nep-dev New Economics Papers
on Development
Issue of 2011‒07‒13
thirty papers chosen by
Mark Lee
Towson University

  1. The cycle of development in Africa. A story about the power of economic ideas By Martin Paldam
  2. Poverty transitions among older households in Brazil and South Africa By Armando Barrientos; Julia Mase
  3. Mind the gaps: a political economy of the multiple dimensions of China’s rural–urban divide By Xiaobing Wang; Jenifer Piesse; Nick Weaver
  4. The Latin American Development Problem By Diego Restuccia
  5. Manipulating the rural landscape: Villagisation and income generation in Rwanda By Isaksson, Ann-Sofie
  6. A Matter of Time: Revisiting Growth Convergence in Developing Countries By Andersson, Fredrik N. G.; Edgerton, David; Opper, Sonja
  7. Estimating the Constraints to Trade of Developing Countries By Jean-Jacques Hallaert; Ricardo Cavazos Cepeda; Gimin Kang
  8. Growth, Colonization, and Institutional Development. In and Out of Africa By Graziella Bertocchi
  9. Did Growth and Reforms Increase Citizens’ Support for the Transition? By R. Golinelli; R. Rovelli
  10. Population, poverty, and sustainable development : a review of the evidence By Das Gupta, Monica; Bongaarts, John; Cleland, John
  11. Trade liberalization, firm heterogneity, and wages : new evidence from matched employer-employee data By Krishna, Pravin; Poole, Jennifer P.; Senses, Mine Zeynep
  12. The effects of conflict on fertility in Rwanda By Schindler, Kati; Bruck, Tilman
  13. Diaspora effects in international migration : key questions and methodological issues By Beine, Michel; Docquier, Frederic; Ozden, Caglar
  14. Crossing boundaries : gender, caste and schooling in rural Pakistan By Jacoby, Hanan G.; Mansuri, Ghazala
  15. Does female empowerment promote economic development ? By Doepke, Matthias; Tertilt, Michele
  16. The correlation between human capital and morality and its effect on economic performance : theory and evidence By Balan, David J.; Knack, Stephen
  17. Nature, socioeconomics and adaptation to natural disasters: new evidence from floods By Ferreira, Susana; Hamilton, Kirk; Vincent, Jeffrey R.
  18. Trends and socioeconomic gradients in adult mortality around the developing world By de Walque, Damien; Filmer, Deon
  19. Sierra Leone's infrastructure : a continental perspective By Pushak, Nataliya; Foster, Vivien
  20. Does female reservation affect long-term political outcomes ? Evidence from rural India By Deininger, Klaus; Jin, Songqing; Nagarajan, Hari K.; Fang, Xia
  21. Can diaries help improve agricultural production statistics ? Evidence from Uganda By Deininger, Klaus; Carletto, Calogero; Savastano, Sara; Muwonge, James
  22. Cash transfers, children and the crisis : protecting current and future investments By Fiszbein, Ariel; Ringold, Dena; Srinivasan, Santhosh
  23. Empowering Women: Inheritance Rights and Female Education in India By Roy, Sanchari
  24. An analysis of income polarization in rural and urban China By Céline BONNEFOND (GREThA, CNRS, UMR5113); Matthieu CLEMENT (GREThA, CNRS, UMR5113)
  25. Corruption and Network in Education: Evidence from the Household Survey Data in Bangladesh By Chongwoo Choe; Ratbek Dzhumashev; Asadul Islam; Zakir H. Khan
