nep-dev New Economics Papers
on Development
Issue of 2011‒09‒16
43 papers chosen by
Mark Lee
Towson University

  1. Do contacts matter in the process of getting a job in Cameroon? By Doko Tchatoka; Urbain Thierry Yogo
  2. Self-Selection Patterns among Return Migrants: Mexico 1990-2010 By Raymundo M. Campos Vázquez; Jaime Lara Lara
  3. Family Income Inequality and the Role of Wives Earnings in Mexico: 1988-2010 By Raymundo M. Campos Vázquez; Andrés Hincapie; Rubén I. Rojas Valdés
  4. Left‐Behind Children and Return Decisions of Rural Migrants in China By Sylvie Demurger; Hui Xu
  5. Oil rents, governance quality, and the allocation of talents in developing countries By Christian Ebeke; Luc Désiré Omgba
  6. Firm Productivity and Investment Climate in Developing Countries: How Does Middle East and North Africa Manufacturing Perform? By Patrick Plane; Marie-Ange Veganzones; Tidiane Kinda
  7. Microcredit and Women’s Empowerment: Through the Lens of Time Use Data from Rural India By Supriya Garikipati
  8. Rogue Aid? The Determinants of China’s Aid Allocation By Axel Dreher; Andreas Fuchs
  9. Aid and Oil in Papua New Guinea: Implications for the Financing of Service Delivery By Aaron Batten
  10. Child Labour: Insights from an Agricultural Household Model By Diego Angemi
  11. FDI and Growth: What Cross-Country Industry Data Say By Maria Cipollina; Giorgia Giovannetti; Filomena Pietrovito; Alberto Franco Pozzolo
  12. Labour Migration and Time Use Patterns of the Left-Behind Children and Elderly in Rural China By Hongqin Chang; Xiao-yuan Dong; Fiona MacPhail
  13. Assessing absolute and relative pro-poor growth, with an application to selected African countries By Bibi, Sami; Duclos, Jean-Yves; Verdier-Chouchane, Audrey
  14. Firm location and the determinants of exporting in developing countries By Farole, Thomas; Winkler, Deborah
  15. Framing local conflict and justice in Bangladesh By Das, Maitreyi Bordia; Maru, Vivek
  16. Foreign direct investment under weak rule of law : theory and evidence from China By Wang, Xiaozu; Xu, Lixin Colin; Zhu, Tian
  17. Ladies first ? firm-level evidence on the labor impacts of the East Asian crisis By Hallward-Driemeier, Mary; Rijkers, Bob; Waxman, Andrew
  18. Consensus, institutions, and supply response : the political economy of agricultural reforms in Sub-Saharan Africa By Aksoy, Ataman; Onal, Anil
  19. Fewer jobs or smaller paychecks ? aggregate crisis impacts in selected middle-income countries By Khanna, Gaurav; Newhouse, David; Paci, Pierella
  20. Ripe for a big bang ? assessing the political feasibility of legislative reforms in the Philippines'local government code By Matsuda, Yasuhiko
  21. Does expanding health insurance beyond formal-sector workers encourage informality ? measuring the impact of Mexico's Seguro Popular By Aterido, Reyes; Hallward-Driemeier, Mary; Pages, Carmen
  22. The Effect of Vaccination on Children's Physical and Cognitive Development in the Philippines By David E. Bloom; David Canning; Erica Seigner
  23. Demographic Change and Economic Growth in South Asia By David E. Bloom; David Canning; Larry Rosenberg
  24. The Economic Effects of Malaria Eradication: Evidence from an Intervention in Uganda By Jeremy Barofsky; Claire Chase; Tobenna Anekwe; Farshad Farzadfar
  25. Population Dynamics in India and Implications for Economic Growth By David E. Bloom
  26. Explaining Income Inequalities in Developing Countries: the Role of Human Capital By Mazhar MUGHAL; Barassou DIAWARA
  27. The Consequences of Child Market Work on the Growth of Human Capital By Armand A Sim; Daniel Suryadarma; Asep Suryahadi
  28. Exports and Job Creation in Indonesia Before and After the Asian Financial Crisis By Haryo Aswicahyono; Chris Manning
  29. Reducing Vulnerability in Transition Economies: Crises and Adjustment in Cambodia By Hal Hill; Jayant Menon
  30. Aligning With One's Own: Private Voting and Public Outcomes in Elections in Rural India By Raghbendra Jha; Hari K. Nagarajan; Kailash C. Pradhan
  31. Calorie Thresholds and Undernutrition in India, 1993–2004 By Nidhi Kaicker; Raghav Gaiha
  32. The Differential Effects of Financial Development on India's Industrial Performance By Nitin Gupta
  33. Bribing to Circumvent Capture and Facilitate Participation in Social Programs: Evidence from Indian Villages By Raghbendra Jha; Hari K. Nagarajan; Kailash C. Pradhan
  34. Sex and Credit: Is There a Gender Bias in Microfinance? By Thorsten Beck; Patrick Behr; Andreas Madestam
  35. Growth, Inequality, and Poverty Reduction in Developing Countries: Recent Global Evidence By Augustin Kwasi Fosu
  36. When is capital enough to get female microenterprises growing? Evidence from a randomized experiment in Ghana By Marcel Fafchamps; David McKenzie; Simon Quinn; Christopher Woodruff
  37. Network Proximity and Business Practices in African Manufcaturing By Marcel Fafchamps; Mans Soderbom
  38. Is « Pollution Haven » Hypothesis valid for China’s manufacture sectors? An empirical analysis based on carbon embodied in trade By Jie He; Jingyan Fu
  39. How can infrastructures reduce child malnutrition and health inequalities? Evidence from Guatemala By Thomas Poder; Jie He
  40. Highly qualified Mexican immigrants in the U.S. and transfer of resources from Mexico to the U.S. through the education costs of Mexican migrants By Adolfo Albo; Juan Luis Ordaz Diaz
  41. Productivity growth and ownership change in China: 1998-2007 By Liu, Jing; Cao, Shutao
  42. Corruption in Developing Countries By Benjamin A. Olken; Rohini Pande
  43. The Future of Economic Convergence By Dani Rodrik

  1. By: Doko Tchatoka; Urbain Thierry Yogo (School of Economics and Finance, University of Tasmania)
    Abstract: We question whether the use of social networks to exit unemployment matters in Cameroon. We develop a Weibull-type duration model which allows us to address this issue in a convenient way. Our investigations indicate that there is a strong evidence of endogeneity and sample selection biases. We then propose a three-step procedure to deal with both problems. Our results show that the use of social networks to exit unemployment is effective. Furthermore, we find that the hazard monotonically increases with time. Hence, unemployment exhibits a positive duration dependence. Moreover, we provide an analysis of factors that determine labor market participation and the use of social networks. We find that the density of the west native population in the center of Cameroon and religion are the only factors that determine the use of social networks. In contrast, characteristics such as age, sex, education, association’s membership, determine labor market participation.
