nep-dev New Economics Papers
on Development
Issue of 2012‒07‒08
nine papers chosen by
Mark Lee
Towson University

  1. Economic Comparison and Group Identity: Lessons from India By Xavier Fontaine; Katsunori Yamada
  2. Does International Migration Increase Child Labor? By Anna De Paoli; Mariapia Mendola
  3. The Mexican Wage Curve 2000-2003: A Quantile Analysis By Hector Elias Gutierrez Rufrancos
  4. Creating jobs in South Asia's conflict zones By Iyer, Lakshmi; Santos, Indhira
  5. Vulnerability and Responses to Risk in Rural India By Raghbendra Jha; Woojin Kang; Hari K. Nagarajan; Kailash C. Pradhan
  6. Vulnerability as Expected Poverty in Rural India By Raghbendra Jha; Woojin Kang; Hari K. Nagarajan; Kailash C. Pradhan
  7. The Rhythm of the Rains: Seasonal Effects on Child Health in The Gambia By Gajigo, Ousman; Schwab, Benjamin
  8. Does Outward FDI Matter in International Trade? Evidence from Malaysia By Goh , Soo Khoon; Wong, Koi Nyen; Tham , Siew Yean
  9. The Returns to Education in China: Evidence from the 1986 Compulsory Education Law By Hai Fang; Karen N. Eggleston; John A. Rizzo; Scott Rozelle; Richard J. Zeckhauser

