nep-dev New Economics Papers
on Development
Issue of 2012‒05‒22
eighteen papers chosen by
Mark Lee
Towson University

  1. Mapping Modes of Rural Labour Migration in China By Sylvie Démurger
  2. Working Paper 149 - Accounting for Poverty in Africa: Illustration with Survey Data from Nigeria By AfDB
  3. Estimating the Causal Effect of Enforcement on Minimum Wage Compliance : The Case of South Africa By Haroon Bhorat; Ravi Kanbur; Natasha Mayet
  4. Minimum Wage Violation in South Africa By Haroon Bhorat; Ravi Kanbur; Natasha Mayet
  5. Micro-evidence on day labourers and the thickness of labour markets in South Africa By PF Blaauw; WF Krugell
  6. Human Capital, Economic Growth, and Inequality in China By Heckman, James J.; Yi, Junjian
  7. The Determinants of Earnings Inequalities: Panel Data Evidence from South Africa By Kerr, Andrew; Teal, Francis J.
  8. Urban-Rural Disparities of Child Health and Nutritional Status in China from 1989 to 2006 By Liu, Hong; Fang, Hai; Zhao, Zhong
  9. The Effect of Village-Based Schools: Evidence from a Randomized Controlled Trial in Afghanistan By Burde, Dana; Linden, Leigh L.
  10. Family Planning and Women's and Children's Health: Long Term Consequences of an Outreach Program in Matlab, Bangladesh By Joshi, Shareen; Schultz, T. Paul
  11. Like Father, Like Son? Intergenerational Education Mobility in India By Azam, Mehtabul; Bhatt, Vipul
  12. The Impact of the 1996 US Immigration Policy Reform (IIRIRA) on Mexican Migrants' Remittances By Vaira-Lucero, Matias; Nahm, Daehoon; Tani, Massimiliano
  13. Lords of Uhuru: the political economy of elite competition and institutional change in post-independence Kenya By Bedasso, Biniam
  14. Are remittances a "catalyst" for financial access? Evidence from Mexican household data By Ambrosius, Christian
  15. Are remittances a substitute for credit? Carrying the financial burden of health shocks in national and transnational households By Ambrosius, Christian
  16. Conflict, Food Price Shocks, and Food Insecurity: The experience of Afghan households By D'Souza, Anna; Jolliffe, Dean
  17. On the sources of risk preferences in rural Vietnam By Dang, Duc Anh
  18. Linkages between investment flows and financial development: causality evidence from selected African countries By Simplice A , Asongu

  1. By: Sylvie Démurger (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon)
    Abstract: Internal labour migration has become an important part of the process of China's industrialization and urbanisation in the 2000s. Using micro data for the year 2007, this chapter attempts to contribute to a better understanding of the motives of and the constraints to labour mobility in China. Drawing on various empirical investigations at the household level, it examines both the decision and the level of migration and provides a mapping of the main factors driving different types of labour mobility across space (by destination) and time (by duration).
    Keywords: rural-urban migration; destination; duration; migration networks; China
    Date: 2012–05–09
  2. By: AfDB
    Date: 2012–05–14
  3. By: Haroon Bhorat; Ravi Kanbur; Natasha Mayet (Development Policy Research Unit; Director and Professor)
    Abstract: This paper attempts to estimate the causal effect of government enforcement on compliance with minimum wages in South Africa, a country where considerable non-compliance exists. The number of labour inspectors per capita is used as a proxy for enforcement, whilst non-compliance is measured using an index of violation that measures both the proportion of individuals violated, as well as the average depth of individual violation. Due to the potential simultaneity between enforcement and compliance, the number of labour inspectors is instrumented by the number of non-inspectors. The results suggest that there are a variety of factors impacting on violation, including firm-level, sectoral and spatial characteristics. One of the key determinants of violation is found to be the local unemployment rate. However, the number of labour inspectors is found to be insignificant in determining non-compliance.
    Keywords: Minimum Wage, Enforcement, Compliance, Depth of Violation, South Africa
    JEL: A1
    Date: 2011–11
  4. By: Haroon Bhorat; Ravi Kanbur; Natasha Mayet (Development Policy Research Unit; Director and Professor)
    Abstract: Minimum wage legislation is central in South African policy discourse, with both strong support and strong opposition. The validity of either position depends, however, on the effectiveness of minimum wage enforcement. Using detailed matching of occupational, sectoral and locational codes in the 2007 Labour Force Survey to the gazetted minimum wages, this paper presents, we believe for the first time, estimates of minimum wage violation in South Africa. Our results give considerable cause for concern. Minimum wage violation is South Africa is disturbingly high. We find that 44% of covered workers get paid wages below the legislated minimum, whilst the average depth of shortfall is 35% of the minimum wage. Around this average, violation is most prevalent in the Security, Forestry and Farming Sectors. We hope that the quantifications in this paper will provide a more solid basis for discussion of minimum wage levels and their enforcement in South Africa.