  26. Effectiveness of foreign aid in Small Island Developing States By Bah, El-hadj M.; Ward, Jeremy
  27. Taxes, Transfers and the Distribution of Employment in Mexico By Alonso Ortiz, Jorge; Leal Ordóñez, Julio C.
  28. Self-Help Groups and Mutual Assistance: Evidence from Urban Kenya By Fafchamps, Marcel; La Ferrara, Eliana
  29. Productivity Volatility and the Misallocation of Resources in Developing Economies By Allan Collard-Wexler; John Asker; Jan De Loecker
  30. Divide and Rule or the Rule of the Divided? Evidence from Africa By Stelios Michalopoulos; Elias Papaioannou

  1. By: Martin Paldam (School of Economics and Management, Aarhus University, Denmark)
    Abstract: During the last 60 years development in Sub-Sahara Africa has had three main phases – P1, P2 and P3 – divided by kinks in 1972 and in 1994. P1 (before 1972) and P3 (after 1994) had fairly satisfactory growth, but P2 (between the kinks) had negative growth. This cyclical growth path has to be explained by variables with a similar path. A set of socio-economic variables representing 11 possible explanations are considered. Some of these were proposed to account for the low growth of Africa, while most are meant to explain the growth tragedy of P2. Most of the variables have paths with no relation to the cycle, but the shifts in the dominating development strategy do have a cyclical path that matches. At the end of P1 the main policy-package in Africa became the one of African socialism. It led to large scale rent seeking, inefficiency and economic regression. At the end of P2 policies were adjustment towards a more market based system and growth resumed.
    Keywords: Cyclical path, African growth
    JEL: O11 O55
  2. By: Armando Barrientos; Julia Mase
    Abstract: Using a panel dataset of older people and their households in Brazil and South Africa, this paper provides estimates of changes in poverty among older people in Brazil and South Africa. It examines poverty status transitions of older people and their households over time. It measures the extent to which panel households managed to escape from poverty, whilst others fell into poverty, and others still remained persistently poor or persistently non-poor over time. The analysis in the paper also throws light on changes in the depth and intensity of poverty among older households. A comparative approach provides an additional dimension to the estimates.
    Date: 2011
  3. By: Xiaobing Wang; Jenifer Piesse; Nick Weaver
    Abstract: China’s impressive growth has been accompanied by increasing inequality and a widening rural– urban divide. This paper identifies and examines nine major dimensions of this divide: income, consumption, education, healthcare, employment, child care, pensions, access to public services and environment. The paper attributes the main causes of the rural–urban divide to China’s development strategy and the associated regressive tax and subsidies policies. This paper is among the first to evaluate and decompose the rural–urban divide into multiple dimensions or gaps, and highlights the severe constraints on the Chinese peasantry. It discuses the policy and welfare implications of the rural–urban divide. It argues that the large size of the rural–urban divide was mainly due to inequality in opportunities and the lack of social provision of public goods in rural areas. The removal of discriminatory policies, including the provision of such public goods, will lead to greater equality of opportunity and a reduced gap. Increased equality and efficiency can be achieved simultaneously.
    Date: 2011
  4. By: Diego Restuccia
    Abstract: By international standards, gross domestic product (GDP) per capita in Latin America is low: around one fourth of that of the United States. Moreover, in the last five decades, Latin America has failed to catch-up in wealth to the level of the United States while other countries at similar or even lower stages of development have been successful. The failure to attain higher levels of relative income represents what I call the development problem in Latin America. Using a development accounting framework, I find that the bulk of the difference in GDP per capita between Latin America and the United States is accounted for by low GDP per hour and, in particular, low total factor productivity (TFP) in Latin America. I calculate that to explain the difference in GDP per hour, TFP in Latin America must be around 60 percent of that in the United States. I then consider a model with heterogeneous production units where institutions and policy distortions lead to a 60 percent productivity ratio between Latin America and the United States. Removing the barriers to productivity can increase long-run GDP per hour in Latin America by a factor of 4 relative to that of the United States. This increase is equivalent to 70-years worth of U.S. post WW-II development.
    Keywords: labor productivity, capital, schooling, establishment heterogeneity, policy distortions
    JEL: O1
    Date: 2011–06–12
  5. By: Isaksson, Ann-Sofie (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: The aim of the present paper is to investigate whether households relocated to governmentbuilt village settlements, as part of Rwanda’s Villagisation programme (‘Imidugudu’), diversify into non-farm income-generating activities to a greater extent than other rural households in Rwanda, and if so, to what extent the variation can be explained by differences in micro-level asset and meso-level access factors. Despite the programme objective to stimulate non-farm activity, the results of empirical estimations drawing on household and community-level data suggest that Imidugudu households differ surprisingly little from other rural households in terms of diversification into non-farm income sources. The slightly greater participation in non-farm income-generating activities observed among the Imidugudu households can be attributed to regional variation and household characteristics mattering for selection into the programme rather than to asset endowments and improved service access.
