nep-dev New Economics Papers
on Development
Issue of 2013‒04‒06
thirteen papers chosen by
Mark Lee
Towson University

  1. Is government spending a free lunch? -- evidence from China By Xin Wang; Yi Wen
  2. Household Formation Rules, Fertility and Female Labour Supply: Evidence from post-communist countries By Louise Grogan
  3. Rural Electrification and Employment in Poor Countries: Evidence from Nicaragua By Louise Grogan
  4. Social activity and collective action for agricultural innovation: a case study of New Rural Reconstruction in China By Mary-Françoise Renard; Huanxiu GUO
  5. Why Are Women Less Democratic Than Men? Evidence from Sub-Saharan African Countries By Cecilia García-Peñalosa; Maty Konte
  6. Intimate Partner Violence and HIV in Sub-Saharan Africa By Durevall, Dick; Lindskog, Annika
  7. The Efficiency of Human Capital Allocations in Developing Countries By Dietrich Vollrath
  8. Wages and informailty in developing countries By Costas Meghir; Renata Narita; Jean-Marc Robin
  9. Economic integration, location of industries, and frontier regions : evidence from Cambodia By Kuroiwa, Ikuo; Tsubota, Kenmei
  10. Vulnerability to weather disasters: the choice of coping strategies in rural Uganda By Jennifer Helgeson; Simon Dietz; Stefan Hochrainer-Stigler
  11. Income polarization and economic growth By Michal Brzezinski
  12. Poverty of Ethnic Minorities in the Poorest Areas of Vietnam By Nguyen Viet, Cuong
  13. Poverty Dynamics: The Structurally and Stochastically Poor in Vietnam By Nguyen Viet, Cuong

  1. By: Xin Wang; Yi Wen
    Abstract: Most empirical studies based on U.S. data suggest that the fiscal multiplier is less than 1 (e.g., Barro and Redlick, 2011). However, Keynes argued that the multiplier would be the largest when markets have failed to the greatest extent in coordinating economic activities (such as during the Great Depression with rampant unemployment and low capacity utilization). As a large developing country with high household saving rates, a large pool of rural labor force, and a wide range of market failures, China offers a unique opportunity to test the Keynesian notion that government expenditures (even as a pure waste of aggregate resources) can have a fiscal multiplier larger than 1 on aggregate income. Perhaps even more exceptional is China’s extensive use of government spending as a major policy tool to stimulate the economy over the past three decades. Based on both aggregate time-series data and panel data from 29 Chinese provinces, we find that the fiscal multiplier in China is larger than 2. We provide a theoretical model with market failures and Monte Carlo analysis to rationalize our empirical findings. Specifically, we build a model that can generate the same multiplier and business cycles observed in China and use the model as a data-generating process to gauge whether structural vector autoregressions can yield consistent estimates of the theoretical multiplier in short samples. Our analysis supports the large multiplier found in China but also suggests that government spending may not necessarily be a free lunch despite the large multiplier.
    Keywords: Government spending policy ; Multiplier (Economics) ; Economic conditions - China ; China
    Date: 2013
  2. By: Louise Grogan (Department of Economics,University of Guelph)
    Abstract: This paper explains how household formation rules affect the fertility and labour supply of women in the Former Soviet Union and neighbouring countries. Women who bear a male first child in countries dominated by traditional, patrilocal households are shown to have sub- stantially lower subsequent fertility from those whose first child is female. Where households are generally nuclear, male first borns do not reduce subsequent fertility. Middle-aged women in more patrilocal contexts often work less if their first child is male, despite reduced fertility and being more likely to reside with a daughter-in-law. In more nuclear contexts, they tend to work more. These findings suggest that household formation rules are strongly related both to women’s demand for sons and to the direction of intergenerational transfers.
    Keywords: household formation rules, fertility, daughter-in-law, deferred compensation, Central Asia, Russia, Soviet Union, patrilocality, intergenerational transfers
    JEL: J10 O12 O5
  3. By: Louise Grogan (Department of Economics,University of Guelph)
    Abstract: This paper shows that rural electrification is associated with big changes in the time use of men and women in Nicaragua, even in the absence of labor-saving appliances. Electricity is shown to increase the propensity of rural Nicaraguan women to work out- side the home by about 23%, but to have no impact on male employment. These findings suggest significant potential benefits to rural electrification that are not generally captured in cost–benefit analyses, such as greater women’s earnings and reduced deforestation.