    Keywords: Minimum Wage Violation, South Africa
    JEL: A1
    Date: 2011–10
  5. By: PF Blaauw; WF Krugell
    Abstract: The South African labour market is characterised by sharp segmentation, high unemployment and apparently limited informal sector employment. Recent work has focussed on the importance of the quality of education while others have argued that the rigidity of the labour market constrains employment growth. This paper considers the spatial aspects of the day labour market and argues that the size and proximity of economic activity found in agglomerations ensure a thick labour market that allows for better matching between workers and jobs. The results indicate that the day labourers, who were hired by the same employer more often, receive higher earnings and the thicker metropolitan labour market allows workers to become more specialised and receive higher earnings.
    Keywords: Day labourers, Labour market, Agglomeration
    JEL: J21 J24 J31 R23
    Date: 2012
  6. By: Heckman, James J. (University of Chicago); Yi, Junjian (University of Chicago)
    Abstract: China's rapid growth was fueled by substantial physical capital investments applied to a large stock of medium skilled labor acquired before economic reforms began. As development proceeded, the demand for high skilled labor has grown, and, in the past decade, China has made substantial investments in producing it. The egalitarian access to medium skilled education characteristic of the pre-reform era has given rise to substantial inequality in access to higher levels of education. China's growth will be fostered by expanding access to all levels of education, reducing impediments to labor mobility, and expanding the private sector.
    Keywords: education, human capital, economic growth, inequality
    JEL: I25 J24 O15
    Date: 2012–05
  7. By: Kerr, Andrew (University of Cape Town); Teal, Francis J. (University of Oxford)
    Abstract: In this paper we analyse the relative importance of individual ability and labour market institutions, including public sector wage setting and trade unions, in determining earnings differences across different types of employment. To do this we use the KwaZulu-Natal Income Dynamics Study data from South Africa, which show extremely large average earnings differentials across different types of employment. Our results suggest that human capital and individual ability explain much of the earnings differentials within the private sector, including the union premium, but cannot explain the large premiums for public sector workers. We show that a public sector premium exists only for those moving into the public sector. The paper addresses the challenges of non-random attrition and measurement error bias that panel data bring. Our results show that emphasising a simple binary dichotomy between the formal and informal sector can be unhelpful in attempting to explore how the labour market functions.
    Keywords: formality, trade unions, public sector, earnings, South Africa
    JEL: J31 J51 J45 O12
    Date: 2012–04
  8. By: Liu, Hong (Central University of Finance and Economics); Fang, Hai (University of Colorado Denver); Zhao, Zhong (Renmin University of China)
    Abstract: This paper analyzes urban–rural disparities of China's child health and nutritional status using the China Health and Nutrition Survey data from 1989 to 2006. We investigate degrees of health and nutritional disparities between urban and rural children in China as well as how such disparities have changed during the period 1989–2006. The results show that on average urban children have 0.29 higher height-for-age z-scores and 0.19 greater weight-for-age z-scores than rural children. Urban children are approximately 40% less likely to be stunted (OR = 0.62; P < 0.01) or underweight (OR = 0.62; P < 0.05) during the period 1989-2006. We also find that the urban–rural health and nutritional disparities have been declining significantly from 1989 to 2006. Both urban and rural children have increased consumption of high protein and fat foods from 1989 to 2006, but the urban-rural difference decreased over time. Moreover, the urban-rural gap in child preventive health care access was also reduced during this period.
    Keywords: urban-rural disparities, health and nutritional status, child, China
    JEL: I14 I15
    Date: 2012–04
  9. By: Burde, Dana (New York University); Linden, Leigh L. (University of Texas at Austin)
    Abstract: We conduct a randomized evaluation of the effect of village-based schools on children's academic performance using a sample of 31 villages and 1,490 children in rural northwestern Afghanistan. The program significantly increases enrollment and test scores among all children, eliminates the 21 percentage point gender disparity in enrollment, and dramatically reduces the disparity in test scores. The intervention increases formal school enrollment by 42 percentage points among all children and increases test scores by 0.51 standard deviations (1.2 standard deviations for children that enroll in school). While all students benefit, the effects accrue disproportionately to girls. Evidence suggests that the village-based schools provide a comparable education to traditional schools. Estimating the effects of distance on academic outcomes, children prove very sensitive: enrollment and test scores fall by 16 percentage points and 0.19 standard deviations per mile. Distance affects girls more than boys – girls' enrollment falls by 6 percentage points more per mile (19 percentage points total per mile) and their test scores fall by an additional 0.09 standard deviations (0.24 standard deviations total per mile).