    Keywords: Income diversification; livelihoods; villagisation; Rwanda
    JEL: O12 O22 O55
    Date: 2011–06–28
  6. By: Andersson, Fredrik N. G. (Department of Economics, Lund University); Edgerton, David (Department of Economics, Lund University); Opper, Sonja (Department of Economics, Lund University)
    Abstract: We propose a new methodology for testing inter-regional growth convergence in developing countries. Labor surplus economies are typically characterized by large inter-regional short-term growth fluctuations, which tend to mask long-term growth trends. These fluctuations render standard tests for growth convergence unreliable. A frequency domain analysis that separates between short and long-run growth offers new insights. We develop a growth model and provide an empirical application using provincial data from China covering the period 1978 - 2009. Our results suggest that provinces diverge over the short-term. Over the long term, however, provinces cluster into two growth clubs of converging provinces.
    Keywords: regional convergence; developing countries; growth; China
    JEL: O14 O33 O41 R11
    Date: 2011–07–04
  7. By: Jean-Jacques Hallaert; Ricardo Cavazos Cepeda; Gimin Kang
    Abstract: The severity of binding constraints to trade expansion in developing countries and the importance of the complementary policies that will maximize the impact of trade reforms on trade and economic growth are identified and quantified in this report. As trade-related needs of developing countries are numerous, such quantification is needed to identify the most binding constraints to guide the sequencing of reforms and aid-for-trade interventions. The constraints to trade expansion are largely country specific. However, countries which share important characteristics may face similar binding constraints. An econometric analysis is undertaken for as many partner countries as possible to produce an \unrestricted sample. that can be used as a benchmark against which special country groupings can be assessed. The econometric work relies on experimentation to identify and rank (based on their relative severity) the most binding constraints for each country grouping. Two case studies, on Azerbaijan and Uganda, illustrate the mechanisms of the econometric work and the importance of several variables not captured because of data limitations
    Keywords: aid for trade, trade expansion, Binding constraints, developing countries trade, taxonomy of constraints, landlocked countries, small and vulnerable economies, resource rich countries
    JEL: F1
    Date: 2011–06–24
  8. By: Graziella Bertocchi
    Abstract: This essay investigates the determinants of the growth performance of Africa. I start by illustrating a broader research agenda which accounts not only for basic economic and demographic factors, but also for the role of history and institutional development. After reporting results from standard growth regressions, I analyze the role of Africa’s peculiar history, which has been marked by its colonization experience. Next I discuss the potential growth impact of state fragility, a concept which reflects multiple facets of the dysfunctions that plague the continent. The last topic I address is the influence, in and out of Africa, of the slave trades. The essay ends with critical conclusions and suggestions for further research.
    Keywords: Growth; Africa; history; colonization; institutions; state fragility; slavery
    JEL: O43 N17 H11
    Date: 2011–06
  9. By: R. Golinelli; R. Rovelli
    Abstract: How did post-communist transformations affect people’s perceptions of their economic and political systems? We model a pseudo-panel with 89 country-year clusters, based on 13 countries observed between 1991 and 2004, to identify the macro and institutional drivers of the public opinion. Our main findings are: (i) When the economy is growing, on average people appreciate more extensive reforms; they dislike unbalanced reforms. (ii) Worsening of income distribution and higher inflation interact with an increasing share of the private sector in aggravating nostalgia for the past regime. (iii) Cross-country differences in the attitudes towards the present and future (both in the economic and political dimensions) are largely explained by differences in the institutional indicators for the rule of law and corruption. (iv) Cross-country differences in the extent of nostalgia towards the past are mainly related to differences in the deterioration of standards of living.
    JEL: O11 O57 P2 P36 P27
    Date: 2011–07
  10. By: Das Gupta, Monica; Bongaarts, John; Cleland, John
    Abstract: There is a very large but scattered literature debating the economic implications of high fertility. This paper reviews the literature on three themes: (a) Does high fertility affect low-income countries'prospects for economic growth and poverty reduction? (b) Does population growth exacerbate pressure on natural resources? and (c) Are family planning programs effective at lowering fertility, and should they be publicly funded? The literature shows broad consensus that while policy and institutional settings are key in shaping the prospects of economic growth and poverty reduction, the rate of population growth also matters. Recent studies find that low dependency ratios (as fertility declines) create an opportunity for increasing productivity, savings and investment in future growth. They find that lower fertility is associated with better child health and schooling, and better health and greater labor-force participation for women. They also indicate that rapid population growth can constrain economic growth, especially in low-income countries with poor policy environments. Population growth also exacerbates pressure on environmental common property resources. Studies highlight the deep challenges to aligning divergent interests for managing these resources. However, part of the pressure on these resources can be mitigated by reducing the rate of population growth. Although family planning programs are only one policy lever to help reduce fertility, studies find them effective. Such programs might help especially in the Sub-Saharan African region, where high fertility and institutional constraints on economic growth combine to slow rises in living standards.