    Keywords: RePEc
    Date: 2011–02
  2. By: Raymundo M. Campos Vázquez (El Colegio de México); Jaime Lara Lara (El Colegio de México)
    Abstract: This paper analyzes the self-selection patterns among Mexican return migrants during the period from 1990 to 2010. Using census data, we can identify return migrants who have lived in the United States within the previous 5 years but who currently live in Mexico. To calculate the selection patterns, we non parametrically estimate the counterfactual wages that the return migrants would have experienced had they never migrated by using the wage structure of non migrants. We find evidence that the selection patterns change over time toward negative selection. For example, in 1990, the wages that the male return migrants would have experienced had they not migrated was 6 percent larger than the wages of male non migrants. However, by 2010, the difference had declined to -14 percent. The increasing negativity of the degree of selection is robust to the analysis of specific subgroups: rural and urban, men and women, and states with high migration rates and low migration rates. Moreover, the negative selection results for the period from 2000 to 2010 are robust to the use of different surveys that define a return migrant by using distinct characteristics. Additionally, we observe that the wages of return migrants are larger than those that the migrants would have obtained had they not migrated. This finding shows that migration has a positive effect on the Mexican economy.
    Keywords: Mexican migration, self-selection, return migration, wages
    JEL: F22 J61 O54
    Date: 2011–09
  3. By: Raymundo M. Campos Vázquez (El Colegio de México); Andrés Hincapie (Yale University); Rubén I. Rojas Valdés (Inter-American Development Bank)
    Abstract: We study family income inequality in Mexico from 1988 to 2010. Female labor supply increased during this period, especially for married women. The share of wives’ income among married couples grew from 13 percent in 1988 to 23 percent in 2010. However, the correlation of husbands’ and wives’ earnings has been fairly stable with a value close to 0.28, one of the highest correlations recorded across countries. We follow Cancian and Reed’s (1999) methodology in order to analyze whether wives’ income equalizes total family income distribution. We investigate several counterfactuals and conclude that the recent increment in female employment has contributed to a decrease in family income inequality mainly through a rise in wives’ labor supply in poor families.
    Keywords: income inequality, female employment, female earnings, Latin America, Mexico
    JEL: J12 J21 J31 O15 O54
    Date: 2011–05
  4. By: Sylvie Demurger (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure de Lyon); Hui Xu (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure de Lyon)
    Abstract: This paper examines how left-behind children influence return migration in China. We first present a simple model that incorporates economic and non-economic motives for migration duration (or intentions to return). Based on Dustmann (2003b), the parent is assumed to be altruistic and to care about the prospects of her left-behind children. We then propose two complementary empirical tests based on an original dataset from a rural household survey carried out in Wuwei County (Anhui province, China) in fall 2008. We first use a discrete-time proportional hazard model to estimate the determinants of migration duration for both on-going migrants with incomplete length of duration and return migrants with complete length of duration. Second, we apply a binary Probit model to study the return intentions of on-going migrants. Both models find consistent results regarding the role of left-behind children as a significant motive for return. First, left-behind children are found to pull their parents back to the village, the effect being stronger for pre-school children. Second, sons are found to play a more important role than daughters in reducing migration duration.
    Keywords: return migration; migration duration; left-behind children; discrete-time duration analysis; China
    Date: 2011
  5. By: Christian Ebeke (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Luc Désiré Omgba (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: Evidence shows that the allocation of talented people is not neutral for growth. Thus, a country with a large population of law concentrators tends to develop rent-seeking activities that reduce growth. A country with a large population of engineers tends to foster innovation and strengthen growth. But what determines the allocation of talents? This question has not yet been empirically examined. This paper contributes to fill this gap. Based on a sample of 69 developing countries the paper highlights that oil rents determine the allocation of talents but this effect is not linear. It largely depends on the quality of governance. While, oil rents in well governed countries tend to orient talents towards productive activities, oil rents in badly governed countries tend to orient talents towards rent-seeking activities. These results are robust to different specifications, datasets on governance quality and estimation methods.
    Keywords: Rent-seeking; occupational choice; oil rents
    Date: 2011–08–23
  6. By: Patrick Plane (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Marie-Ange Veganzones (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Tidiane Kinda (FMI - FMI - FMI)
    Abstract: Firm productive performances in five Middle East and North African (MENA) economies and eight manufacturing industries are compared to those in 17 other developing countries. Although the broad picture hides some heterogeneity, enterprises in MENA often performed inadequately compared to MENA status of middle-income economies, with the exception of Morocco and, to some extent, Saudi Arabia. Firm competitiveness is a more constant constraint, with a unit labor cost higher than in most competitor countries, as well as investment climate (IC) deficiencies. The empirical analysis also points out how IC matters for firm productivity through the quality of infrastructure, the experience and education of the labor force, the cost and access to financing, and different dimensions of the government-business relationship. These findings bear important policy implications by showing which dimensions of the IC, in which industry, could help manufacturing in MENA to be more competitive in the globalization context.
