nep-dev New Economics Papers
on Development
Issue of 2012‒04‒03
eleven papers chosen by
Mark Lee
Towson University

  1. Employment Generation in Rural Africa: Mid-Term Results from an Experimental Evaluation of the Youth Opportunities Program in Northern Uganda By Christopher Blattman; Nathan Fiala; Sebastian Martinez
  2. Internal vs. International Migration: Impacts of Remittances on Child Well-Being in Vietnam By Michele Binci; Gianna Giannelli
  3. Social Identity and Inequality: The Impact of China's Hukou System By Afridi, Farzana; Li, Sherry Xin; Ren, Yufei
  4. The Percolation of public expenditure: Food subsidies and the Poor in India and the Philippines By Shikha Jha; Bharat Ramaswami
  5. South-South Migration and the Labor Market: Evidence from South Africa By Giovanni Facchini; Anna Maria Mayda; Mariapia Mendola
  6. Improving access to jobs and earnings opportunities : the role of activation and graduation policies in developing countries By Almeida, Rita; Arbelaez, Juliana; Honorati, Maddalena; Kuddo, Arvo; Lohmann, Tanja; Ovadiya, Mirey; Pop, Lucian; Puerta, Maria Laura Sanchez; Weber, Michael
  7. The Rise and Fall of Income Inequality in Mexico, 1989-2010 By Raymundo Campos; Gerado Esquivel; Nora Lustig
  8. Determinants of Health Professionals’ Migration in Africa By Simplice A , Asongu
  9. State legitimacy and famines in Sub-Saharan Africa By Sutter, Camille
  10. Endogenous human capital formation, distance to frontier and growth By Basu, Sujata; Mehra, Meeta K
  11. Social Enterprise, Capabilities and Development: Lessons from Ecuador By Scarlato, Margherita

  1. By: Christopher Blattman; Nathan Fiala; Sebastian Martinez
    Abstract: Can cash transfers promote employment and reduce poverty in rural Africa? Will lower youth unemployment and poverty reduce the risk of social instability? We experimentally evaluate one of Uganda's largest development programs, which provided thousands of young people nearly unconditional, unsupervised cash transfers to pay for vocational training, tools, and business start-up costs. Mid-term results after two years suggest four main findings. First, despite a lack of central monitoring and accountability, most youth invest the transfer in vocational skills and tools. Second, the economic impacts of the transfer are large: hours of nonhousehold employment double and cash earnings increase by nearly 50% relative to the control group. We estimate the transfer yields a real annual return on capital of 35% on average. Third, the evidence suggests that poor access to credit is a major reason youth cannot start these vocations in the absence of aid. Much of the heterogeneity in impacts is unexplained, however, and is unrelated to conventional economic measures of ability, suggesting we have much to learn about the determinants of entrepreneurship. Finally, these economic gains result in modest improvements in social stability. Measures of social cohesion and community support improve mildly, by roughly 5 to 10%, especially among males, most likely because the youth becomes a net giver rather than a net taker in his kin and community network. Most strikingly, we see a 50% fall in interpersonal aggression and disputes among males, but a 50% increase among females. Neither change seems related to economic performance nor does social cohesion - a puzzle to be explored in the next phase of the study. These results suggest that increasing access to credit and capital could stimulate employment growth in rural Africa. In particular, unconditional and unsupervised cash transfers may be a more effective and cost-efficient form of large-scale aid than commonly believed. A second stage of data collection in 2012 will collect longitudinal economic impacts, additional data on political violence and behavior, and explore alternative theoretical mechanisms.
    Keywords: Cash grant, randomized control trial, credit constraints, psychological and social impacts
    JEL: O12 O15
    Date: 2012
  2. By: Michele Binci (Dipartimento Scienze Economiche, Università degli Studi di Firenze); Gianna Giannelli (Dipartimento Scienze Economiche, Università degli Studi di Firenze)
    Abstract: This paper intends to contribute to the literature on the effects of domestic and international remittances on schooling and child labour. Using the information gathered in the 1992/93 and 1997/98 Vietnam Living Standards Surveys (VLSS), we examine separately the school attendance rates and the incidence of child labour in remittance recipient households, as compared to households where this income source is absent. We apply ordinary least squares regression for the two cross-sections and a fixed-effects linear regression for the panel, using as dependent variables the child labour and school attendance ratios of children in each household. Our results indicate that the average child belonging to a remittance recipient household has a lower probability of working and a greater probability of going to school. Although international remittances are found to have a stronger beneficial impact than domestic ones in the cross-sectional analysis, the panel analysis reverses this result, showing that the only significant impact stems from domestic remittances.