    Keywords: Population Policies,Environmental Economics&Policies,Achieving Shared Growth,Economic Theory&Research,Health Systems Development&Reform
    Date: 2011–06–01
  11. By: Krishna, Pravin; Poole, Jennifer P.; Senses, Mine Zeynep
    Abstract: In this paper, the authors use a linked employer-employee database from Brazil to examine the impact of trade reform on the wages of workers employed at heterogeneous firms. The analysis of the data at the firm-level confirms earlier findings of a differential positive effect of trade liberalization on the average wages at exporting firms relative to non-exporting firms. However, this analysis of average firm-level wages is incomplete along several dimensions. First, it cannot fully account for the impact of a change in trade barriers on workforce composition especially in terms of unobservable (time-invariant) characteristics of workers (innate ability) and any additional productivity that obtains in the context of employment in the specific firm (match specific ability). Furthermore, the firm-level analysis is undertaken under the assumption that the assignment of workers to firms is random. This ignores the sorting of worker into firms and leads to a bias in estimates of the differential impact of trade on workers at exporting firms relative to non-exporting firms. Using detailed information on worker and firm characteristics to control for compositional effects and using firm-worker match specific effects to account for the endogenous mobility of workers, the authors find the differential effect of trade openness on wages in exporting firms relative to domestic firms to be insignificant. Consistent with the models of Helpman, Itskhoki, and Redding (2010) and Davidson, Matusz and Schevchenko (2008), they also find that the workforce composition improves systematically in exporting firms in terms of innate (time invariant) worker ability and in terms the quality of the worker-firm matches.
    Keywords: Labor Markets,Microfinance,Free Trade,Trade Policy,Economic Theory&Research
    Date: 2011–06–01
  12. By: Schindler, Kati; Bruck, Tilman
    Abstract: The aim of this paper is to study the short and long-term fertility effects of mass violent conflict on different population sub-groups. The authors pool three nationally representative demographic and health surveys from before and after the genocide in Rwanda, identifying conflict exposure of the survivors in multiple ways. The analysis finds a robust effect of genocide on fertility, with a strong replacement effect for lost children. Having lost siblings reduces fertility only in the short term. Most interesting is the continued importance of the institution of marriage in determining fertility and in reducing fertility for the large group of widows in Rwanda.
    Keywords: Population Policies,Gender and Law,Post Conflict Reconstruction,Population&Development,Gender and Social Development
    Date: 2011–06–01
  13. By: Beine, Michel; Docquier, Frederic; Ozden, Caglar
    Abstract: This paper reviews the existing literature on the impact of migrants networks on the patterns of international migration. It covers the theoretical channels at stake in the global effect of the networks. It identifies the key issues, namely the impact on size, selection and concentration of the migration flows. The paper also reviews the empirical hurdles that the researchers face in assessing the importance of networks. The key issues concern the choice of micro vs a macro approach, the definition of a network, the access to suitable data and the adoption of econometric methods accounting for the main features of those data. Finally, the paper reports a set of estimation outcomes reflecting the main findings of the macro approach.
