nep-dev New Economics Papers
on Development
Issue of 2012‒09‒09
eighteen papers chosen by
Mark Lee
Towson University

  1. Estimating the External Returns to Education: Evidence from China By Wen Fan; Yuanyuan Ma
  2. China’s New Labour Contract Law: State Regulation and Worker Rights in Global Production Networks By Tu Lan; John Pickles
  3. Global inequality, rising powers and labour standards By Dev Nathan; Sandip Sarkar
  4. Rural Policies and Poverty in Tanzania: an Agricultural Household Model-Based Assessment By Marco Tiberti; Luca Tiberti
  5. Evidence-based implementation efficiency analysis of the HIV/AIDS national response in Colombia By Moreno, Antonio; Alvarez-Rosete. Arturo; Nunez, Ricardo Luque; del Carmen Moreno Chavez, Teresa; Rodriguez-Garcia, Rosalia; Montenegro, Fernando; Moreno, Luis Angel; Suarez Lissi, Alejandra; Concardo, Pedro Magne; Gaillard, Michel Eric
  6. Household enterprises in Sub-Saharan Africa : why they matter for growth, jobs, and livelihoods By Fox, Louise; Sohnesen , Thomas Pave
  7. Effectiveness of interventions aimed at improving women's employability and quality of work : a critical review By Todd, Petra E.
  8. Climate change, agriculture and food security in Tanzania By Arndt, Channing; Farmer, William; Strzepek, Kenneth; Thurlow, James
  9. Remittances, Inequality and Poverty in Pakistan: Macro and Microeconomic Evidence By Mazhar MUGHAL; Amar Iqbal ANWAR
  10. The Legacy of Historical Conflict Evidence from Africa By Timothy Besley; Marta Reynal-Querol
  11. Pre-Colonial Political Centralization and Contemporary Development in Uganda By Sanghamitra Bandyopadhyay; Elliott Green
  12. Targeting the Poor: A Macroeconomic Analysis of Cash Transfer Programs By Eduardo Zilberman; Tiago Berriel
  13. The Welfare Cost of Homicides in Brazil: Accounting for Heterogeneity in the Willingness to Pay for Mortality Reductions By Daniel R.C. Cerqueira; Rodrigo R. Soares
  14. Spillovers from Conditional Cash Transfer Programs:Bolsa Família and Crime in Urban Brazil By Laura Chioda; João Manoel Pinho de Mello; Rodrigo R. Soares
  15. Is Direct FDI in Healthcare Desirable in a Developing Economy? By Chaudhuri, Sarbajit; Mukhopadhyay, Ujjaini
  16. F.D.I. through the imitation procedure The case of China: A Note By Metaxas, Theodore; Kechagia, Polyxeni
  17. Does the Effect of Pollution on Infant Mortality Differ Between Developing and Developed Countries? Evidence from Mexico City By Eva O. Arceo-Gomez; Rema Hanna; Paulina Oliva
  18. Wages and Informality in Developing Countries By Costas Meghir; Renata Narita; Jean-Marc Robin

  1. By: Wen Fan (University College Dublin); Yuanyuan Ma (University College Dublin)
    Abstract: Good understanding on the human capital externalities is important for both policy makers and social science researchers. Economists have speculated for at least a century that the social returns to education may exceed the private returns. In this paper, using the longitudinal data from China Health and Nutrition Survey (CHNS), we examine how individual wage changes associated with the share of college graduates in the same province across years for a person who has never moved by implementing individual fixed effects estimates. The individual fixed effect model shows that the external returns to education in China appear to be negative and on the order of -2%, which might be biased by potential endogeneity. Concerned with this problem, we then implement the IV fixed effect estimates and find positive external returns to education at about 10%. We also find this returns differ across individual heterogeneity.
    Keywords: Education, Externalities, Spillover, Signalling, China
    JEL: J0 J24 O15
    Date: 2012–08–29
  2. By: Tu Lan; John Pickles
    Abstract: Abstract In 2007/2008, the new Labour Contract Law was enacted in China. This law has substantially changed the conditions under which workers and employers can enter into contracts and has had important effects on the ability of workers to shape their conditions of work. This paper outlines the conditions and terms of the 1995 Labour Law and how the new law changes these. It details the legal requirements of the new law and then assesses the consequences of these changes for global buyers sourcing from China and for workers and enterprises in China. In particular, it assesses the differential impacts of the new law on permanent and temporary workers in state-owned and private enterprises, and between private- and public-sector employees.
