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on Development |
| By: | Ravallion, Martin; van de Walle, Dominique; Dutta, Puja; Murgai, Rinku |
| Abstract: | Public knowledge about India's ambitious Employment Guarantee Scheme is low in one of India's poorest states, Bihar, where participation is also unusually low. Is the solution simply to tell people their rights? Or does their lack of knowledge reflect deeper problems of poor people's agency and an unresponsive supply side? This paper reports on an information campaign that was designed and implemented in the form of an entertaining movie to inform people of their rights under the scheme. In randomly-assigned villages, the movie brought significant gains in knowledge and more positive perceptions about the impact of the scheme. But objectively measured employment showed no gain on average, suggesting that the movie created a"groupthink,"changing social perceptions about the scheme but not individual efficacy in accessing it. The paper concludes that awareness generation needs to go hand-in-hand with supply-side changes. |
| Keywords: | Agricultural Knowledge and Information Systems,Population Policies,Rural Development Knowledge&Information Systems,Primary Education,Knowledge for Development |
| Date: | 2013–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6598&r=dev |
| By: | Michalopoulos, Stelios (Brown University and NBER); Papaioannou, Elias (London Business School, NBER and CEPR) |
| Abstract: | We examine the long-run consequences of the scramble for Africa among European powers in the late 19th century and uncover the following empirical regularities. First, utilizing information on the spatial distribution of African ethnicities before colonization, we show that apart from the land mass and water area of an ethnicity’s historical homeland, no other geographic, economic, and historical trait, including proxies of pre-colonial conflict, predicts partitioning by the national borders. Second, we exploit a detailed geo-referenced database that records various types of conflict across African regions and show that civil conflict is concentrated in the historical homeland of partitioned ethnicities. We also document that violence against civilians (child soldiering, village burning, abductions, rapes) and territorial changes between rebel groups, militias, and government forces are more prevalent in the homelands of split groups. These results are robust to a rich set of local controls, the inclusion of country fixed effects and ethnic-family fixed effects. The uncovered evidence brings in the foreground the violent repercussions of an important aspect of European colonization, that of ethnic partitioning. |
| Keywords: | Africa, Borders, Ethnicities, Conflict, Development, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:161&r=dev |
| By: | Dean Karlan (Economic Growth Center, Yale University); Santosh Anagol (The Wharton School, University of Pennsylvania); Alvin Etang (Economic Growth Center, Yale University) |
| Abstract: | We examine the returns from owning cows and buffaloes in rural India. We estimate that when valuing labor at market wages, households earn large, negative average returns from holding cows and buffaloes, at negative 64% and negative 39% respectively. This puzzle is mostly explained if we value the household’s own labor at zero (a stark assumption), in which case estimated average returns for cows is negative 6% and positive 13% for buffaloes. Why do households continue to invest in livestock if economic returns are negative, or are these estimates wrong? We discuss potential explanations, including labor market failures, for why livestock investments may persist. |
| Keywords: | Savings, Investment, Profits, Livestock, Labor markets |
| JEL: | E21 M4 Q1 O12 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:egc:wpaper:1031&r=dev |
| By: | Michalopoulos, Stelios (Brown University and NBER); Papaioannou, Elias (London Business School, NBER and CEPR) |
| Abstract: | We investigate the role of national institutions on subnational African development in a novel framework that accounts both for local geography and cultural-genetic traits. We exploit the fact that the political boundaries in the eve of African independence partitioned more than two hundred ethnic groups across adjacent countries subjecting similar cultures, residing in homogeneous geographic areas, to different formal institutions. Using both a matching-type and a spatial regression discontinuity approach we show that differences in countrywide institutional structures across the national border do not explain within-ethnicity differences in economic performance, as captured by satellite images of light density. The average non-effect of national institutions on ethnic development masks considerable heterogeneity partially driven by the diminishing role of national institutions in areas further from the capital cities. |
| Keywords: | Africa, Borders, Ethnicities, Development, National Institutions, Regression Discontinuity |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:cge:warwcg:153&r=dev |
| By: | Angelucci, Manuela; Karlan, Dean S.; Zinman, Jonathan |