    Keywords: Population Policies,Voluntary and Involuntary Resettlement,Human Migrations&Resettlements,International Migration,Anthropology
    Date: 2011–06–01
  14. By: Jacoby, Hanan G.; Mansuri, Ghazala
    Abstract: Can communal heterogeneity explain persistent educational inequities in developing countries? The paper uses a novel data-set from rural Pakistan that explicitly recognizes the geographic structure of villages and the social makeup of constituent hamlets to show that demand for schooling is sensitive to the allocation of schools across ethnically fragmented communities. The analysis focuses on two types of social barriers: stigma based on caste affiliation and female seclusion that is more rigidly enforced outside a girl's own hamlet. Results indicate a substantial decrease in primary school enrollment rates for girls who have to cross hamlet boundaries to attend, irrespective of school distance, an effect not present for boys. However, low-caste children, both boys and girls, are deterred from enrolling when the most convenient school is in a hamlet dominated by high-caste households. In particular, low-caste girls, the most educationally disadvantaged group, benefit from improved school access only when the school is also caste-concordant. A policy experiment indicates that providing schools in low-caste dominant hamlets would increase overall enrollment by almost twice as much as a policy of placing a school in every unserved hamlet, and would do so at one-sixth of the cost.
    Keywords: Primary Education,Education For All,Disability,Adolescent Health,Tertiary Education
    Date: 2011–06–01
  15. By: Doepke, Matthias; Tertilt, Michele
    Abstract: Empirical evidence suggests that money in the hands of mothers (as opposed to their husbands) benefits children. Does this observation imply that targeting transfers to women is good economic policy? The authors develop a series of noncooperative family bargaining models to understand what kind of frictions can give rise to the observed empirical relationships. Then they assess the policy implications of these models. The authors find that targeting transfers to women can have unintended consequences and may fail to make children better off. Moreover, different forms of empowering women may lead to opposite results. More research is needed to distinguish between alternative theoretical models.
    Keywords: Economic Theory&Research,Gender and Law,Debt Markets,Inequality,Public Sector Economics
    Date: 2011–06–01
  16. By: Balan, David J.; Knack, Stephen
    Abstract: This paper incorporates morality -- defined as lower utility from consuming goods obtained through appropriative rather than productive activities -- into a simple static general equilibrium model in which agents choose whether to be producers or appropriators. The authors analyze the relationship between the correlation between morality and human capital on the one hand, and aggregate economic performance on the other. They show that there is a main effect that tends to cause this relationship to be positive, and that there can be secondary effects that can either rein-force or oppose (or even overbalance) the main effect. They test the theory using the World Val-ues Survey as a source of proxies for morality. Using their preferred proxy, they find evidence that higher within-country correlation between morality and ability, holding constant the levels of morality and ability, increases per-capita income levels. Under the preferred specification, a one-standard-deviation increase in the correlation between morality and ability raises the log of per-capita income by about one-fourth of a standard deviation, equal to approximately $3,600 for the median income country in the sample. The results are robust to correcting for endogeneity and to changes in sample and specification. The results are mixed when the analysis uses alternative morality proxies, but the coefficient on the morality-ability correlation is still usually positive and statistically significant.
    Keywords: Educational Sciences,Teaching and Learning,Economic Theory&Research,Ethics&Belief Systems,Statistical&Mathematical Sciences
    Date: 2011–06–01
  17. By: Ferreira, Susana; Hamilton, Kirk; Vincent, Jeffrey R.
    Abstract: The authors analyze the determinants of fatalities in 2,194 large flood events in 108 countries between 1985 and 2008. Given that socioeconomic factors can affect mortality right in the aftermath of a flood, but also indirectly by influencing flood frequency and magnitude, they distinguish between direct and indirect effects of development on flood mortality. The authors find that income is negatively associated with the frequency of floods and, conditional on their magnitude, the fatalities they cause in developing countries. However, for developed countries they find that increased income is associated with more fatalities, both directly (conditional on flood occurrence and magnitude) and indirectly through an increase in the frequency and magnitude of flood events. Also in contrast to the literature, they find that the effect of governance on flood frequency and fatalities in developing countries is U-shaped, with improvements in governance reducing the numbers of floods and deaths when governance is weaker but raising them when governance is stronger.