    Keywords: Afghanistan, RCT, education, gender
    JEL: I21 I25 I28 O12 O22
    Date: 2012–04
  10. By: Joshi, Shareen (Georgetown University); Schultz, T. Paul (Yale University)
    Abstract: The paper analyzes the impact of an experimental maternal and child health and family-planning program that was implemented in Matlab, Bangladesh in 1977. Village data from 1974, 1982 and 1996 suggest that program villages experienced extra declines in fertility of about 17%. Household data from 1996 confirm that this decline in "surviving fertility" persisted for nearly two decades. Women in program villages also experienced other benefits: lower child mortality, improved health status, and greater use of preventive health inputs. Some benefits also diffused beyond the boundaries of the program villages into neighboring comparison villages. These program effects are robust to the inclusion of individual, household, and community characteristics. This paper concludes that the benefits of this reproductive and child health program in rural Bangladesh have many dimensions extending well beyond fertility reduction, which do not appear to dissipate after two decades.
    Keywords: program evaluation, health and women's work, health and development, family planning, fertility, Bangladesh
    JEL: O12 J13 I12 J16
    Date: 2012–05
  11. By: Azam, Mehtabul (World Bank); Bhatt, Vipul (James Madison University)
    Abstract: An important constraint in studying intergenerational education mobility for India is the lack of data that contain information about parents' education for the entire adult population. This paper employs a novel strategy to create a unique father-son matched data that is representative of the entire adult male population in India. Using this father-son matched data, we study the extent of intergenerational mobility in educational attainment in India since 1940s and provide an estimate of how India ranks among other nations. We also document this mobility across social groups, and states in India. Finally, we investigate the evolution of mobility in educational attainment across the two generations and whether this trend differs across social groups and state boundaries. We find that there have been significant improvements in educational mobility across generations in India, at the aggregate level, across social groups, and across states. Although most of the Indian states have made significant progress over time, in terms of improved mobility, there remains significant variation across states with some states faring worse than the others.
    Keywords: intergenerational mobility, educational persistence, India
    JEL: J6 I28
    Date: 2012–05
  12. By: Vaira-Lucero, Matias (Macquarie University, Sydney); Nahm, Daehoon (Macquarie University, Sydney); Tani, Massimiliano (Macquarie University, Sydney)
    Abstract: This paper investigates the effect of the US Illegal Immigrant Reform and Immigrant Responsibility Act of 1996 (IIRIRA) on the remitting patterns of Mexican immigrants. Using data from the Mexican Migration Project (MMP128), we find that a significant effect on remittance flows from illegal migrants took place after the implementation of the IIRIRA. This is consistent with the hypothesis that illegal immigrants are risk-averse agents who transfer more money to their home country as a mechanism to insure themselves against higher degrees of uncertainty within their host countries. Furthermore, this finding confirms previous research that conditions and policies in the host country affect migrants' remitting behaviour, and migrants' motivations are not only altruistic but also self-interested. Given that migrants' remittances and their savings are important sources of capital formation in many sending countries and of savings in the countries that host them, a better understanding of the effect that migration policies have on remittance flows can lead to more informed policies that can transcend the home security aspects that often dominate discussions about illegal migration.
    Keywords: remittances, legal status, uncertainty, policy reform, illegal migrants, Mexico, migration policy
    JEL: F22 F24 J61
    Date: 2012–05
  13. By: Bedasso, Biniam (UNU-MERIT/MGSoG, Maastricht University)
    Abstract: The post-independence history of Kenya is characterized by an unusual mix of stability with ever-lingering fragility. The high level of elite persistence in Kenya could be seen both as a cause and a result of this peculiar nature of the political economy of the country. This paper has the objective of studying the effects of historical elite competition and consolidation on political-economic stability and institutional transition in post-independence Kenya. The logic of the natural state is applied to organize the narrative and analyze the key features (North, Wallis and Weingast (2009), Violence and Social Orders: A Conceptual Framework for Interpreting Recorded Human History: Cambridge University Press). Most of the existing institutional structures in Kenya are built on elite configurations inherited from the colonial times. The robust growth performance of the first decade after independence was generated by smallholder agriculture, while most of the rent was transferred to the elite via state patronage. The political instability of the later years had a lot to do with dwindling patronage resources and elite fragmentation. For most part of the political economy history of the country, patron-client networks and tribalism have played key role in regulating intra-elite bargains. Land has always been the leverage used by the elite to manipulate the aforementioned structures. Although the Kenyan elite have maintained keen interest in winning via constitutional means, they have kept reverting to extralegal avenues whenever intra-elite negotiations seemed to have failed to be enforced.