    Date: 2012
  3. By: Dev Nathan; Sandip Sarkar
    Abstract: Abstract The paper analyses growing inequality in the rising powers, concentrating on the situation in China and India. It describes the various processes that are currently underway to reduce inequality in these economies. These processes include a combination of tightening the labour market, as best seen in China, increasing rural productivity and government measures to boost basic rural incomes in all such countries. Reductions in inequality in the emerging economies have a global macroeconomic effect of increasing consumption and investment, counteracting the current global slowdown. They also have the benefit of creating more space at the bottom for poorer economies to take up more of the world’s low-skill production, as the emerging economies themselves move up to higher-skill production and exporting. This sequential upgrading is being driven by the growth of emerging economy markets and by wage increases in the emerging economies.
    Date: 2012
  4. By: Marco Tiberti; Luca Tiberti
    Abstract: The main objective of this study is to develop a robust and comprehensive tool to evaluate the effect on households’ welfare of different agricultural policies in Tanzania. This is done through a non-separable agricultural household model where production and consumption decisions are considered. In particular, we look at labour market failure, since this is among the major constraints in a context like rural Tanzania. Non-separability implies that production and consumption decisions are interlinked and that labour allocation is likely to be determined by shadow wages rather than market wages. A two-stage estimation strategy is adopted: the shadow price of family labour is first estimated and then included into the production and demand systems. The impact of a number of agricultural policies on poverty is then estimated. In particular, we evaluate the impact of policies established by the Agricultural Sector Development Programme, as well as changes in food prices.
    Keywords: Agricultural household models, poverty, agricultural policies, Tanzania
    JEL: D12 O12 O13 Q12 Q18
    Date: 2012
  5. By: Moreno, Antonio; Alvarez-Rosete. Arturo; Nunez, Ricardo Luque; del Carmen Moreno Chavez, Teresa; Rodriguez-Garcia, Rosalia; Montenegro, Fernando; Moreno, Luis Angel; Suarez Lissi, Alejandra; Concardo, Pedro Magne; Gaillard, Michel Eric
    Abstract: This study on the implementation efficiency of the HIV/AIDS national response in Colombia seeks to examine how it has been implemented -- whether it has been done according to the available evidence about the epidemic and as the response was originally planned. The study approaches three specific dimensions of implementation efficiency: (i) programmatic; (ii) budgetary; and (iii) service delivery. The study uses a range of research techniques, including: (i) documentary analysis of key policies, official publications and reports; (ii) semi-structured interviews with representatives of the central government and territorial entities, international and community-based organizations, insurers, care providers, etc.; and (iii) case-study analysis to visualize the ways in which people are cared for in practice. The available data suggest that the HIV/AIDS response is succeeding in keeping the prevalence low and the epidemic concentrated. In recent years, the level of health coverage has increased and the quality of care services has improved. The identified problems in service delivery (mostly related to coverage and access) are linked to system fragmentation and integration, and to the nature of the coordination mechanisms, both at the national and the territorial level. The effectiveness of the response would benefit from re-energized leadership at both the national and local levels -- articulated through the existing programmatic framework and coordinating mechanisms. The complexity of the system and the lack of budgetary and expenditure information have impeded the evaluation of the budgetary efficiency of the HIV/AIDS response.
    Keywords: Health Monitoring&Evaluation,HIV AIDS,Population Policies,Health Systems Development&Reform,Disease Control&Prevention
    Date: 2012–08–01
  6. By: Fox, Louise; Sohnesen , Thomas Pave
    Abstract: Despite 40 percent of households relying on household enterprises (non-farm enterprises operated by a single individual or with the help of family members) as an income source, household enterprises are usually ignored in low-income Sub-Saharan-African development strategies. Yet analysis of eight countries shows that although the fast growing economies generated new private non-farm wage jobs at high rates, household enterprises generated most new jobs outside agriculture. Owing to the small size of the non-farm wage job sector, this trend is expected to continue for the foreseeable future. This analysis of enterprises and their owners shows that although it is a heterogeneous sector within countries, there are many similarities across countries, indicating that cross-country learning is possible. For labor force participants who want to use their skills and energy to create a non-farm income source for themselves and their families, household enterprises offer a good opportunity even if they remain small. The paper finds that given household human capital and location, household enterprise earnings have the same marginal effect on consumption as private wage and salary employment. The authors argue that household enterprises should be seen as part of an integrated job and development strategy.
    Keywords: Labor Markets,Banks&Banking Reform,Population Policies,Labor Policies,Rural Poverty Reduction
    Date: 2012–08–01
  7. By: Todd, Petra E.
    Abstract: This paper examines the effectiveness of a variety of policy interventions that have been tried in developing and transition economies with the goal of improving women's employability and quality of work. The programs include active labor market programs, education and training programs, programs that facilitate work (such as childcare subsidies, parental leave programs and land titling programs), microfinance programs, entrepreneurship and leadership programs, and conditional cash transfer programs. Some of these policy interventions were undertaken to increase employment, some to increase female employment, and some for other reasons. All of these programs have been subjected to impact evaluations of different kinds and some also to rigorous cost-benefit analyses. Many were found to be effective in increasing women's quantity of work as measured by increased rates of labor market participation and number of hours worked. In some cases, the programs also increased women's quality of work, for example, by increasing the capacity for women to work in the formal rather than the informal sector where wages are higher and where women are more likely to have access to health, retirement, and other benefits.