    Keywords: Hazard Risk Management,Natural Disasters,Governance Indicators,Disaster Management,Flood Control
    Date: 2011–06–01
  18. By: de Walque, Damien; Filmer, Deon
    Abstract: The authors combine data from 84 Demographic and Health Surveys from 46 countries to analyze trends and socioeconomic differences in adult mortality, calculating mortality based on the sibling mortality reports collected from female respondents aged 15-49. The analysis yields four main findings. First, adult mortality is different from child mortality: while under-5 mortality shows a definite improving trend over time, adult mortality does not, especially in Sub-Saharan Africa. The second main finding is the increase in adult mortality in Sub-Saharan African countries. The increase is dramatic among those most affected by the HIV/AIDS pandemic. Mortality rates in the highest HIV-prevalence countries of southern Africa exceed those in countries that experienced episodes of civil war. Third, even in Sub-Saharan countries where HIV-prevalence is not as high, mortality rates appear to be at best stagnating, and even increasing in several cases. Finally, the main socioeconomic dimension along which mortality appears to differ in the aggregate is gender. Adult mortality rates in Sub-Saharan Africa have risen substantially higher for men than for women—especially so in the high HIV-prevalence countries. On the whole, the data do not show large gaps by urban/rural residence or by school attainment.
    Keywords: Population Policies,Health Monitoring&Evaluation,Demographics,Statistical&Mathematical Sciences,Early Child and Children's Health
    Date: 2011–06–01
  19. By: Pushak, Nataliya; Foster, Vivien
    Abstract: Infrastructure development in Sierra Leone contributed about half a percentage point to the economy's per capita growth rate in 2003-07. But if Sierra Leone could upgrade its infrastructure to the level of the best performer in Africa, per capita growth rates could be boosted by more than three percentage points. After nine years of peace, economic activity is flourishing at every level in Sierra Leone. But the 11-year civil war destroyed the country's infrastructure, and rebuilding the road network and ports while improving the electrical, water, and telecommunications infrastructure is proving difficult. Looking ahead, expanding electrification is a top priority because current access levels, at only 1-5 percent of the urban population and 0 percent in rural areas, are impeding other development. The water and sanitation sector faces similar challenges, as only 1 percent of the rural population has access to piped water. Sierra Leone has been spending about $134 million annually on infrastructure in recent years. About $66 million is lost each year to inefficiencies. Comparing spending needs against existing spending and potential efficiency gains leaves an annual funding gap of $59 to $278 million per year. If savings from greater efficiency could be fully captured, Sierra Leone would not meet its posited infrastructure targets for another 30 years. Sierra Leone needs to make difficult decisions about the prioritization of infrastructure investments and must think strategically about bundling and sequencing investments for maximum returns.
    Keywords: Transport Economics Policy&Planning,Infrastructure Economics,Energy Production and Transportation,Town Water Supply and Sanitation,Public Sector Economics
    Date: 2011–06–01
  20. By: Deininger, Klaus; Jin, Songqing; Nagarajan, Hari K.; Fang, Xia
    Abstract: Although many studies have explored the impacts of political quotas for females, often with ambiguous results, the underlying mechanisms and long-term effects have received little attention. This paper uses nation-wide data from India spanning a 15-year period to explore how reservations affect leader qualifications, service delivery, political participation, local accountability, and individuals’ willingness to contribute to public goods. Although leader quality declines and impacts on service quality are often negative, gender quotas are shown to increase the level and quality of women's political participation, the ability to hold leaders to account, and the willingness to contribute to public goods. Key effects persist beyond the reserved period and impacts on females often materialize only with a lag.
    Keywords: Housing&Human Habitats,Population Policies,Gender and Law,Gender and Health,Parliamentary Government
    Date: 2011–06–01
  21. By: Deininger, Klaus; Carletto, Calogero; Savastano, Sara; Muwonge, James
    Abstract: Although good and timely information on agricultural production is critical for policy-decisions, the quality of underlying data is often low and improving data quality could have a high payoff. This paper uses data from a production diary, administered concurrently with a standard household survey in Uganda to analyze the nature and incidence of responses, the magnitude of differences in reported outcomes, and factors that systematically affect these. Despite limited central supervision, diaries elicited a strong response, complemented standard surveys in a number of respects, and were less affected by problems of respondent fatigue than expected. The diary-based estimates of output value consistently exceeded that from the recall-based production survey, in line with reported disposition. Implications for policy and practical administration of surveys are drawn out.
