-cost technologies in water and sanitation, and adopting less-ambitious road-building technologies. If inefficiencies were eliminated and recent spending levels sustained, Malawi could reach its infrastructure targets within 16 years.
    Keywords: Transport Economics Policy&Planning,Infrastructure Economics,Banks&Banking Reform,Energy Production and Transportation,Town Water Supply and Sanitation
    Date: 2011–03–01
  16. By: Foster, Vivien; Pushak, Nataliya
    Abstract: Liberia's power generating capacity and national grid were completely demolished during 14 years of civil war. Piped water access fell from 15 percent of the population in 1986 to less than 3 percent in 2008. War also left the national road network in a state of severe disrepair. Since the return of peace, the port of Monrovia has resumed normal operations under private management, and progress has been made in securing donor finance for road reconstruction. Liberia has also successfully liberalized its mobile telephone markets, with low-priced access surging to 40 percent in 2009. Liberia's starkest challenge lies in funding a more cost-effective power sector. The country's generation capacity is barely one-tenth of the benchmark level of Africa's other low-income countries. The cost of generating power is exorbitant, and the power tariff is three times the regional average. Addressing Liberia's public infrastructure needs will require sustained expenditures of between $350 million and $600 million annually, mostly to fund power and transport. In the mid-2000s, with all sources of spending taken into account, Liberia spent around $90 million a year on infrastructure. An additional $17 million was lost to inefficiencies, such as underpricing of power. Because Liberia suffers an annual funding gap of between $250 million and $500 million per year, it will need a combination of increased finance, improved efficiency, and cost-reducing innovations to reach its infrastructure targets in a reasonable time. Without these, Liberians may have to wait for up to 40 years to achieve the targets.
    Keywords: Transport Economics Policy&Planning,Infrastructure Economics,Energy Production and Transportation,Public Sector Economics,E-Business
    Date: 2011–03–01
  17. By: Budy Resosudarmo; Daniel Suryadarma
    Abstract: Developing countries are experiencing unprecedented levels of urbanization. Although most of these movements are motivated by economic reasons, they could affect the human capital accumulation of the children who follow their parents to the cities. This paper estimates the causal effect of permanently migrating as a child from a rural area to an urban area on human capital outcomes. To our knowledge, this paper is one of only several papers, especially in the context of a developing country, which is able to estimate the causal effect of migration. We utilize a recent survey of urban-rural migrants in Indonesia and merge it with a nationally representative survey to create a dataset that contains migrants in urban areas and non-migrants in rural areas who were born in the same rural districts. We then employ a measure of district-level propensity to migrate, calculated from the Indonesian intercensal survey, as an instrument. We find that childhood migration to urban areas increase education attainment by about 4.5 years by the time these individuals are adults. In addition, the childhood migrants face a lower probability to be underweight by about 15 percentage points as adults. However, we find no statistically significant effect on height, which is a measure of long-term nutritional intake, and we only find a weak effect on the probability to be obese. Therefore, our results suggest a permanent, positive, and large effect of childhood migration on education attainment and some health measures. In addition, our results can rule out any negative effect on health.
    Keywords: migration, education, health
    JEL: I12 I21 O15 R23
    Date: 2011
  18. By: D.P. Chaudhri; Raghbendra Jha
    Abstract: Children ( under 15 years of age) growing up in poor and/or nutritionally deprived households also live with a number of layers of deprivations that stifle their freedom to actively participate in and benefit from elementary school education. Lack of health care, limited access to quality schooling and opportunity cost of participation in education are some of these layers. Human Development Report 2010, using Oxford University's newly developed Multidimensional Poverty Index, adds more dimensions to poverty measures over and above those of the Indian Planning Commission's (2009) new measure or absolute poverty used in this paper. These enrich our understanding but do not directly deal with children growing up in absolute poverty and non- participation in schooling. This issue can be meaningfully explored with household as the unit of analysis. The paper uses household level data for 2004–05 (NSS 61st Round) and 1993–94 (NSS 50th Round) for India and also major states to analyze these issues. We start with the size of child population, changing share of states and uneven demographic transition in India (particularly the movement in Total Fertility Rates across Indian states) during 1961–2001. Changes in the number of children and the household size in very-poor, poor, non-poor low income and nonpoor high income households from 1993–94 to 2004–05 are analyzed within the crosssections and also between the two cross-sections. Participation in education, and nonparticipation separated as child labor and Nowhere (neither in schools nor in labor force) by poverty status at the all-India and the state levels are reported and commented upon. Changes in magnitudes & proportions of children in poverty in India and across states during 1993–94 & 2004–05 are presented and the share of some states in these magnitudes is highlighted. The determinants of non-attendance in schools (i.e. child being in the labor force or 'no-where') for 5–14 year olds are analyzed using formal econometric models — Probit with binary variables and also Multinomial Logit Models. The results are robust and confirm our descriptive analysis. Finally, broad features of The Free and Compulsory Elementary Education Act, 2009 (Law w.e.f. April, 2010) are reported and linked to the policy implications of our empirical findings for meaningful implementation of the Elementary Education Law. Potential usefulness of Unique ID in delivery of child focused services and monitoring is also highlighted.