  1. By: Xavier Fontaine (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole des Ponts ParisTech - Ecole Normale Supérieure de Paris - ENS Paris - INRA); Katsunori Yamada (ISER - Institute of Social and Economic Research - Osaka University)
    Abstract: The caste system has framed a large part of the recent Indian history. Clear tensions between different castes, as well as low-castes' demands for positive discriminations, have played a central role in India's political and social life. We focus here on the intensity of economic comparison within the caste, and between castes. Our underlying goal is to reach a better understanding of this caste interplay. Relying on an happiness panel data set, we find that economic comparison inside the caste affects well-being negatively. Very interestingly, comparison between "rival" castes is found to decrease well-being even more. This latter finding is consistent with the caste struggles we observe.
    Keywords: Subjective Well-being ; Relative Income ; Identity ; Caste ; India ; Panel Data
    Date: 2012–05–25
  2. By: Anna De Paoli; Mariapia Mendola
    Abstract: Global international migration may influence child labor through a labor mar- ket effect. We empirically investigate this issue by using an original cross-country survey dataset, which combines information on international emigration flows with detailed individual-level data on child labor at age 5-15 in a wide range of developing countries. By using variation in the emigration supply shocks across labor market units defined on the basis of both geography and skill, we estimate a set of child labor equations where the variable of interest is the interactive e¤ect between parental skill and country-level emigration shocks. We measure the latter through di¤erent indicators including a direct measure of the relative skill compostion of emigrants relative to the resident population in the country of origin. Overall, after controlling for a large set of individual-level characteristics, remittances, and country fixed effects, our findings are consistent with predic- tions and show that international out-migration may significantly reduce child labor in disadvantaged households through changes in the local labor market.
    Keywords: International Migration, Child Labor, Factor Mobility, Crosscountry Survey Data
    JEL: F22 F1 J61
    Date: 2012–06
  3. By: Hector Elias Gutierrez Rufrancos (Department of Economics, University of Sussex)
    Abstract: This paper exploits the Mexican Encuesta Nacional de Empleo Urbano (ENEU) to determine the existence of the wage curve|an empirical phenomena rst suggested by Blanch ower and Oswald (1990)|during the period 2000{2003. We propose an innovative approach to the wage curve by estimating the elasticity across the wage dis- tribution. This is applied to the Mexican experience during the early 2000s recession. The evidence indicates that for Mexico during this period there is no wage curve, and that wages are positively aected by local levels of unemployment. This lends credi- bility to the Harris and Todaro (1970) view which suggests that there is segmentation in the labour market with residual unemployment. We argue that perhaps the power of unions may account for our fndings.
    Keywords: Wage curve, unemployment, Formal/Informal Employment, Urban labour markets, Mexico
    JEL: C21 J30 J60 O17
    Date: 2012–06
  4. By: Iyer, Lakshmi; Santos, Indhira
    Abstract: This paper describes the key challenges to job creation in conflict-affected environments in South Asia. It uses household survey data since the early 2000s for Afghanistan, India, Nepal, and Sri Lanka to document the characteristics of labor markets in conflict-affected areas, exploiting the spatial and time variation in armed conflict within countries. The analysis finds that, across countries, labor markets look very different in conflict-affected areas when compared with non-conflict or low-conflict areas. Employment rates are higher in large part because women participate more in the labor market, but work tends to be more vulnerable, with more self-employment and unpaid family work. The authors show that these differences often pre-date the conflict but are also exacerbated by it. They also examine the constraints on the private sector activity in such areas, using firm surveys when possible. Finally, the paper reviews the existing literature and the policy experiences of several countries to draw some policy implications for job creation efforts in the conflict-affected areas of South Asia. It particularly highlights the role of the private sector and community initiatives, in conjunction with public policies, to improve the environment for successful job creation.
    Keywords: Post Conflict Reconstruction,Population Policies,Labor Markets,Environmental Economics&Policies,Rural Poverty Reduction
    Date: 2012–06–01
  5. By: Raghbendra Jha; Woojin Kang; Hari K. Nagarajan; Kailash C. Pradhan
    Abstract: Using Vulnerability as Expected Utility (VEU) analysis that permits the decomposition of household vulnerability into its components on a unique data set this paper demonstrates that in rural India household vulnerability is most explained by poverty and idiosyncratic components. So far as risk coping strategies go households rely heavily on informal instruments such as their own saving, transfers or capital depletion. However, they also try to cope with covariate risks by participating in government programmes. Further, household consumption is highly covariate with income. This implies that existing informal insurance instruments are not sufficient to protect household consumption against income shocks. Government sponsored coping strategies reduce the idiosyncratic and risk component of vulnerability. Hence, an important policy implication of our analysis is that the government should provide readily accessible and well targeted public safety nets. The existing informal strategy is not very effective as a consumption insurance mechanism. Although the government coping programme is found to reduce vulnerability access to such programmes is constrained. Expansion of government sponsored coping programmes is likely to protect households effectively from negative shocks.
    Keywords: Vulnerability, Poverty, Covariate and Idiosyncratic shocks, REDS data, India
    JEL: C23 C25 C31 I32
    Date: 2012
  6. By: Raghbendra Jha; Woojin Kang; Hari K. Nagarajan; Kailash C. Pradhan
    Abstract: Using a unique panel data for rural India for the periods 1999 and 2006 this paper models vulnerability to poverty. We quantify household vulnerability in rural India in 1999 and 2006, investigate the determinants of ex post poverty as well as ex ante vulnerability, assess the role of ex ante vulnerability on poverty shift during the sample periods (i.e. movement into/out of poverty) and finally, examine how the effects of the determinants of vulnerability vary at different points across the vulnerability distribution. We conclude that over time economic growth has reduced the incidence of poverty. Although chronic poverty is relatively small the high incidence of transient poverty underscores the importance of covariate and idiosyncratic shocks. Household vulnerability across the distribution of such vulnerability is also investigated. A number of factors affect such vulnerability across this distribution. Thus the paper isolates a number of characteristics of households and policy variables which can be targeted to reduce the incidence of vulnerability in rural India.
    Keywords: Vulnerability, Poverty, Covariate and Idiosyncratic shocks, REDS data, India
    JEL: C23 C25 C31 I32
    Date: 2012
  7. By: Gajigo, Ousman; Schwab, Benjamin
    Abstract: We analyze the consequences of seasonal variation in maternal consumption on child health using two nationally representative Gambian household surveys. Seasonal fluctuation in consumption stems from difficulties borrowing when incomes are low during the rainy season and saving when they peak after harvest. The resulting fluctuations in maternal nutritional intake can affect birth outcomes and lactational performance. Using mother fixed effects to isolate the effect of birth season, we find that child health—measured by weight-for-age and height-for-age—varies significantly with birth timing. Children in farm households born during dry seasons (February-June) fare considerably worse than siblings born in other seasons.
    Keywords: Child, Maternal Health, Consumption, Agriculture, Seasonal, Agricultural and Food Policy, Consumer/Household Economics, Food Consumption/Nutrition/Food Safety, Food Security and Poverty, D13, I12, I15, Q12,
    Date: 2012
  8. By: Goh , Soo Khoon; Wong, Koi Nyen; Tham , Siew Yean
    Abstract: Developing and transition economies are an increasingly important source of outward foreign direct investment (OFDI). The objective of this paper is to fill the gap in the literature regarding outward foreign direct investment by adopting the well known gravity model to examine the relationship between trade (export and import), inward and outward FDI using Malaysia as a case. This contributes to the literature as previous studies on OFDI in Malaysia have focused primarily on the determinants of these outward flows, and there are no studies examining the impact of OFDI on trade. Our findings reveal that inward foreign direct investment (IFDI) conforms to the observed pattern of a complementary relationship between FDI and trade while OFDI and trade linkages are not significant. The empirical results also indicate that Malaysia has yet to follow the trajectory of developed economies in its shift from being a net capital importer to a capital exporter due to the lack of trade linkages between OFDI and trade. This further implies that the country may not be able to reap the potential benefits of OFDI that accrue through efficiency gains from specialization and scale advantages that are generated through trade channels.
    Keywords: Outward FDI; trade; multinationals; Malaysia
    JEL: F23
    Date: 2012–05
  9. By: Hai Fang; Karen N. Eggleston; John A. Rizzo; Scott Rozelle; Richard J. Zeckhauser
    Abstract: As China transforms from a socialist planned economy to a market-oriented economy, its returns to education are expected to rise to meet those found in middle-income established market economies. This study employs a plausible instrument for education: the China Compulsory Education Law of 1986. We use differences among provinces in the dates of effective implementation of the compulsory education law to show that the law raised overall educational attainment in China by about 0.8 years of schooling. We then use this instrumental variable to control for the endogeneity of education and estimate the returns to an additional year of schooling in 1997-2006. Results imply that the overall returns to education are approximately 20 percent per year on average in contemporary China, fairly consistent with returns found in most industrialized economies. Returns differ among subpopulations; they increase after controlling for endogeneity of education.
    JEL: J31 O15 P52
    Date: 2012–06

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