    Keywords: Manufacturing firms;productivity;investment climate;developing countries;Middle East and North Africa (MENA)
    Date: 2011–08–29
  7. By: Supriya Garikipati
    Abstract: This study examines the impact of microcredit on male and female time use and draws on this analysis to explore the linkages between credit and women’s empowerment. A study of time use can help understand these linkages because credit targeted at women with the intent of influencing their livelihoods must also influence the way they allocate their work time. Its other advantages are that it does not suffer from much time lag and can be objectively measured. We use survey data from rural India. Our findings show that while microcredit has little impact on women’s time use, it helps their husbands shift away from wage-work, which is associated with bad pay and low status, to self-employment. We find that this is because women’s loans are typically used to enhance male ownership of household’s productive assets. Further, we find that only women who use loans in self-managed enterprises are able to allocate more time to self-employment. We conclude that if credit is to increase the value of women’s work time then it is not access to loan but use of loan that matters. Specifically, women’s control over loan created assets is critical.
    Date: 2011–09
  8. By: Axel Dreher; Andreas Fuchs
    Abstract: Foreign aid from China is often characterized as „rogue aid‟ that is not guided by recipient need but by China‟s national interests alone. However, no econometric study so far confronts this claim with data. We make use of various datasets, covering the 1956-2006 period, to empirically test to which extent political and commercial interests shape China‟s aid allocation decisions. We estimate the determinants of China‟s allocation of project aid, food aid, medical teams and total aid money to developing countries, comparing its allocation decisions with traditional and other so-called emerging donors. We find that political considerations are an important determinant of China‟s allocation of aid. However, in comparison to other donors, China does not pay substantially more attention to politics. In contrast to widespread perceptions, we find no evidence that China‟s aid allocation is dominated by natural resource endowments. Moreover, China‟s allocation of aid seems to be widely independent of democracy and governance in recipient countries. Overall, denominating aid from China as „rogue aid‟ seems unjustified.
    Keywords: Aid allocation; China‟s foreign aid; new donors; donor motives
    JEL: F35
    Date: 2011–09
  9. By: Aaron Batten (Development Policy Centre, Crawford School of Economics and Government, The Australian National University)
    Abstract: This paper measures the extent to which both donor finance and resource revenues have contributed to higher rates of expenditure in key development sectors of the PNG economy—social services (including health and education) and infrastructure, between 1975 and 2010. Estimated elasticities are then compared against a hypothetical revenue scenario to assess the potential contribution that post-2014 LNG revenue inflows may have on increasing the financing available to these sectors.
    JEL: E62 F35 H51 H52 H53 O23
    Date: 2011–06
  10. By: Diego Angemi (Centro Studi Luca d\'Agliano)
    Abstract: This manuscript investigates the extent to which children contribute to the household’s agricultural activities. The conclusion that children play an important role in the farming activities of Ugandan agricultural households is supported by two key findings: (i) Child labour accounts for approimately 9% of the household’s annual agricultural earnings; and (ii) on the bases that most child labour is performed on the family farm and smoothly functioning labour markets are rare, land ownership increases the household’s demand for child labour in agricultural activities.
    Keywords: Child labour; labour market; agricultural earnings; land ownership
    JEL: J22 O12
    Date: 2011–09–06
  11. By: Maria Cipollina (University of Molise); Giorgia Giovannetti (University of Florence and European University Institute); Filomena Pietrovito (University of Molise); Alberto Franco Pozzolo (University of Molise, Centro Studi Luca d’Agliano and MoFiR)
    Abstract: The theoretical literature has discussed different channels through which foreign direct investments (FDI) promote host country’s economic growth, but empirical analyses have so far been inconclusive. In this paper we provide evidence that FDI have a positive and statistically significant growth effect in recipient countries, using a panel of 14 manufacturing sectors for (a sample of) developed and developing countries over the period 1992 - 2004. Moreover, we find that this effect is stronger in capital intensive and in technologically advanced sectors, highlighting the importance of sector characteristics. We find that the growth enhancing effect comes primarily from an increase in total factor productivity (TFP) and from capital accumulation. FDI not only contribute to physical capital accumulation, but also generate positive technological spillovers. Our results are robust to the inclusion of other determinants of economic growth. We also address the issue of potential endogeneity and results are confirmed. Policy implications of our findings are important, especially for developing countries, where the growth enhancing promotion of foreign investment in capital intensive and technologically advanced sectors is at the heart of the debate.
    Keywords: Foreign direct investment; Economic growth; Capital intensity, Technological progress; Patents; Total factor productivity
    JEL: F23 F36 F43 O16
    Date: 2011–09–06
  12. By: Hongqin Chang; Xiao-yuan Dong; Fiona MacPhail
    Abstract: Rural-urban migration has become a major feature of the Chinese economy since the mid-1990s. Due to institutional arrangements and economic and cultural factors, massive labor migration has resulted in a large left-behind population consisting of children, non-elderly married women, and the elderly. This paper examines the impacts of labor migration on time use patterns of the left-behind elderly people and children in rural China, using data derived from the China’s health and Nutrition Health Survey (CHNS) for the period between 1997 and 2006. The results show that the migration of household members increases the time spent on farm work and domestic work for the left-behind elderly, and the migration of parents increases the time spent on farm work and domestic work for the left-behind children. Importantly, migration has striking gender differentiated impacts with the increase in work time being greater for elderly women and girls than elderly men and boys. These results have important policy implications.
