nep-dev New Economics Papers
on Development
Issue of 2012‒11‒11
twelve papers chosen by
Mark Lee
Towson University

  1. Reducing Fuel Subsidies and the Implication on Fiscal Balance and Poverty in Indonesia: A Simulation Analysis By Teguh Dartanto
  2. Migration, Remittances and Rural Employment Patterns: Evidence from China By Sylvie Démurger; Li Shi
  3. Social Capital and Repayment Performance of Group Lending in Microfinance By Luminita Postelnicu
  4. Poverty and Agriculture in the Philippines: Trends in Income Poverty and Distribution By Tabuga, Aubrey D.; Reyes, Celia M.; Asis, Ronina D.; Datu, Maria Blesila G.
  5. Agriculture, Markets and Poverty - A Comparative Analysis of Laos and Cambodia By Raghav Gaiha; Md Shafiul Azam; Samuel Annim; Katsushi S. Imai
  6. The Role of Land Certification in Reducing Gender Gaps in Productivity in Rural Ethiopia By Bezabih, Mintewab; Holden, Stein; Mannberg, Andrea
  7. Size-Dependent Labor Regulations and Structural Transformation in India By Wenbiao Cai; Manish Pandey
  8. How Does Child Labor Affect the Demand for Adult Labor? Evidence from Rural Mexico By Kirk Doran
  9. The Role of Household Saving in the Economic Rise of China By Richard Jensen; Steven Lugauer
  10. Demographic Patterns and Household Saving in China By Steven Lugauer; Nelson Mark
  11. The Unequal Effects of Financial Development on Firms' Growth in India By Maria Bas; Antoine Berthou
  12. Learning by Doing: Skills and Jobs in Urban Ghana By Monazza Aslam; Kim Lehrer

  1. By: Teguh Dartanto (Institute for Economic and Social Research, Department of Economics, Faculty of Economics, Universitas Indonesia)
    Abstract: An increase in world oil prices has forced the government of Indonesia to run a larger budget deficit to finance energy subsidies. Between 2000 and 2011, Indonesia burnt 61 per cent of oil and gas revenues to fuel and electricity subsidies. These subsidies worsen income distribution in Indonesia since almost 72 per cent of these subsidies are enjoyed by the 30 per cent of the richest income groups. Therefore, there are strong economic arguments to reallocate fuel subsidies to infrastructures, education and health sectors that can boast economic growth. Applying a CGE-Microsimulation, this study found that removing 25 per cent of fuel subsidies increases the incidence of poverty by 0.253 per cent. If this money were fully allocated to government spending, the poverty incidence would decrease by 0.270 per cent. Moreover, the 100 per cent removal of fuel subsidies and the reallocation of 50 per cent of them to government spending, transfers and other subsidies could decrease the incidence of poverty by 0.277 per cent. However, these reallocation policies might not be effective to compensate the adverse impacts of the 100 per cent removal of fuel subsidies if economic agents try to seek gain through mark-up pricing over the increase of production costs.
    Keywords: fuel subsidies, fiscal balance, poverty, Indonesia, energy policy
    JEL: C68 I32 Q42 Q48
    Date: 2012–05
  2. By: Sylvie Démurger (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure - Lyon); Li Shi (School of Economics and Business Administration - Beijing Normal University / Beijing)
    Abstract: This paper explores the rural labor market impact of migration in China using crosssectional data on rural households for the year 2007. A switching probit model is used to estimate the impact of belonging to a migrant-sending household on the individual occupational choice categorized in four binary decisions : farm work, wage work, self-employment and housework. The paper then goes on to estimate how the impact of migration differs across different types of migrant households identified along two additional lines : remittances and migration history. Results show that individual occupational choice in rural China is responsive to migration, at both the individual and the family levels, but the impacts differ : individual migration experience favors subsequent local off-farm work, whereas at the family level, migration drives the left-behinds to farming rather than to off-farm activities. Our results also point to the interplay of various channels through which migration influences rural employment patterns.
    Keywords: labor migration; labor supply; remittances; temporary migration; left-behind; China
    Date: 2012–10–23
  3. By: Luminita Postelnicu
    Abstract: Conventional wisdom associates the success of microfinance group lending with joint liability only. Recent studies have pinpointed the role of social capital, around which the successful implementation of joint liability contracts seems to revolve. This paper brings together all relevant evidence on the effect of social capital on the repayment performance of microfinance group lending. I reconcile seemingly divergent views on the role of social capital by pointing out that authors measure different aspects of social capital. In particular, researchers use different proxies and different methodologies to measure social capital. I emphasize the need for a theoretical framework designed to fit social capital in the microfinance context, and I suggest avenues for future research in this field.