    Keywords: electric light, time use, employment, labor-saving technology, slope gradient, population density
    JEL: H4 I3 O1 O3
  4. By: Mary-Françoise Renard (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Huanxiu GUO (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: Since 2003, a grass-roots movement of New Rural Reconstruction (NRR) has emerged in China to experience alternative model of rural development. The movement adopts a particular approach for rural development on basis of rural social and cultural reconstruction. In order to understand this social approach, we investigate an original NRR experiment in a poor village of south China, where organic farming is promoted by means of basketball game. An in-depth household survey is conducted to qualitatively analyze this social approach and derive intuitive hypothesis of extended social network for empirical test. With a panel structure dataset collected by the survey, we quantitatively identify the causal effect of social network by exploiting the endogeneity of social network formation. Our identification result provides micro evidence for a large social multiplier effect in the diffusion of organic farming, whereas it is negative for organic experts. Also, our results highlight the role of women, education and labor force for the development of organic farming. On basis of these results, we conclude that organic farming is suitable but challenging for small villages in China, while social activity is a good lever to achieve farmers' collective action for its large diffusion.
    Keywords: New rural reconstruction; Social network; Organic farming; China. D71;O33;Q55
    Date: 2013–03–19
  5. By: Cecilia García-Peñalosa (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM)); Maty Konte (AMSE - Aix-Marseille School of Economics - Aix-Marseille Univ. - Centre national de la recherche scientifique (CNRS) - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - Ecole Centrale Marseille (ECM))
    Abstract: A substantial literature has examined the determinants of support for democracy and although existing work has found a gender gap in democratic attitudes, there have been no attempts to explain it. In this paper we try to understand why females are less supportive of democracy than males in a number of countries. Using data for 20 Sub-Saharan African countries, we test whether the gap is due to individual differences in policy priorities or to country-wide characteristics. We find that controlling for individual policy priorities does not offset the gender gap, but those women who are interested in politics are more democratic than men. Furthermore, our results indicate that the gap disappears in countries with high levels of human development and political rights.
    Keywords: Support for democracy; gender gap; policy priorities; institutions
    Date: 2013–03
  6. By: Durevall, Dick (Department of Economics, School of Business, Economics and Law, Göteborg University); Lindskog, Annika (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: We investigate the relationship between intimate partner violence and HIV among married women in sub-Saharan Africa. Using propensity score matching, we find a strong relationship. To investigate mechanisms, we split the sample according to spouse’s HIV status. Neither women with HIV-positive husbands nor those with HIV-negative husbands are more likely to be infected when subject to IPV. To find an effect the two samples have to be combined. Thus the relationship is explained by higher HIV risk among violent men. Neither women’s decreased ability to protect from HIV transmission within marriage, nor their risky sexual behavior explains the link.
    Keywords: Domestic violence; HIV; HIV epidemic; Intimate partner violence; Gender inequality; Sexual violence; Propensity score matching; Sub-Saharan Africa
    JEL: I14 I15 J12
    Date: 2013–03–27
  7. By: Dietrich Vollrath (University of Houston)
    Abstract: For a set of 14 developing countries I evaluate whether differences in the marginal product of human capital between sectors - estimated from individual-level wage data - have meaningful effects on aggregate productivity. Under the most generous assumptions regarding the homogeneity of human capital, my analysis shows that equalizing the marginal product of human capital between sectors leads to gains in output of less than 5% for most countries. These estimated gains of reallocation represent an upper bound as some of the observed differences in marginal products between sectors are due to unmeasured human capital. Under reasonable assumptions on the amount of unmeasured human capital the gains from reallocation fall well below 3%. Compared to similar estimates made using data from the U.S., developing countries would gain more from a reallocation of human capital, but the differences are too small to account for a meaningful portion of the gap in income per capita with the United States.
    Keywords: Misallocation, human capital, aggregate productivity, structural transformation, wage differentials
    JEL: O12 O15 O47 O57 J31
    Date: 2013–03–15
  8. By: Costas Meghir (Institute for Fiscal Studies and Yale University); Renata Narita; Jean-Marc Robin (Institute for Fiscal Studies and Sciences Po)
    Abstract: It is often argued that informal labour markets in developing countries are the engine of growth because their existence allows firms to operate in an environment where wage and regulatory costs are lower. On the other hand informality means that the amount of social protection offered to workers is lower. In this paper we extend the wage-posting framework of Burdett and Mortensen (1998) to allow for two sectors of employment. Firms are heterogeneous and decide endogenously in which sector to locate. Workers engage in both off the job and on the job search and decide which offers to accept. Direct transitions across sectors are permitted, which matches the evidence in the data about job mobility. Our empirical analysis uses Brazilian labour force surveys. We use the model to discuss the relative merits of alternative policies towards informality. In particular, we evaluate the impact of a tighter regulatory framework on employment in the formal and the informal sector on the distribution of wages.