    Keywords: Total Fertility Rate, Child poverty, Elementary education, School non-attendance, India
    JEL: I21 J11 J13 J16 J22
    Date: 2011
  19. By: Raghbendra Jha; Raghav Gaiha; Manoj K. Pandey
    Abstract: Despite its evident importance relatively little is known about links between Body Mass Index (BMI) and participation in workfare programs, particularly in India. Using a unique data set for the Indian state of Rajasthan for 2009-10, this paper attempts to fill this void and examines the association between BMI and participation in, duration of employment in and earnings from employment in NREGs. Thus we go beyond the scope of the extant literature and model these links for both male and female workers with varied social and economic backgrounds. Further, we permit non-linearities in some impacts and allow for mutual endogenity, say, between BMI and earnings. To the best of our knowledge this is the first paper to examine this range of issues.
    Keywords: Body Mass Index, National Rural Employment Guarantee, Participation, India
    JEL: C21 D31 D63 H53
    Date: 2011
  20. By: Megha Mukim
    Abstract: This paper studies the determinants of firm location choice at the district-level in India to gauge the relative importance of agglomeration economies vis-à-vis good business environment. A peculiar characteristic of the Indian economy is that the unorganised nonfarm sector accounts for 43.2% of NDP and employs 71.6% of the total workforce. I analyse National Sample Survey data that covers over 4.4 million firms, in both unorganised sectors - manufacturing and services. The empirical analysis is carried out using count models, and I instrument with land revenue institutions to deal with possible endogeneity bias. I find that buyer-suppler linkages and industrial diversity make a district more attractive to economic activity, whilst the quality and level of infrastructure are also important. I conclude that public policy may be limited in its ability to encourage relocation of informal firms.
    Keywords: Agglomeration economies, informal sector, location choice
    JEL: R12 R3 O17
    Date: 2011–03
  21. By: Sophie Chauvin (Banque de France, DAMEP, 31 rue Croix des Petits Champs, 75049 Paris Cedex, France.); André Geis (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main)
    Abstract: This paper first presents a comprehensive analysis of the significance of different transmission channels of the global economic and financial crisis to Sub-Saharan African countries. It then examines the repercussions of the crisis for the growth of gross domestic product (GDP) and its components; this is complemented by a study of the responses of monetary and fiscal authorities to the challenges posed by the crisis, both in regional terms and on the basis of selected country case studies. Finally, the paper highlights medium-term to long-term challenges for ensuring a sustainable recovery and for fostering resilience against potential future shocks.The authors find that the intensity of the impact of the crisis varies widely across countries, with a lack of export diversification apparently having been particularly conducive to its transmission. However, the analysis of the magnitude of the observed swings in macroeconomic variables also reveals that although they were large, they were not exceptional and are comparable to fluctuations Sub-Saharan Africa has witnessed in the recent past. Furthermore, in a non-negligible number of instances the extent of the slowdown seems to have been determined by domestic factors as well. Particularly, policies and conditions prior to the global recession, rather than crisis contagion per se, appear decisively to have shaped the scope of possible responses in many cases. As a result, many of the policy lessons Sub-Saharan Africa might draw from the crisis do not involve radical deviation from the policies in place before. Efforts to improve the management of resource revenue for commodity-dependent countries, necessary reforms of the economic and business environment to enable a diversification of the export base, and further regional integration might help to alleviate possible future external shocks. Additionally, the crisis re-emphasises the need to back growth prospects by redefining sectoral priorities, for example by concentrating on infrastructure and agricultural supply. Lastly, new challenges in the wake of the crisis may call for a re-focusing of policy initiatives, e.g. to address an emergence of potential financing constraints for aid-dependent economies or the exposure of domestic financial sectors to systemic shock. JEL Classification: R11, E60, F30, O10
    Keywords: Regional growth, Sub-Saharan Africa, balance of payments, global economic crisis, international spillovers.