    JEL: J16 J22 O12
    Date: 2010–12
  13. By: Bibi, Sami; Duclos, Jean-Yves; Verdier-Chouchane, Audrey
    Abstract: This paper proposes a multidimensional procedure for jointly assessing the absolute and relative pro-poorness of growth. It is also a procedure for testing whether poverty comparisons can be made over classes of indices that incorporate both absolute and relative views of poverty. Besides being robust to whether pro-poor judgements should be absolute or relative, the procedure is also robust to choosing over a class of weights to aggregate the impact of growth on the poor as well as over ranges of absolute and relative poverty lines. The test is applied to distributional changes in five middle- and four lower-income African countries, countries that have witnessed different impacts of growth in the last two decades. --
    Keywords: Pro-poor growth,absolute poverty,relative poverty,stochastic dominance
    JEL: D63 I32
    Date: 2011
  14. By: Farole, Thomas; Winkler, Deborah
    Abstract: Using a cross-section of more than 40,000 manufacturing and services firms in 79 developing countries from the World Bank's Enterprise Surveys Database, this paper assesses how firm location determines the likelihood and extent of exporting in developing countries. Descriptive statistics confirm higher export participation (but not intensity) for firms in core versus non-core regions, despite the finding that firms in the core assess many aspects of the investment climate more negatively. Results from a probit model show that, in addition to firm-specific characteristics, both regional investment climate and agglomeration factors have a significant impact on export participation. Specifically, customs clearance and electricity quality matter for export participation for manufacturing firms. Although localization economies and export spillovers are associated with increased exporting, the opposite is found for urbanization economies for both manufacturing and services firms. The analysis finds that firm-level determinants of exporting matter more for firms located in non-core regions, while regional determinants and agglomeration economies play a larger role in core regions. The findings point to the presence of congestion costs in the core, and suggest that policy interventions to target export participation are likely to have a greater impact if they are focused on core regions over non-core regions, where firm-specific factors predominate. Moreover, the importance of export spillovers and localization economies highlights the potential value of efforts to remove barriers to natural agglomeration both in core and non-core regions, for example through investments in infrastructure, the provision of social services, and regional integration arrangements.
    Keywords: Regional Economic Development,Microfinance,E-Business,Banks&Banking Reform,Private Participation in Infrastructure
    Date: 2011–08–01
  15. By: Das, Maitreyi Bordia; Maru, Vivek
    Abstract: The institutional landscape of local dispute resolution in Bangladesh is rich: it includes the traditional process of shalish, longstanding and impressive civil society efforts to improve on shalish, and a somewhat less-explored provision for gram adalat or village courts. Based on a nationally representative survey, qualitative evidence from focus groups, and a telephone survey of 40 Union Parishad chairpersons (a little less than 1 percent of the total Union Parishads), it provides both an empirical mapping of local conflict and justice and pointers to possible policy reforms. It suggests a number of opportunities for strengthening local justice and argues that the village courts may pose a useful bridge between Bangladesh's informal and formal justice institutions.
    Keywords: Gender and Law,Judicial System Reform,Legal Institutions of the Market Economy,Legal Products,Public Sector Corruption&Anticorruption Measures
    Date: 2011–08–01
  16. By: Wang, Xiaozu; Xu, Lixin Colin; Zhu, Tian
    Abstract: This paper develops a self-enforcing contract model to show that better economic fundamentals can help when there is weak rule of law -- but with order -- to attract foreign direct investment, whereas lowering taxes does not necessarily help. Using a cross-region Chinese dataset, the analysis finds evidence consistent with the theoretical analysis. Regional variations in tax rates and the perceived quality of formal contracting institutions are not correlated with regional inflows of foreign direct investment, but leadership characteristics are. Most conventional economic factors have the predicted effects on foreign direct investment. The finding that foreign direct investment is lower in locations where domestic private firms have better access to finance and where the air quality is poor is new to the literature.
    Keywords: Debt Markets,Emerging Markets,Investment and Investment Climate,Bankruptcy and Resolution of Financial Distress,Access to Finance
    Date: 2011–09–01
  17. By: Hallward-Driemeier, Mary; Rijkers, Bob; Waxman, Andrew
    Abstract: In a crisis, do employers place the burden of adjustment disproportionately on female employees? Relying on household and labor force data, existing studies of the distributional impact of crises have not been able to address this question. This paper uses Indonesia's census of manufacturing firms to analyze employer responses and to identify mechanisms by which gender differences in impact may arise, notably differential treatment of men and women within firms as well as gender sorting across firms that varied in their exposure to the crisis. On average, women experienced higher job losses than their male colleagues within the same firm. However, the aggregate adverse effect of such differential treatment was more than offset by women being disproportionately employed in firms hit relatively less hard by the crisis. The null hypothesis that there were no gender differences in wage adjustment is not rejected. Analyzing how employer characteristics impact labor market adjustment patterns contributes to the understanding of who is vulnerable in volatile times.
    Keywords: Labor Markets,Gender and Development,Labor Policies,Population Policies,Gender and Law
    Date: 2011–09–01
  18. By: Aksoy, Ataman; Onal, Anil
    Abstract: During the late 1980s and the 1990s, most countries in Sub-Saharan Africa implemented agricultural policy reforms, along with national political and economic reforms. The agricultural reforms focused on opening up processing and marketing activities to increased competition and eliminating export taxes and restrictions to improve producer incentives. In eight of nine country/commodity case studies analyzed in this paper, output responded positively in the short run to the reforms. In many cases, however, the initial supply response was not sustained in the face of subsequent shocks. The studies suggest that stakeholder consensus on the distribution of sector-specific rents is a key variable affecting the sustainability of supply responses. Agricultural sector reforms lead to large changes in income distribution. The greater the acceptance of the distribution of rents following the reforms, the better sectors are able to accommodate subsequent shocks. In cases where the initial consensus on the distribution of rents is weak, shocks lead to reform reversals in some cases or an inability to design necessary support institutions in others. The diversity in outcomes across similar products and countries suggests it is possible to achieve sector and local level results that differ from national ones.