    Keywords: social capital; social ties; loan repayment performance; group lending
    JEL: Z13 G21 O12 O17 D71
    Date: 2012–10–30
  4. By: Tabuga, Aubrey D.; Reyes, Celia M.; Asis, Ronina D.; Datu, Maria Blesila G.
    Abstract: Poverty incidence in the Philippines is rising based on the national official data released by the National Statistical Coordination Board. Poverty incidence among population rose from 24.9 percent in 2003 to 26.4 percent in 2006 and then inched up further to 26.5 percent in 2009. This is in reverse of the downward trend and is a major deviation from the path toward achieving the Millennium Development Goals. The disparities across the regions remain wide both in terms of poverty and inequality measures. In this paper, we show the salient features of the country`s poverty situation in a hope to contribute to the existing knowledge about the poverty condition and to the formulation of better strategies for reducing poverty. It focuses on agriculture because it plays a central role in the poverty condition that continues to persist despite recent episodes of high economic progress the country has achieved.
    Keywords: inequality, Philippines, Philippine poverty profile, agricultural poverty, multidimensional poverty
    Date: 2012
  5. By: Raghav Gaiha (Economics, Australian National University (Australia)); Md Shafiul Azam (Economics, School of Social Sciences, University of Manchester (UK)); Samuel Annim (Department of Economics, University of Central Lancashire (UK)); Katsushi S. Imai (Economics, School of Social Sciences, University of Manchester (UK) and RIEB, Kobe University (Japan))
    Abstract: Laos and Cambodia have been transitioning to a market-oriented policy regime. Both are agrarian economies with agriculture contributing about one-third of the GDP. We assess prospects of achieving MDG1 and centrality of agricultural growth in achieving this goal. As these are macro relationships, richer insights into determinants of poverty are obtained by detailed analyses of recent household surveys in Laos and Cambodia. Some of these insights relate to access to markets, returns to crops, education, land size, non-farm activities, ethnic affiliation, and rural infrastructure, with unavoidable variation due to differences in the coverage of the household surveys used. Another major theme studied for Cambodia is integration of farmers - especially smallholders - into markets. The focus is on barriers between large and smallholders-for example, transaction costs. An accelerated transition to a more market-oriented policy regime may promote not just a more efficient agriculture but also a more equitable outcome.
    Keywords: Aagriculture, Poverty, MDG1, Smallholders, Markets, Transaction costs, Laos and Cambodia
    JEL: N55 H53 I32
    Date: 2012–10
  6. By: Bezabih, Mintewab (Department of Economics, University of Sussex); Holden, Stein (Department of Economics and Resource Management, Norwegian University of Life Sciences); Mannberg, Andrea (Department of economics, Umeå university)
    Abstract: This paper analyses the impact of a low cost and restricted rights land certification program on the productivity of female-headed households. The analysis is based on plot level panel data from the East Gojjam and South Wollo Zones in the Amhara region of Ethiopia. The results suggest a positive and significant effect of certification on plot-level productivity, particularly on plots rented out to other operators. In addition, the results show that certification has different impacts on male and female productivity with female-headed households gaining significantly more and with zonal differences in the effectiveness of certification impacts.
    Keywords: Ethiopia; Female Headed Households; Productivity; Land Market; Certification
    JEL: D02 Q12 Q15
    Date: 2012–09–01
  7. By: Wenbiao Cai; Manish Pandey
    Abstract: Labor regulations in India increase the cost of hiring labor for larger establishments and have been cited as an important reason for the lack of mid-sized establishments in the manufacturing sector. Using data for India, we calibrate a two-sector model in which agents differ in their managerial ability in manufacturing. In the presence of size-dependent labor regulations, the model generates the observed employment distribution across manufacturing establishments in India. In a counterfactual exercise, removing the regulations increases aggregate output per worker by 2.3% and also increases labor productivity in agriculture relative to manufacturing by 4%. We find that labor regulations in manufacturing have a detrimental effect on the productivity of the agricultural sector and hence impede the process of structural transformation.