    Date: 2011–03
  22. By: Emilie CALDEIRA
    Abstract: While there is a large body of literature on the determinants of allocation of intergovernmental Â…fiscal transfers in developed countries, this kind of study is still very limited for developing countries, especially Subsaharan countries. Using an original micro-level public fiÂ…nance panel data from Senegal, we address three issues: (1) Does the Senegalese allocation system of Â…fiscal transfers conform to the guidance of the normative theory, in particular, to the equity principle? (2) Does this allocation system eliminate the politically motivated targeting of transfers? (3) If not, what kind of political factors explain the horizontal allocation of resources? By estimating a panel data for 67 local gov- ernments ("communes"), from 1997 to 2009, we fiÂ…nd that equity concerns do not affect the allocation of intergovernmental transfers in Senegal, leading to the conclusion that the resources distribution system does not comply with the dictates of normative theory. Moreover, we Â…find evidence that political considerations influence the horizontal allocation of Â…fiscal transfers. In particular, our analysis suggests that transfers allocation follows a pattern of tactical redistribution more than patronage, swing communes being targeted while partisan communes are not.
    Keywords: decentralization, political economy, Intergovernmental transfers, senegal
    JEL: O12 H77 H20
    Date: 2011
  23. By: Balli, Faruk; Balli, Hatice, O.
    Abstract: We examine the potential welfare gains and channels of income smoothing for Pacific Island Countries (PICs) and nd that, under full risk sharing overall welfare gains across all PICs (particularly, Kiribati, Palau, and Papua New Guinea) are at desirable levels. However, for Australia, the potential welfare gain from risk sharing is almost similar to the gain it obtains if Australia attains full risk sharing with the rest of the OECD countries or with New Zealand alone. We also break down output using the framework of Sorensen and Yosha (1998) to quantify the extent and channels of risk sharing across PICs. For PICs, income-smoothing channels (net factor income and current transfers) play a significant role in buffering the output shock compared to the performance of those channels on smoothing the output shock for OECD countries. Domestic savings also smooth a fair portion of shocks to output, but the extent is much lower compared to that of OECD countries. Further, we analyze the effect of remittances and foreign aid on income smoothing for the PICs exclud- ing Australia and New Zealand. Income smoothing via remittances is highly volatile and significant in recent years, while foreign aid seems to be a stronger and more stable channel for smoothing domestic output shocks for PICs.
    Keywords: Foreign Aid; Remittance In ows; International Integration; Income Smoothing; Consumption Smoothing; Pacic Island Countries; Welfare Gains from Risk Sharing.
    JEL: F15 E25 E21
    Date: 2010–03–01
  24. By: Muhammad, Javid; Qayyum, Abdul
    Abstract: Despite receiving the large quantities of foreign aid, like many other Developing Countries, Pakistan has remained stagnant and become more aid dependent. This grim reality provokes vigorous debate on the effectiveness of aid. This study examines the effectiveness of aid, focusing on the ongoing debate on the interactive effect of aid and policy on sustainable economic growth. The empirical analysis is based on the ARDL cointegration approach using the data for the period 1960 to 2008. Based on the empirical results we find that foreign aid and real GDP has negative relationship while aid-policy interactive term and real GDP growth has positive and significant relationship. The interesting results emerge; when Aid/GDP alone is introduced into the growth equation it has insignificant positive coefficient in the long run and negative and weakly significant coefficient in the short run while aid policy interactive term has positive and significant coefficient both in the short run and long run. When we disaggregate aid in term bilateral and multilateral component, bilateral aid is significantly positive in the short run and multilateral aid is insignificant while aid interactive term is positive in both cases. The results strongly support the view that foreign aid does have positive impact on economic growth in Pakistan conditional on sound macroeconomic policies.
    Keywords: Foreign Aid; Macroeconomic Policies; Economic Growth; Pakistan; ARDL
    JEL: F35
    Date: 2011
  25. By: Niño-Zarazúa, Miguel
    Abstract: This paper provides an overview of the political and economic context under which Mexico’s Progresa-Oportunidades was introduced to prelude the emergence of social assistance in Latin America. The paper identifies four distinctive features of the programme that were revolutionary in their own right. First, the Progresa-Oportunidades embraced a multidimensional approach to poverty, linking income transfers with simultaneous interventions in health, education and nutrition. Second, the programme focused on the poor. This is in clear contrast to generalised food subsidies and other targeted interventions that dominated the antipoverty agenda in the past. Third, the programme followed a complex system of identification and selection of beneficiaries to prevent discretionary political manipulation of public funds. Finally, an independent impact evaluation protocol proved to be critical for both improving the programme’s effectiveness and strengthening its legitimacy across different political factions and constituencies. The paper concludes that the success of Progresa-Oportunidades must be understood in a broader context, where a harsh economic and political environment, coupled with a rapid democratisation and increasing political competition, laid down the foundations for the introduction and then sustained expansion of the programme
    Keywords: social assistance; poverty; human development; Latin America; Mexico
    JEL: I31 O54 I38 O12
    Date: 2011–03–16

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