    Keywords: Labor Markets,Labor Policies,Poverty Impact Evaluation,Poverty Monitoring&Analysis,Population Policies
    Date: 2012–09–01
  8. By: Arndt, Channing; Farmer, William; Strzepek, Kenneth; Thurlow, James
    Abstract: The consequences of climate change for agriculture and food security in developing countries are of serious concern. Due to their reliance on rain-fed agriculture, both as a source of income and consumption, many low-income countries are considered to be the most vulnerable to climate change. This paper estimates the impact of climate change on food security in Tanzania. Representative climate projections are used in calibrated crop models to predict crop yield changes for 110 districts in the country. The results are in turn imposed on a highly-disaggregated, recursive dynamic economy-wide model of Tanzania. The authors find that, relative to a no-climate-change baseline and considering domestic agricultural production as the principal channel of impact, food security in Tanzania appears likely to deteriorate as a consequence of climate change. The analysis points to a high degree of diversity of outcomes (including some favorable outcomes) across climate scenarios, sectors, and regions. Noteworthy differences in impacts across households are also present both by region and by income category.
    Keywords: Climate Change Mitigation and Green House Gases,Climate Change Economics,Regional Economic Development,Science of Climate Change,Food&Beverage Industry
    Date: 2012–09–01
  9. By: Mazhar MUGHAL; Amar Iqbal ANWAR
    Abstract: Remittances, Inequality and Poverty in Pakistan: Macro and Microeconomic Evidence
    Date: 2012–08
  10. By: Timothy Besley; Marta Reynal-Querol
    Abstract: There is a great deal of interest in the causes and consequences of conflict in Africa, one of the poorest areas of the world where only modest economic progress has been made. This paper asks whether post-colonial conflict is, at least in part, a legacy of historical conflict by examining the empirical relationship between conflict in Africa since independence with recorded conflicts in the period 1400 to1700. We find evidence of a legacy of historical conflicts using between-country and withincountry evidence. The latter is found by dividing the continent into 120km_120km grids and measuring the distance from 91 documented historical conflicts. We also provide evidence that historical conflict is correlated with lower levels of trust, a stronger sense of ethnic identity and a weaker sense of national identity.
    Keywords: Conflict, Trust, Identity
    JEL: N47 O43
    Date: 2012–02
  11. By: Sanghamitra Bandyopadhyay; Elliott Green
    Abstract: The importance of pre-colonial history on contemporary African development has become an important .eld of study within development economics in recent years. In particular Gennaioli and Rainer (2007) suggest that pre-colonial political centralization has had an impact on con- temporary levels of development within Africa at the country level. We test the Gennaioli and Rainer (2007) hypothesis at the sub-national level with evidence from Uganda. Using a variety of datasets we obtain results which are striking in two ways. First, we con.rm the Gennaioli and Rainer (2007) hypothesis that pre-colonial centralization is highly correlated with modern- day development outcomes such as GDP, asset ownership and poverty levels, and that these correlations hold at the district, sub-county and individual levels. We also use an instrumental variable approach to con.rm this .nding using the distance from ancient capital of Mubende as an instrument. However, our second .nding is that public goods like immunization coverage and primary school enrolment are not correlated with pre-colonial centralization. These .ndings are thus consistent with a correlation between pre-colonial centralization and private rather than public goods, thereby suggesting the persistence of poverty and wealth from the pre-colonial period to the present.
    Date: 2012–08
  12. By: Eduardo Zilberman (Department of Economics PUC-Rio); Tiago Berriel (EPGe/FGV)
    Abstract: This paper introduces cash transfers targeting the poor in an incomplete marketsmodel with heterogeneous agents facing idiosyncratic risk. These transfers change the degree of insurance in the economy and affect precautionary motives asymmetrically,leading the poorest households to decrease savings proportionally more than their richer counterparts. In a model economy calibrated to Brazil, once the cash transfer program is adopted, wealth inequality and social welfare increase, poverty decreases,while employment and income inequality remain about the same. Imperfect access to financial markets is important for these results, whereas whether the program is funded with lump sum or distortive taxes is not.