    Keywords: Markets and Market Access,Crops&Crop Management Systems,Emerging Markets,Economic Theory&Research,Labor Policies
    Date: 2011–08–01
  19. By: Khanna, Gaurav; Newhouse, David; Paci, Pierella
    Abstract: This paper reviews evidence from 44 middle-income countries on how the recent financial crisis affected jobs and workers'incomes. In addition to providing a rare assessment of the magnitude of the impact across several middle-income countries, the paper describes how labor markets adjusted and how the adjustments varied for different types of countries. The main finding is that the crisis affected the quality of employment more than the number of jobs. Overall, the slow-down in earning growth was considerably higher than that in employment, and the decline in gross domestic product was associated with a sharp decline in output per worker, particularly in the industrial sector. In several counties, hours per worker declined and hourly wages changed little. But both the magnitude and nature of the adjustments varied considerably across countries. For a given drop in gross domestic product, earnings declined more in countries with larger manufacturing sectors, smaller export sectors, and more stringent labor market regulations. In addition, overall employment became more sensitive to growth in gross domestic product. These findings have implications that go beyond the recent financial crisis as they highlight (i) the limitations of focusing policy responses on maintaining jobs and providing alterative employment or replacement income for the unemployed, and (ii) the critical role of fast-track data systems that are capable of monitoring ongoing labor market adjustment during economic downturns, in supporting the design of effective policy responses.
    Keywords: Labor Markets,Labor Policies,Banks&Banking Reform,Markets and Market Access,Labor Management and Relations
    Date: 2011–09–01
  20. By: Matsuda, Yasuhiko
    Abstract: In the Philippines'highly decentralized political system, smooth functioning of inter-governmental relations is key to effective service delivery and good governance overall. Although considered a milestone, the 1991 Local Government Code, the Philippines'basic legislation governing inter-governmental relations, contains provisions that thwart vertical and horizontal resource equalization among local government units, and contributes to mismatch between expenditure assignments and the fiscal capacities of the local government units. Numerous technical reports have called for adjustments to the existing revenue and expenditure assignments, yet no tangible progress has been made. This paper assesses the prospects of legislative reforms on the revenue side of the decentralization framework. Using a variety of approaches ranging from a historical analysis to institutional analysis of the legislative dynamics in the Philippine congress, it assesses the prospects of a major overhaul of the Local Government Code and concludes that a significant reform is highly unlikely under the conditions prevailing in the late 2010s. By implication, any effort to improve the Philippines'inter-governmental framework will have to settle for sub-optimal incremental measures within the inefficient revenue assignment arrangement.
    Keywords: Parliamentary Government,Subnational Economic Development,Debt Markets,Intergovernmental Fiscal Relations and Local Finance Management,Municipal Financial Management
    Date: 2011–09–01
  21. By: Aterido, Reyes; Hallward-Driemeier, Mary; Pages, Carmen
    Abstract: Seguro Popular was introduced in 2002 to provide health insurance to the 50 million Mexicans without Social Security. This paper tests whether the program has had unintended consequences, distorting workers'incentives to operate in the informal sector. The analysis examines the impact of Seguro Popular on disaggregated labor market decisions, taking into account that program coverage depends not only on the individual's employment status, but also that of other household members. The identification strategy relies on the variation in Seguro Popular's rollout across municipalities and time, with the difference-in-difference estimation controlling for household fixed effects. The paper finds that Seguro Popular lowers formality by 0.4-0.7 percentage points, with adjustments largely occurring within a few years of the program's introduction. Rather than encouraging exit from the formal sector, Seguro Popular is associated with a 3.1 percentage point reduction (a 20 percent decline) in the inflow of workers into formality. Income effects are also apparent, with significantly decreased flows out of unemployment and lower labor force participation. The impact is larger for those with less education, in larger households, and with someone else in the household guaranteeing Social Security coverage. However, workers pay for part of these benefits with lower wages in the informal sector.
    Keywords: Health Monitoring&Evaluation,Labor Markets,Labor Policies,Housing&Human Habitats,Population Policies
    Date: 2011–08–01
  22. By: David E. Bloom (Harvard School of Public Health); David Canning (Harvard School of Public Health); Erica Seigner
    Abstract: We use data from the Cebu Longitudinal Health and Nutrition Survey in the Philippines to link vaccination in the first two years of life with later physical and cognitive development in children. We use propensity score matching to estimate the causal effect of vaccination on child development. We find no effect of vaccination on later height or weight, but full childhood vaccination for measles, polio, TB, and DPT significantly increases cognitive test scores relative to matched children who received no vaccinations. The size of the effect is large, raising test scores, on average, by about half a standard deviation.
    Keywords: vaccination, Phiippines, cognitive development
    Date: 2011–04
  23. By: David E. Bloom (Harvard School of Public Health); David Canning (Harvard School of Public Health); Larry Rosenberg (Harvard School of Public Health)
    Abstract: Identifying factors that influence the pace of national economic growth is a time-worn activity of economists. Strangely, demographic change has often been absent from consideration. But new thinking and evidence have highlighted the powerful contribution that demographic change can make to economic growth, and this line of inquiry has some salient implications for understanding past growth in South Asia and assessing and shaping its future prospects.