    JEL: K31 O11 O40
    Date: 2012–10
  8. By: Kirk Doran (Department of Economics, University of Notre Dame)
    Abstract: Do employers substitute adults for children, or do they treat them as complements? Using data from a Mexican schooling experiment, I find that decreasing child farm work is accompanied by increasing adult labor demand. This increase was not caused by treatment money reaching farm employers: there were no significant increases in harvest prices and quantities, non-labor inputs, or non-farm labor supply. Furthermore, coordinated movements in price and quantity can distinguish this increase in demand from changes in supply induced by the treatment's income effects. Thus, declining child supply caused increasing adult demand: employers substituted adults for children.
    Date: 2012–08
  9. By: Richard Jensen (Department of Economics, University of Notre Dame); Steven Lugauer (Department of Economics, University of Notre Dame)
    Abstract: We estimate the age distribution's impact on carbon dioxide emissions from 1990 to 2006 by exploiting demographic variation in a panel of 46 countries. To eliminate potential bias from endogeneity or omitted variables, we instrument for the age distribution with lagged birth rates, and the regressions control for total population, output, and country and year fixed effects. The increase in the share of the population aged 35 to 49 accounts for a large portion of the observed increase in carbon dioxide emissions.
    Keywords: Climate Change, Environment, Carbon Dioxide Emissions
    JEL: Q4 J1
    Date: 2012–06
  10. By: Steven Lugauer (Department of Economics, University of Notre Dame); Nelson Mark (Department of Economics, University of Notre Dame)
    Abstract: This paper studies how changing demographics can explain much of the evolution of China's household saving rate from 1955 to 2009. We undertake a quantitative investigation using an overlapping generations model in which agents live for 85 years. Agents begin to exercise decision making when they are 20. From age 20 to 63, they work. From age 20 to 49, they also provide for children. Dependent children's consumption enters into the parent's utility, and parents choose the consumption level of the young until they leave the household. Working agents transfer a portion of their labor income to their retired parents and save for their own retirement. Retirees live of of their accumulated assets and support from current workers. We present agents in the parameterized model with the future time-path of the demographics, interest rates and wages as given by the data and analyze their saving decisions. The simulated model accounts for nearly all the observed increase in the household saving rate from 1955 to 2009.
    Keywords: Saving Rate, Life-Cycle, China, Demographics, Overlapping Generations
    JEL: E2 J1
    Date: 2010–12
  11. By: Maria Bas; Antoine Berthou
    Abstract: This paper investigates the microeconomic effects of financial development on economic growth. The increased availability of credit is usually expected to improve firms’ growth due to the elimination of credit constraints. We investigate this question using a survey of Indian firms in the manufacturing industry during the period 1997-2006, in a context of rapid economic growth and underlying structural changes. We examine how changes in the level credit over GDP in Indian States affected firms’ value added and capital used for production. The baseline estimations show that financial development has boosted within-firm growth in India. Our findings also suggest that the impact of financial development on firms’ growth is heterogeneous across firms and industries. Credit expansion has a greater effect on firms that are initially larger, more productive or profitable. The effect of financial development is less heterogenous in sectors relying on external finance, where both medium-size and large firms have expanded more rapidly than small firms. These results are robust to various specifications that allow to control for other reforms taking place simultaneously, or for potential reverse causality.
    Keywords: financial development;banking reforms;firm panel data;firm growth and capital investments
    JEL: O16 G21
    Date: 2012–10
  12. By: Monazza Aslam; Kim Lehrer
    Abstract: This paper investigates the relationship between skills acquisition and job characteristics using a panel dataset of individuals in urban Ghana by analyzing on-the-job skills acquisition and exploring the link between mathematics skills and jobs which involve the handling of money. These mathematics skills are important, not only, in the workplace but also more generally. Survey respondents were administered a short mathematics test involving a number of theoretical and practical math questions. The relationship between skills and jobs is identified by examining individuals who changed jobs between survey rounds while controlling for individual time invariant characteristics. We argue that the process of job choice in Ghana allows us to identify causal impacts. The findings show that money handling is positively associated with higher math skills for women. These results are not driven by differences in mathematics scores between self-employed individuals and wage employed individuals and are robust to changes in the classification of money handling jobs. Moreover, the findings show that working in a job involving the handling of money is positively associated with higher math scores among women with high levels of education. This suggests that individuals at the low end of the distribution of years of education are not acquiring mathematics skills through money handling jobs. It is only the 36% of women who are already quite highly educated in the Ghanaian context who are acquiring these skills on the job.
    Date: 2012

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