    Keywords: elites, dominant coalition, economic growth, institutional change, Kenya
    JEL: P16 D72 O55
    Date: 2012
  14. By: Ambrosius, Christian
    Abstract: In policy discussions, it has frequently been claimed that migrants' remittances could function as a catalyst for financial access among receiving households. This paper provides empirical evidence on this hypothesis from Mexico, a major receiver of remittances worldwide. Using the Mexican Family Life Survey panel (MxFLS) for 2002 and 2005, the results from the fixed effects logit model show that receiving remittances is strongly correlated with the ownership of savings accounts and, to some degree, with the availability of borrowing options. These effects are more important for rural households than for urban households and are more important for microfinance institutions, than for traditional banks. --
    Keywords: Remittances,Mexico,Financial Access,Microfinance
    JEL: G21 O16 F24
    Date: 2012
  15. By: Ambrosius, Christian
    Abstract: The assumption that remittances are a substitute for credit has been an implicit or explicit theoretical foundation of many empirical studies on remittances. This paper directly tests this assumption by comparing the response to health-related shocks among national and transnational households using panel data from Mexico for 2002 and 2005. While the occurrence of serious health shocks that required hospital treatment doubled the average debt burden of exposed households compared to the control group, households with nuclear family members (a parent, child, or spouse) in the US did not increase their debts due to health shocks. This finding is consistent with the view that remittances respond to households' demand for financing emergencies and make them less reliant on debt-financing. --
    JEL: F24 D14 I15 O12
    Date: 2012
  16. By: D'Souza, Anna; Jolliffe, Dean
    Abstract: Using nationally-representative household survey data and confidential geo-coded data on violence, we examine the linkages between conflict, food insecurity, and food price shocks in Afghanistan. Spatial mappings of the raw data reveal large variations in levels of food insecurity and conflict across the country; surprisingly, food insecurity is not higher in conflict areas. In a multivariate regression framework, we exploit the 2008 spike in wheat flour prices to estimate differential effects on household food security – measured by calorie intake and the real value of food consumed – based on the level of conflict in the province where the household is located. We find robust evidence that households in provinces with higher levels of conflict experience larger declines in food security than households in provinces with lower levels of conflict. Therefore while conflict may not be the driving factor in overall levels of food insecurity in Afghanistan, it may limit the coping mechanisms available to households in the face of rising food prices. Gaining a better understanding of such linkages and knowing the spatial distribution of food insecurity can serve to inform policymakers interested in targeting scarce resources to vulnerable populations, for example, through the placement of strategic grain reserves or targeted food assistance programs.
    Keywords: Afghanistan, food security, conflict, nutrition, poverty, spatial distribution, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, International Development, D12, I3,
    Date: 2012
  17. By: Dang, Duc Anh
    Abstract: In this paper, I provide a new empirical evidence that natural environment can shape individual risk preferences. By combining historical data on climate variation and contemporary survey questions on risk aversion, I find that risk aversion is significantly different for people who live in areas that have suffered high frequency of natural disasters. In particular, individuals highly affected by climate volatility show a long term risk aversion. The finding also supports the hypothesis that when people used to live in risky environment, an incremental increase in risk affects their risk preferences less.
    Keywords: Climate variation, risk aversion, Vietnam
    JEL: D03 O53 Q54
    Date: 2012–04
  18. By: Simplice A , Asongu
    Abstract: This paper introduces previously missing financial components(efficiency, activity and size) in the assessment of the finance-investment nexus. Using VAR models in the perspectives of VECM and short-run Granger causality, three broad findings are established: (1) while finance led investment elasticities are positive, investment elasticities of finance are negative; (2)but for Guinea Bissau, Mozambique and Togo, finance does not seem to engender portfolio investment; (3)contrary to mainstream literature, financial efficiency appears to impact investment more than financial depth. Four policy implications result: (1)extreme caution is needed in the use of single equation analysis for economic forecasts; (2)financial development leads more to investment flows than the other way round; (3) financial allocation efficiency is more relevant as means to attracting investment flows than financial depth; (4) the somewhat heterogeneous character of the findings also point to shortcomings in blanket policies that are not contingent on country-specific trends in the finance-investment nexus.
    Keywords: Financial development; Investment; Causality; Africa
    JEL: O55 O10 C50 C40 F21
    Date: 2012–05–10

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