    Keywords: economic growth, South Asia, demographic change
    Date: 2011–02
  24. By: Jeremy Barofsky (Harvard School of Public Health); Claire Chase (Harvard School of Public Health); Tobenna Anekwe; Farshad Farzadfar
    Abstract: This study evaluates the economic consequences of a malaria eradication campaign in the southwestern Ugandan district of Kigezi. The project was a joint venture between the WHO and Uganda's Ministry of Health, designed to test for the first time the feasibility of malaria eradication in a sub-Saharan African country. During the years of 1959 and 1960, eradication efforts employing DDT spraying and mass distribution of anti-malarials were implemented, beginning in northern Kigezi. Follow-up studies reported a drop in overall parasite rates from 22.7 to 0.5% in hyperendemic areas and from 12.5 to 0% in mesoendemic areas. We use this campaign as a plausibly exogenous health shock to explore changes in human-capital formation and income. We employ a difference-in-difference methodology to show that eradication produced differential improvements in Kigezi compare to the rest of Uganda in years of schooling, literacy, and primary school completion. In addition, we find suggestive evidence that eradication increased income levels.
    Keywords: human capital, malaria, economic development and health
    Date: 2011–05
  25. By: David E. Bloom (Harvard School of Public Health)
    Abstract: Demographic change in India is opening up new economic opportunities. As in many countries, declining infant and child mortality helped to spark lower fertility, effectively resulting in a temporary baby boom. As this cohort moves into working ages, India finds itself with a potentially higher share of workers as compared with dependents. If working-age people can be productively employed, India's economic growth stands to accelerate. Theoretical and empirical literature on the effect of demographics on labor supply, savings, and economic growth underpins this effort to understand and forecast economic growth in India. Policy choices can potentiate India's realization of economic benefits stemming from demographic change. Failure to take advantage of the opportunities inherent in demographic change can lead to economic stagnation.
    Keywords: age structure, China-India comparison, conditional convergence, demographic dividend, demographic transition, economic growth, economic growth in India, policy reform, population health, population of India
    Date: 2011–01
  26. By: Mazhar MUGHAL; Barassou DIAWARA
    Abstract: Explaining Income Inequalities in Developing Countries: the Role of Human Capital
    Date: 2011–12
  27. By: Armand A Sim; Daniel Suryadarma; Asep Suryahadi
    Abstract: Child labor is a phenomenon that has attracted a great amount of attention and research. Theoretical propositions suggest that child labor is inefficient if it adversely affects future earning ability. This paper contributes to the literature on the effects of child market work on human capital by focusing on the long-term growth in human capital, which is widely known to significantly affect earning ability. The paper also uses better measures of human capital by focusing on the output of the human capital production function: numeracy skills, cognitive skills, and pulmonary function. Using a rich longitudinal dataset on Indonesia, we find strong negative effects of child labor on the growth of both numeracy and cognitive skills in the next seven years. In addition, we find a strong and negative effect on pulmonary function as measured through lung capacity. Comparing the effects by gender and type of work, we find that female child workers suffer more adverse effects on mathematical skills growth, while male child workers experience much smaller growth in pulmonary function. We also find that child workers who work for pay outside the family bore worse effects compared to child workers who work in the family business.
    Keywords: child labor, human capital, skills, health, Indonesia
    JEL: I12 I21 J13 J22 O15
    Date: 2011
  28. By: Haryo Aswicahyono; Chris Manning
    Abstract: Employment generation has been a challenge in Indonesia since the Asian Financial Crisis (AFC), especially in labor-intensive manufacturing. We examine the direct and indirect impact of exports on jobs, based on an analysis of input-output tables over the period 1985-2005, and compare these findings with the earlier pre-crisis period. The paper finds that fewer jobs were created through exports in manufacturing industries in after the AFC, because of slower growth in manufacturing exports and a shift away from light industry. However, there was an increase in service sector jobs, partly because of linkages with the main export industries in manufacturing and primary industry. Besides intensified competition from other lower-middle income Asian economies, the main constraints to job creation through exports appear to have been on the supply side; these include too poor infrastructure, an uncertain investment climate and tight labor regulations.
    Keywords: exports, employment creation, manufacturing growth, input-output analysis, Indonesia, Southeast Asia
    JEL: F16 J23 O14
    Date: 2011
  29. By: Hal Hill; Jayant Menon
    Abstract: This paper examines the impact of the global financial crisis on Cambodia, and the lessons learned. Cambodia is an interesting case study: after extremely rapid economic growth 2000-07, it experienced a sharp growth collapse in 2008-09. This highlighted a number of its peculiar vulnerabilities, including a narrow economic base, a pre-crisis asset price boom, a fragile financial system, and the limited array of defensive economic policy levers available to the government. The economy has begun to rebound since early 2010, and the crisis episode provides the government with an opportunity to place the country's economic growth trajectory on a more sustainable footing. Apart from diversifying the economy and creating the preconditions for dedollarization, we also consider policies that could improve the business climate and make growth more inclusive.
    Keywords: Cambodia, transition economies, economic crises
    JEL: O53 P20
    Date: 2011
  30. By: Raghbendra Jha; Hari K. Nagarajan; Kailash C. Pradhan
    Abstract: This paper has the objective of showing that identity based voting will lead to improvements in household welfare through increased access to welfare programs. Using newly available data from rural India, we establish that identity based voting will lead to enhanced participation in welfare programs and increased consumption growth. We also show that consumption growth is retarded if households do not engage in identity based voting. Using 3 stage least squares, we are able to show that identity based voting results from the externalities derived from membership in social and information networks, and such voting by enhancing participation in welfare programs leads to significant increases in household consumption growth.