    Keywords: Rural Development Knowledge&Information Systems,Crops&Crop Management Systems,Food&Beverage Industry,Scientific Research&Science Parks,Science Education
    Date: 2011–06–01
  22. By: Fiszbein, Ariel; Ringold, Dena; Srinivasan, Santhosh
    Abstract: Developing countries have responded to the multiple shocks from the food, fuel and finance crises of 2008-2009 with a mix of responses aimed at both mitigating the immediate impacts of the crises on households (and particularly children), and protecting future investments in human capital. While some countries have introduced new safety net programs, others have modified and/or expanded existing ones. Since many countries have introduced conditional cash transfers (CCTs) in recent years, these programs have been used as an important starting point for a response. This paper aims to describe how conditional cash transfers have been used by different countries to respond to the crises (e.g. by expanding coverage and/or increasing benefit amounts), distill lessons about their effectiveness as crisis-response programs, identify design features that can facilitate their ability to respond to transient poverty shocks, and assess how they can complement other safety net programs.
    Keywords: Safety Nets and Transfers,Services&Transfers to Poor,Access to Finance,Labor Policies,Debt Markets
    Date: 2011–06–01
  23. By: Roy, Sanchari (University of Warwick)
    Abstract: This paper examines the impact of property inheritance rights on education of women. Using plausibly exogenous variation created by amendments to female inheritance laws in India, I nd that exposure to improved inheritance rights increased mean female educational attainment by approximately one additional year. I also provide suggestive evidence that the mechanism behind such an e ect may be explained by the existence of complementarity between female inheritance rights and education in the context of household property management rather than by a relaxation of the household budget constraint owing to reduction in dowry payments following the reform.
    Keywords: Property rights; education; gender; dowry
  24. By: Céline BONNEFOND (GREThA, CNRS, UMR5113); Matthieu CLEMENT (GREThA, CNRS, UMR5113)
    Abstract: The purpose of this article is to contribute to the analysis of Chinese income inequality by focusing more specifically on income polarization, which captures both alienation (i.e. heterogeneity between income groups) and identification (i.e. homogeneity within groups). The empirical investigations conducted as part of this research are based on the China Health and Nutrition Survey data from 1989 to 2006 and indicate that Chinese household income is strongly polarized. After a period of stagnation between 1989 and 1997, the degree of polarization increased significantly between 1997 and 2006, indicating the constitution of identified groups in middle and upper income ranges. Although the level of income polarization is higher in rural areas, the increase in polarization is far more conspicuous in urban areas, suggesting that the risk of social tensions is more pregnant in Chinese cities. The analysis of the sources of income polarization in rural areas shows that the increase in polarization is closely linked to non agricultural opportunities. In urban areas, the emergence of identified groups in middle and upper income classes can be explained both by the sharp decline in subsidies and by the liberalization of the urban labor market and state enterprises.
    Keywords: inequality, polarization, kernel density, China
    JEL: D31 D63 O15 P36 R20
    Date: 2011
  25. By: Chongwoo Choe; Ratbek Dzhumashev; Asadul Islam; Zakir H. Khan
    Abstract: We examine the causes and consequences of corruption in the provision of education service in Bangladesh. Our empirical analysis is based on the 2007 household survey data collected by Transparency International Bangladesh (TIB), which measure actual corruption. Our main findings are (i) both the incidence of corruption and the amount of bribe increase in the level of red tape, (ii) poorer households, households with less educated household head, and households with girls studying in school are more likely to be victims of corruption, (iii) households with higher social status are more likely to rely on informal network to bypass the red tape or pay less amount of bribe and, as a result, (iv) corruption in the education sector is likely to be regressive.
    Keywords: education, corruption, bribery, Bangladesh
    JEL: K4 O1
    Date: 2011–06
  26. By: Bah, El-hadj M.; Ward, Jeremy
    Abstract: Global flows of Official Development Assistance are large and there is a large literature devoted to testing the effectiveness of these large flows. While among the poorest and the top recipients of foreign aid, Small Island Developing States (SIDS) are usually left out in the aid effectiveness literature. This paper seeks to remedy this by testing the main conditionality models of the literature using a sample of 37 SIDS. We also specify a new model that best fit the data for these countries. The general result is that aid has a positive and significant effect on growth in a number of specifications. However, we do not find supporting evidence that aid is effective only in countries with good policies or there is a threshold above which it has diminishing returns. Instead, we find, in our preferred specification, that aid is effective in the presence of sufficiently good governmental and social institutions.