    Keywords: Migration, Remittances, Schooling, Child Labour, Panel Data, Vietnam
    JEL: F22 I39 J13 O15
    Date: 2012
  3. By: Afridi, Farzana (Indian Statistical Institute); Li, Sherry Xin (University of Texas at Dallas); Ren, Yufei (Union College)
    Abstract: We conduct an experimental study to investigate the causal impact of social identity on individuals' response to economic incentives. We focus on China's household registration (hukou) system which favors urban residents and discriminates against rural residents in resource allocation. Our results indicate that making individuals' hukou status salient and public significantly reduces the performance of rural migrant students on an incentivized cognitive task by 10 percent, which leads to a significant leftward shift of their earnings distribution. The results demonstrate the impact of institutionally imposed social identity on individuals' intrinsic response to incentives, and consequently on widening income inequality.
    Keywords: social identity, inequality, field experiment, hukou, China
    JEL: C93 D03 O15 P36
    Date: 2012–03
  4. By: Shikha Jha (Asian Development Bank); Bharat Ramaswami (Indian Statistical Institute, New Delhi)
    Abstract: This paper measures the percolation of food subsidy expenditures to th e poor. The paper proposes a metric that takes into account the depth and width of income transfer. The metric is applied to food subsidy expenditures in India and Philippines. Both countries operate in-kind transfer schemes. The major findings is that neither country scores well on the percolation index...
    Date: 2011–09
  5. By: Giovanni Facchini (Erasmus University Rotterdam, University of Milan, CEPR, CES-Ifo, CReAM, IZA and LdA); Anna Maria Mayda (Georgetown University, Centro Studi Luca d’Agliano, CEPR and IZA); Mariapia Mendola (University of Milan Bicocca and Centro Studi Luca d’Agliano)
    Abstract: Using census data for 1996, 2001 and 2007 we study the labor market effect of immigration in South Africa. In this period the share of foreign born over the total population has grown by almost fifty percent, and both the characteristics and geographical distribution of immigrants show substantial variation over time. We exploit these features of the data to carry out an analysis that combines both the “spatial correlation” approach pioneered by Card (1990) and the variation across schooling and experience groups used by Borjas (2003). We estimate that increased immigration has a negative effect on natives’ employment outcomes, but not on total income. Furthermore, we find that skilled South Africans appear to be the most negatively affected subgroup of the population.
    Keywords: Immigration, Labor market effects, South Africa
    JEL: F22 J61
    Date: 2012–03–27
  6. By: Almeida, Rita; Arbelaez, Juliana; Honorati, Maddalena; Kuddo, Arvo; Lohmann, Tanja; Ovadiya, Mirey; Pop, Lucian; Puerta, Maria Laura Sanchez; Weber, Michael
    Abstract: Throughout the developing world there is a growing demand for advice on the design of policies to facilitate access of the most vulnerable individuals to jobs, while reducing their dependency from public income support schemes. Even though these policies are common to both the activation and graduation agendas, a separation is needed as the graduation of beneficiaries out of poverty is a much more ambitious agenda. This paper proposes a simple policy framework highlighting the most common barriers for productive employment. It also reviews the topic of incentive compatibility of income support schemes and employment support programs that are used to address them. The paper finds that, especially in middle income countries, activation and active labor market programs play an important role connecting individuals to jobs and improving earnings opportunities. In low income countries, these programs are far from being a panacea to graduate beneficiaries out of poverty. Furthermore, only scant evidence is available on the pathways to graduation and significant knowledge gaps remain. More cross-disciplinary research is needed to strengthen the evidence base and develop recommendations for different contexts and capacity levels.