    Keywords: Identity Based Voting, Panchayats, Decentralization, Devolution
    JEL: D7 D72 D73
    Date: 2011
  31. By: Nidhi Kaicker; Raghav Gaiha
    Abstract: In a recent study, Jensen and Miller (2011) propose a new measure of undernutrition, based on a calorie share of staples threshold. Among the merits of this measure are that (i) it dispenses with calorie norms, and (ii) relies on a behavioural approach to estimate this threshold. What our analysis with Indian household data for 1993 and 2004 points to is that the Jensen-Miller (2011) story is of limited interest and potentially misleading principally because it confines variation in calorie share to a measure of wealth. The calorie threshold is suspect as it is influenced by several other factors-especially food prices-that are omitted. Since even acutely poor substitute in response to changes in food prices, calorie and income thresholds change, and, consequently, the estimates of undernourished. In some cases, the divergences are large. Thus, both the predictive accuracy of the measure proposed and its descriptive richness leave a lot to be desired.
    Keywords: calories, staples, undernutrition, wealth, food prices, India
    JEL: I12 D12
    Date: 2011
  32. By: Nitin Gupta
    Abstract: The paper aims to investigate the differential impact of increased financial development on industrial output, across state and industry categories. Using an unbalanced panel of 15 Indian states, 22 industries at the 2-digit level, and an 11-year period spanning 1992-2002, the paper's most novel contribution comes from hypothesising and testing for operating channels though which increased financial depth benefits output. It is concluded that financial depth facilitates increased use of contract labour by industries, which in turn mitigates the effects of industrial disputes and increases output. This beneficial impact is uniformly felt across the country, regardless of state-level labour regulations. However, financial depth has failed to directly benefit industries with the greatest need for external financing, i.e. those with moderate and high dependence on external sources of finance. Overall, increased financial depth alleviated the working capital constraints of firms, but not their investment constraints. The negative effects of the latter outweigh the positive effects of the former, and help explain the sharp deceleration of growth across industries categories. Finally, the paper makes the dual case for comprehensive labour reforms and for policies to improve quality of intermediation in Indian financial markets.
    Keywords: Trade & Labour Market Interaction, Dispute Resolution, Industrial Policy, Manufacturing, Financial Markets
    JEL: F16 J52 L52 L60 O16
    Date: 2011
  33. By: Raghbendra Jha; Hari K. Nagarajan; Kailash C. Pradhan
    Abstract: Given that the phenomenon of capture of public programs by sections the population is rampant in developing countries, households can indulge in a strategy to improve their odds of participating in public programs by bribing the suppliers of such programs. This is an important issue affecting both the supply of local public goods and the incidence of corruption. To the best of our knowledge there is no analysis of the impact of bribery on the odds of participating in a local public goods program, anywhere. Using a unique data set for rural India this paper addresses the question of whether households bribe elected officials responsible for assuring such supply to improve their access to local public goods. We find considerable evidence of such bribing. We also model the welfare effects of such bribing on groups of households as well as the impact of bribery on aggregate welfare. Several policy conclusions are advanced.
    Keywords: Bribery, Program Capture, Welfare Effects, Rural India
    JEL: D31 D63 D73 O12
    Date: 2011
  34. By: Thorsten Beck; Patrick Behr; Andreas Madestam
    Abstract: This paper examines the effects of group identity in the credit market. Exploiting the quasi-random assignment of first-time borrowers to loan officers of a large Albanian lender, we test for own-gender bias in the loan officer-borrower match. We find that borrowers pay on average 29 basis points higher interest rates when paired with a loan officer of the other sex. The results indicate the presence of a taste-based rather than a statistical bias, as borrowers’ likelihood of going into arrears is independent of loan officer gender. Ending up with an opposite-sex loan officer also affects demand for credit, with borrowers being 11.5 percent less likely to return for a second loan. The bias is more pronounced when the social distance, as proxied by difference in age between the loan officer and the borrower, increases and when financial market competition declines. This is consistent with theories that predict a taste-based bias to be stronger when the psychological costs of being biased are lower and the disretion in setting interest rates is higher. Taken together, the findings suggest that own-gender preferences can have substantial welfare effects.
    Date: 2011
  35. By: Augustin Kwasi Fosu
    Abstract: The study presents recent global evidence on the transformation of economic growth to poverty reduction in developing countries, with emphasis on the role of income inequality. The focus is on the period since the early-mid-1990s when growth in these countries as a group has been relatively strong, surpassing that of the advanced economies. Both regional and country-specific data are analyzed for the $1.25 and $2.50-level poverty headcount ratios using the most recent World Bank data. The study finds that on average income growth has been the major driving force behind both the declines and increases in poverty. The study, however, documents substantial regional and country differences that are masked by this ‘average’ dominant-growth story. While in the majority of countries, growth was the major factor behind falling or increasing poverty, inequality, nevertheless, played the crucial role in poverty behavior in a large number of countries. And, even in those countries where growth has been the main driver of poverty-reduction, further progress could have occurred under relatively favorable income distribution. For more efficient policymaking, therefore, idiosyncratic attributes of countries should be emphasized. In general, high initial levels of inequality limit the effectiveness of growth in reducing poverty while growing inequality reduces poverty directly for a given level of growth. It would seem judicious, therefore, to accord special attention to reducing inequality in certain countries where income distribution is especially unfavorable. Unfortunately, the present study also points to the limited effects of growth and inequality-reducing policies in low-income countries.
    Keywords: Growth; inequality; poverty; developing countries.
    JEL: O49 D31 I32 O11
    Date: 2011
  36. By: Marcel Fafchamps; David McKenzie; Simon Quinn; Christopher Woodruff
    Abstract: Standard models of investment predict that credit-constrained firmd should grow rapidly when given additional capital, and that how this capital is provided should not affect decisions to invest in the business or consume the capital. We randomly gave cash and in-kind grants to male- and female- owned microenterprises in urban Ghana. Our findings cast doubt on the ability of caoital alone to stimulate the growth of female microenterprises. First, while the average treatment effects of the in-kind grants are large and positive for both males and females, the gain in profits is almost zerp fpr women with itital profits below the median, suggesting that capital alone is not enough to grow subsistence enterprises owned by women. Second, for women we strongly reject equality of the case and in-kind grants; only in-kind grants lead to growth in business profits. The results for men also suggest a lower impact of cash, but differences between cash and in-kind grants is assoicated more with a lack of self-control than with external pressure. As a result, the manner in which funding is provided affects microenterprise growth.