    Keywords: Foreign aid; Small Island Developing States; Aid effectiveness
    JEL: O11 O19
    Date: 2011–05
  27. By: Alonso Ortiz, Jorge; Leal Ordóñez, Julio C.
    Abstract: The informal sector accounts for a substantial fraction of employed population in Mexico and other Latin American countries. In this paper we study the interaction between the tax and transfers system and the size and composition of informal sector. To do that we build a search model that can be calibrated to the Mexican data. Our model features two employment statuses: employed and unemployed; and two sectors: formal and informal. We estimate our model to data from Encuesta Nacional de Ocupaci ́on y empleo (ENOE) by simulated GMM. Then we perform three different policy analyses: changes in the distribution of the transfers between formal and informal sector workers, changes in the size of the transfer system, and changes in the progressivity of taxes and transfers (pending). Our model is able to capture key features of Mexican labor markets, such as the distribution of the labor force across sectors and the distribution of accepted wage offers. Dividing transfers equally between formal and informal sector workers increases the size of the informal sector by 5 percentage points, it also increases average wages in the formal sector by 6% whereas wages in the informal sector fall by 4%. When we double the size of transfers, the size of informal sector falls by 5 percentage points. However, it has a big effect on the distribution of accepted wage offers: average wages increase by 10% in the formal sector and they raise by 16% in the informal sector.
    Keywords: Informal Sector; Mexico; Taxes; Transfers; General Equilibrium; Frictions
    JEL: E62 E24 J31 J21 H30 H53
    Date: 2011–07–04
  28. By: Fafchamps, Marcel; La Ferrara, Eliana
    Abstract: This paper examines the incomes of individuals who have joined self-help groups in poor neighborhoods of Nairobi. Self-help groups are often advocated as a way of facilitating income pooling. We find that incomes are indeed more correlated among individuals in the same group than among individuals who belong to different groups. Using an original methodology, we test whether this correlation is due to self-selection of similar individuals into the same groups. We find that this correlation is not driven by positive assortative matching. If anything, selection works in the opposite direction: incomes from group activities would be more correlated if individuals were matched at random. These findings are consistent with the idea that self-help groups play a mutual assistance role.
    Keywords: income pooling; self-help groups
    JEL: O12 O17
    Date: 2011–06
  29. By: Allan Collard-Wexler; John Asker; Jan De Loecker
    Abstract: We investigate the role of dynamic production inputs and their associated adjustment costs in shaping the dispersion of total factor productivity (TFP) and static measures of capital misallocation within a country. Using data on 5,010 establishments in 33 developing countries from the World Bank’s Enterprise Research Data, we find that countries exhibiting greater time-series volatility of productivity are also characterized by greater cross-sectional dispersion in productivity. Volatility in TFP explains one quarter to one third of cross-country productivity dispersion. We document a similar relationship between productivity volatility and the dispersion of the marginal revenue product of capital (static capital misallocation). We then use a standard model of investment with adjustment costs, parameterized using numbers calibrated to U.S. data, to show that increasing the volatility of productivity to the level observed in these developing economies can quantitatively replicate the observed relationship between static misallocation and volatility observed in the data. We find that sixty-one percent of the static capital misallocation in the data is captured by the model’s prediction. Our findings suggest that the dynamic process governing productivity shocks is a first-order determinant of differences in misallocation and, hence, income across countries.
    JEL: D24 L2 O47
    Date: 2011–06
  30. By: Stelios Michalopoulos; Elias Papaioannou
    Abstract: We investigate jointly the importance of contemporary country-level institutional structures and local ethnic-specific pre-colonial institutions in shaping comparative regional development in Africa. We utilize information on the spatial distribution of African ethnicities before colonization and regional variation in contemporary economic performance, as proxied by satellite light density at night. We exploit the fact that political boundaries across the African landscape partitioned ethnic groups in different countries subjecting identical cultures to different country-level institutions. Our regression discontinuity estimates reveal that differences in countrywide institutional arrangements across the border do not explain differences in economic performance within ethnic groups. In contrast, we document a strong association between pre-colonial ethnic institutional traits and contemporary regional development. While this correlation does not necessarily identify a causal relationship, this result obtains conditional on country fixed-effects, controlling for other ethnic traits and when we focus on pairs of contiguous ethnic homelands.
    JEL: N0 N17 O1 O11 O55
    Date: 2011–06

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