    Date: 2012–08
  13. By: Daniel R.C. Cerqueira (IPEA); Rodrigo R. Soares (Department of Economics PUC-Rio)
    Abstract: This paper estimates the health dimension of the welfare cost of homicides in Brazil incorporating age, gender, educational, and regional heterogeneities. We use the marginal willingness to pay approach from the “value of life” literature to assign monetary values to the welfare cost of increased mortality due to violence. The results indicate that the present discounted value of the welfare cost of homicides in Brazil corresponds to roughly 78% of the GDP or, measured in terms of yearly flow, 2.3%. The analysis also indicates that reliance on aggregate data to perform such calculations, without taking into account the relevant dimensions of heterogeneity, can lead to biases of the order of 20% in the estimated social cost of violence
    Date: 2012–08
  14. By: Laura Chioda (World Bank); João Manoel Pinho de Mello (Department of Economics PUC-Rio); Rodrigo R. Soares (Department of Economics PUC-Rio)
    Abstract: This paper investigates the impact of Conditional Cash Transfer (CCT) programs on crime. Making use of a unique dataset combining detailed school characteristics with time and geo-referenced crime information from the city of São Paulo, Brazil, we estimate the contemporaneous effect of the Bolsa Família program on crime. We address the endogeneity of CCT coverage by exploiting the 2008 expansion of the program to adolescents aged 16 and 17. We construct an instrument that combines the timing of expansion and the initial demographic composition of schools to identify plausibly exogenous variations in the number of children covered by Bolsa Família. We find a robust and significant negative impact of Bolsa Família coverage on crime. The evidence suggests that the main effect works through increased household income or changed peer group, rather than from incapacitation from time spent in school
    Date: 2012–08
  15. By: Chaudhuri, Sarbajit; Mukhopadhyay, Ujjaini
    Abstract: We develop a three-sector general equilibrium model and attempt to examine the impact of FDI in healthcare sector on the welfare and human capital stock of the economy. The greater the size of the healthcare sector the higher and better would be the medical facilities available to each member of the population. Better medical facilities must produce positive effects on workers’ general health and productivity. The greater the size of the healthcare sector the higher is the efficiency of labour. There are two types of capital: capital of type K and capital of type N. While capital of type K is used in production of all the sectors of the economy, capital of type N is specific to the healthcare sector. Our analysis finds that an FDI of capital of type N although raises the human capital formation may lower social welfare. On the contrary, an inflow of foreign capital of type K is likely to be welfare-improving. Although these effects crucially hinge on different structural factors e.g. the degree of labour market imperfection, trade-related and technological factors these can at least question the desirability of allowing the entry of foreign capital in the healthcare sector directly.
    Keywords: FDI; healthcare; developing economy; social welfare; human capital; general equilibrium
    JEL: P36 I12 F19
    Date: 2012–09–03
  16. By: Metaxas, Theodore; Kechagia, Polyxeni
    Abstract: Over the past decades great changes have taken place in the economic environment worldwide regarding the foreign direct investment (F.D.I.). However, some of the developing countries have managed to gain more F.D.I. compared to other developing countries via skills acquisition, competition, exports and imitation. These spillovers channels are used to transfer technological knowledge among firms, while the imitation is used by many multinational enterprises (MNEs) and it is considered one of the most important spillovers channels. Therefore, many Chinese enterprises have imitated the developed countries firms’ managerial and production procedures so far. China is one the largest recipient of F.D.I. inflow worldwide and the country’s development affects the policies and the growth of other developing countries. Hence, under certain circumstances, developing countries have the ability to attract F.D.I. through imitating China.
    Keywords: imitation; China; developing countries
    JEL: O18 F21 R11
    Date: 2012
  17. By: Eva O. Arceo-Gomez; Rema Hanna; Paulina Oliva
    Abstract: Much of what we know about the marginal effect of pollution on infant mortality is derived from developed country data. However, given the lower levels of air pollution in developed countries, these estimates may not be externally valid to the developing country context if there is a nonlinear dose relationship between pollution and mortality or if the costs of avoidance behavior differs considerably between the two contexts. In this paper, we estimate the relationship between pollution and infant mortality using data from Mexico. We find that an increase of 1 parts per billion in carbon monoxide (CO) over the last week results in 0.0032 deaths per 100,000 births, while a 1 μg/m3 increase in particulate matter (PM10) results in 0.24 infant deaths per 100,000 births. Our estimates for PM10 tend to be similar (or even smaller) than the U.S. estimates, while our findings on CO tend to be larger than those derived from the U.S. context. We provide suggestive evidence that a non-linearity in the relationship between CO and health explains this difference.
    JEL: O1 Q53
    Date: 2012–08
  18. By: Costas Meghir; Renata Narita; Jean-Marc Robin
    Abstract: It is often argued that informal labor markets in developing countries promote growth by reducing the impact of regulation. On the other hand informality may reduce the amount of social protection offered to workers. We extend the wage-posting framework of Burdett and Mortensen (1998) to allow heterogeneous firms to decide whether to locate in the formal or the informal sector, as well as set wages. Workers engage in both off the job and on the job search. We estimate the model using Brazilian micro data and evaluate the labor market and welfare effects of policies towards informality.
    JEL: J24 J3 J42 J6 O17
    Date: 2012–08

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