    Keywords: microenterprises; ghana; Conditionality; Asset intergration
    JEL: O12 O16 C93
    Date: 2011
  37. By: Marcel Fafchamps; Mans Soderbom
    Abstract: We document empirical patterns of correlation in the adoption of technological innovation and contractural practices among manfacturing firms in Ethiopia and Sudan. The analysis is based upon network data indicating whether any two firms in our sample do business with each other, whether they buy inputs from a common supplier and whether they sell output to a common client. We only find limited support for the commonly held idea that firms that are more proximate in a network sense are more likely to adopt similar practices. For certain practices, adoption decisions appear instead to be local strategic substitutes: if ones firms in a given location is using a certain practice, others nearby are less likely to do so. These results appear out of tune with policy discussion of how the economic performance of African's manufcaturing sector can be improved.
    Date: 2011
  38. By: Jie He (University of Sherbrooke, GREDI); Jingyan Fu (Department of International Trade and Economics, Jinan University)
    Abstract: Based on single-country linked Input-Output model, this paper first calculated the balance of emission embodied in trade (BEET) and pollution trade terms (PTT) for China’s international trade during 1996-2004. Our results confirm China as a net emission exporter but also find China’s exports to be less-polluting than China’s import. Our estimation results confirm the findings of IO analysis and reveals that China has comparative advantages in less polluting labour-intensive sector. The reason China which exports principally in less-polluting sectors to have a positive BEET is because China has higher emission intensity in almost all sectors than its trade partners. Our conclusion also reveals international production division is organised without consideration of environmental performance of producers of different countries, this is the principal reason for the carbon leakage phenomenon related to international trade, while the pollution haven hypothesis plays actually a marginal role.
    Keywords: Single-country linked Input-Output model, Pollution Haven Hypothesis, Carbon leakage, Comparative advantage, BEET, Pollution terms of trade, China
    Date: 2011–08
  39. By: Thomas Poder (UETMIS - CHU de Sherbrooke, GREDI - Université de Sherbrooke); Jie He (University of Sherbrooke, GREDI)
    Abstract: With the propensity score matching method, we carried out an average benefit incidence analysis that helps disclose those who really benefited from the sanitary services in Guatemala. Specifically, we tested the role of income, maternal education and social capital on how sanitary infrastructures affect child health. Results indicated that the child health benefits from infrastructure increase (decrease) with the household’s socioeconomic status when the infrastructure is a complement (substitute) of the private inputs provided by the household, and that the role of the infrastructure (complement or substitute) itself depends on the household’s socioeconomic status. Finally, results revealed that the battle against child malnutrition and health inequalities could be improved by combining sanitary infrastructure investments with effective public promotion of maternal education, social trust, and poverty reduction.
    Keywords: Malnutrition, infrastructure, health inequality, Guatemala
    Date: 2011–08
  40. By: Adolfo Albo; Juan Luis Ordaz Diaz
    Abstract: In this article, we calculate the number of Mexican immigrants with doctorates living in the United States. We describe some of their characteristics and point to some factors that contribute to the emigration of this group of persons. We also quantify the transfer that Mexico has made to the United States through the education costs of the Mexican migrants prior to their emigration. On average, we find that over recent years Mexico has made a transfer of resources equivalent to just over half a percentage point of GDP each year.
    Date: 2011–08
  41. By: Liu, Jing; Cao, Shutao
    Abstract: This paper studies the industry productivity dynamics in China’s manufacturing sector from 1998 to 2007, and in particular, explores to what extent the privatization of state-owned enterprises (SOEs) contributes to the aggregate productivity growth. Our results show that, though non-SOEs on average are more productive than SOEs, the average productivity growth among SOEs is greater than the privately-owned firms. Industry concentration, taxation, and credit market all account for this difference in growth between SOEs and non-SOEs. In addition, industry productivity growth is mainly attributed to the growth of non-SOEs, entry of non-SOE firms, and the exit of SOEs. However, non-SOE firms that are transformed directly from SOEs make a small but negative contribution to industry productivity growth.
    Keywords: Productivity Growth, Industry Dynamics, Ownership Change, Reallocation
    JEL: E6 D24 O4
    Date: 2011–04–15
  42. By: Benjamin A. Olken; Rohini Pande
    Abstract: Recent years have seen a remarkable expansion in economists’ ability to measure corruption. This, in turn, has led to a new generation of well-identified, microeconomic studies. We review the evidence on corruption in developing countries in light of these recent advances, focusing on three questions: how much corruption is there, what are the efficiency consequences of corruption, and what determines the level of corruption. We find robust evidence that corruption responds to standard economic incentive theory, but also that effects of anti-corruption policies often attenuate as officials find alternate strategies to pursue rents.
    JEL: D73 H83 O12
    Date: 2011–09
  43. By: Dani Rodrik
    Abstract: The question addressed in this paper is whether the gap in performance between the developed and developing worlds can continue, and in particular, whether developing nations can sustain the rapid growth they have experienced of late. The good news is that growth in the developing world should depend not on growth in the advanced economies themselves, but on the difference in the productivity levels of the two groups of countries – on the “convergence gap” – which remains quite large. Yet much of this convergence potential is likely to go to waste. Convergence is anything but automatic, and depends on sustaining rapid structural change in the direction of tradables such as manufacturing and modern services. The policies that successful countries have used to achieve this are hard to emulate. Moreover, these policies – such as currency undervaluation and industrial policies – will meet greater resistance on the part of industrial countries struggling with stagnant economies and high unemployment.
    JEL: O40
    Date: 2011–09

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