    Keywords: Labor Markets,Safety Nets and Transfers,Labor Policies,Rural Poverty Reduction,Poverty Impact Evaluation
    Date: 2012–03–01
  7. By: Raymundo Campos (Center for Economic Studies, El Colegio de Mexico); Gerado Esquivel (Center for Economic Studies, El Colegio de Mexico); Nora Lustig (Department of Economics, Tulane University)
    Abstract: Inequality in Mexico rose between 1989 and 1994 and declined between 1994 and 2010. We examine the role of market forces (demand and supply of labour by skill), institutional factors (minimum wages and unionization rate), and public policy (cash transfers) in explaining changes in inequality. We apply the "re-centered influence function" method to decompose changes in hourly wages into characteristics and returns. The main driver is changes in returns. Returns rose (1989-1994) due to institutional factors and labour demand. Returns declined (1994-2006) due to changes in supply and-to a lesser extent-in demand; institutional factors were not relevant. Government transfers contributed to the decline in inequality, especially after 2000.
    Keywords: inequality, wages, disposable income, labour markets, Mexico
    JEL: D31 J20 J31 O54
    Date: 2012–03
  8. By: Simplice A , Asongu
    Abstract: How do economic prosperity, health expenditure, savings, price-stability, demographic change, democracy, corruption-control, press-freedom, government effectiveness, human development, foreign-aid, physical security, trade openness and financial liberalization play-out in the fight against health-worker crisis when existing emigration levels matter? Despite the acute concern of health-worker crisis in Africa owing to emigration, lack of relevant data has made the subject matter empirically void over the last decades. This paper assesses the theoretical postulations of the WHO report on determinants of health-worker migration. Findings provide a broad range of tools for the fight against health-worker brain-drain. As a policy implication, blanket emigration-control policies are unlikely to succeed equally across countries with different levels of emigration. Thus to be effective, immigration policies should be contingent on the prevailing levels of the crisis and tailored differently across countries with the best and worst records on fighting health worker emigration.
    Keywords: Welfare; Health; Human Capital; Migration
    JEL: F22 O15 J24 D60 I10
    Date: 2012–03–26
  9. By: Sutter, Camille
    Abstract: Political Economy of famines mainly focuses on political regimes to understand the role of institutions. In this paper, we investigate a broader concept, state legitimacy, and its role on one specific development outcome, famine management. State legitimacy refers to the political history of a country, meaning the embedding of state and society. Using a database of Sub-Saharan countries observed from 1980 to 2005, we use three empirical strategies: logit on famine occurrence, negative binomial regression and Arellano-Bond dynamic model on the number of years of famines. They all lead to the same results: there is room for a political economy of famine based on an analysis of state. State legitimacy prevents famines, controlling for shocks countries might go through, and controlling for the quality of government. The main contributions of this paper are first to consider the role of state legitimacy in the political economy of famines and second to apply the concept in an empirical analysis, using for the first time a state legitimacy variable.
    Keywords: Democracy; Famine; Institutions; State Legitimacy; Sub-Saharan Africa
    JEL: O55 H11 I18 I3 Q18
    Date: 2011–10
  10. By: Basu, Sujata; Mehra, Meeta K
    Abstract: We examine human capital's contribution to economy-wide technological progress through two channels -- imitation and innovation -- innovation being more skilled-intensive than innovation. We develop a growth model considering an endogenous ability-driven skill acquisition decision of an individual. We show that skilled labor is growth enhancing in the ``imitation-innovation" regime and the ``innovation-only" regime whereas unskilled labor is growth enhancing in the ``imitation-only" regime. Steady state exists and, in the long run, an economy may or may not converge to the world technology frontier, depending on its initial position and the growth rate of the frontier economy. In the diversified regime, technological progress raises the return to ability and generates an increase in wage inequality between and within groups -- consistent with the pattern observed across countries.
    Keywords: Economic Growth; Endogenous Labor Composition; Imitation-Innovation; Convergence; Wage Inequality
    JEL: O43 I21 O3
    Date: 2011–07–14
  11. By: Scarlato, Margherita
    Abstract: The paper analyses how the theoretical framework of social enterprise proposed in the academic debate could be operationalised in the specific socioeconomic context of Ecuador. Recently, this country designed a new economic paradigm based on the solidarity economy model to reconcile an ambitious developmental state platform with the vision of a participatory strategy that pursues democracy, human rights and poverty reduction. This paradigm was enshrined in the constitution and elaborated through the Plan Nacional para el Buen Vivir 2009-2013. The paper explores the peculiar features of the solidarity model in Ecuador and draws more general insights related to development policy.
    Keywords: Social enterprise; human development; social protection; development policy; Ecuador
    JEL: O54 O15 L31
    Date: 2012–03–21

This nep-dev issue is ©2012 by Mark Lee. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.