    Date: 2013–03
  9. By: Kuroiwa, Ikuo; Tsubota, Kenmei
    Abstract: We examine changes in the location of economic activity in Cambodia between 1998 and 2008 in terms of employment growth. During this period, Cambodia joined ASEAN and increased trade with neighboring countries. Drawing on the predictions of the new economic geography, we focus on frontier regions such as border regions and international port cities. We examine the changing state of manufacturing in Cambodia from its initial concentration in Greater Phnom Penh to its growth in the frontier regions. The results suggest that economic integration and concomitant trade linkages may lead to the industrial development of frontier regions as well as the metropolitan areas in Cambodia.
    Keywords: Cambodia, International economic integration, International trade, Economic geography, Economic integration, Trade liberalization, Frontier regions
    JEL: F15 F16 R12
    Date: 2013–03
  10. By: Jennifer Helgeson; Simon Dietz; Stefan Hochrainer-Stigler
    Abstract: When a natural disaster hits, the affected households try to cope with its impacts. A variety of coping strategies may be employed, from reducing current consumption to disposing of productive assets. The latter strategies are especially worrisome, as they may reduce the capacity of the household to generate income in the future, possibly leading to chronic poverty. In this paper, we use the results of a household survey in rural Uganda to ask, first, what coping strategies would tend to be employed in the event of a weather disaster, second, given that multiple strategies can be chosen, in what combinations would they tend to be employed, and, third, given that asset-liquidation strategies can be particularly harmful for the future income prospects of households, what determines their uptake? Our survey is one of the largest of its kind, containing over 3000 observations garnered by local workers using smart-phone technology. We find that in this rural sample by far the most frequently reported choice would be to sell livestock. This is rather striking, since asset-based theories would predict more reliance on strategies like eating and spending less today, which avoid disposal of productive assets. It may well be that livestock are held as a form of liquid savings to, among other things, help bounce back from a weather disaster. Yet we do find that other strategies, which might undermine future prospects, are avoided, notably selling land or the home, and disrupting the children’s education. Our econometric analysis reveals a fairly rich set of determinants of different subsets of coping strategies. Perhaps most notably, households with a more educated head are much less likely to choose coping strategies involving taking their own children out of education.
    Date: 2012–10
  11. By: Michal Brzezinski (University of Warsaw, Faculty of Economic Sciences)
    Abstract: This study examines empirically the impact of income polarization on economic growth in an unbalanced panel of more than 70 countries during the 1960–2005 period. We calculate various polarization indices using existing micro-level datasets, as well as datasets reconstructed from grouped data on income distribution taken from the World Income Inequality Database. The results garnered for our preferred sample of countries suggest that income polarization has a negative impact on growth in the short term, while the impact of income inequality on growth is statistically insignificant. Our results are fairly robust to various model specifications and estimation techniques.
    Keywords: economic growth, polarization, inequality, income distribution
    JEL: O11 O15 O4 D31
    Date: 2013
  12. By: Nguyen Viet, Cuong
    Abstract: This paper examines the poverty and inequality pattern, income and characteristics of households in the Program 135-II communes – the poorest areas in Vietnam. The poverty incidence decreased from 57.5 percent to 49.2 percent during the period 2007-2012. Although the poverty incidence decreased, the poverty gap and severity indexes of households in the Program 135-II areas did not decrease during 2007-2012. The decomposition analysis shows that the reduction of the poverty incidence in the poorest communes was achieved by the income growth. The inequality increased, thereby slightly raising the poverty incidence. Poverty is sensitive to economic growth. However, the elasticity of poverty with respect to income growth tends to decrease overtime. It means that income redistribution plays a very important role in decreasing the poverty gap and poverty severity.
    Keywords: Ethnic minority; household income; poverty; decomposition, Vietnam
    JEL: I3 I31 I32
    Date: 2012–11–20
  13. By: Nguyen Viet, Cuong
    Abstract: This paper aims to measure the poverty dynamics in Vietnam using the most recent Vietnam Household Living Standard Survey in 2010. Since, there are no panel data between the 2010 VHLSS and the previous studies, the study uses the asset approach of Carter and May (1999, 2001) to estimate the proportion of the structurally and stochastically poor. It is found that the proportion of the structurally and stochastically poor is 11.1 percent and 9.6 percent, respectively. Nearly half of the poor are the stochastically poor. The proportion of the stochastically non-poor, who are non-poor but vulnerable to poverty, is small, at around 3.7 percent.
    Keywords: Poverty dynamics, household survey, Vietnam
    JEL: I3 I32
    Date: 2012–05–22

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