| Abstract: | Theory and evidence have raised concerns that microcredit does more harm than good, particularly when offered at high interest rates. We use a clustered randomized trial, and household surveys of eligible borrowers and their businesses, to estimate impacts from an expansion of group lending at 110% APR by the largest microlender in Mexico. Average effects on a rich set of outcomes measured 18-34 months post-expansion suggest some good and little harm. Other estimators identify heterogeneous treatment effects and effects on outcome distributions, but again yield little support for the hypothesis that microcredit causes harm. |
| Keywords: | Compartamos Banco; microcredit; microcredit impact; microentrepreneurship |
| JEL: | D12 D22 G21 O12 |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9506&r=dev |
| By: | Caselli, Francesco; Ciccone, Antonio |
| Abstract: | How much would output increase if underdeveloped economies were to increase their levels of schooling? We contribute to the development accounting literature by describing a nonparametric upper bound on the increase in output that can be generated by more schooling. The advantage of our approach is that the upper bound is valid for any number of schooling levels with arbitrary patterns of substitution/complementarity. Another advantage is that the upper bound is robust to certain forms of endogenous technology response to changes in schooling. We also quantify the upper bound for all economies with the necessary data, compare our results with the standard development accounting approach, and provide an update on the results using the standard approach for a large sample of countries. |
| Date: | 2013–09 |
| URL: | http://d.repec.org/n?u=RePEc:ner:lselon:http://eprints.lse.ac.uk/46783/&r=dev |
| By: | Enrico Spolaore; Romain Wacziarg |
| Abstract: | What obstacles prevent the most productive technologies from spreading to less developed economies from the world's technological frontier? In this paper, we seek to shed light on this question by quantifying the geographic and human barriers to the transmission of technologies. We argue that the intergenerational transmission of human traits, particularly culturally transmitted traits, has led to divergence between populations over the course of history. In turn, this divergence has introduced barriers to the diffusion of technologies across societies. We provide measures of historical and genealogical distances between populations, and document how such distances, relative to the world's technological frontier, act as barriers to the diffusion of development and of specific innovations. We provide an interpretation of these results in the context of an emerging literature seeking to understand variation in economic development as the result of factors rooted deep in history. |
| Keywords: | Long-run growth, genetic distance, intergenerational transmission, diffusion of innovations |
| JEL: | O11 O33 O40 O57 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:tuf:tuftec:0775&r=dev |
| By: | Allen, Franklin; Carletti, Elena; Cull, Robert; Qian, Jun; Senbet, Lemma; Valenzuela, Patricio |
| Abstract: | Using household surveys and bank penetration data at the district-level in 2006 and 2009, this paper examines the impact of Equity Bank -- a leading private commercial bank focusing on microfinance -- on access to banking in Kenya. Unlike other commercial banks in Kenya, Equity Bank pursues distinct branching strategies that target underserved areas and less-privileged households. Equity Bank presence has a positive and significant impact on households'use of bank accounts and bank credit, especially for Kenyans with low income, no salaried job, and less education and those who do not own their own home. The findings are robust to using the district-level proportion of people speaking a minority language as an instrument for Equity Bank presence. It appears that Equity Bank's business model -- providing financial services to population segments typically ignored by traditional commercial banks and generating sustainable profits in the process -- can be a solution to the financial access problem that has hindered the development of inclusive financial sectors in many African countries. |
| Keywords: | Banks&Banking Reform,Access to Finance,Public Sector Corruption&Anticorruption Measures,Corporate Law,Debt Markets |
| Date: | 2013–09–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:6593&r=dev |
| By: | John C Bluedorn; Rupa Duttagupta; Jaime Guajardo; Nkunde Mwase |
| Abstract: | Growth takeoffs in developing economies have rebounded in the past two decades. Although recent takeoffs have lasted longer than takeoffs before the 1990s, a key question is whether they could unravel like some did in the past. This paper finds that recent takeoffs are associated with stronger economic conditions, such as lower post-takeoff debt and inflation levels; more competitive real exchange rates; and better structural reforms and institutions. The chances of starting a takeoff in the 2000s was triple that before the 1990s, with domestic conditions accounting for most of the increase. The findings suggest that if today’s dynamic developing economies sustain their improved policies; they are more likely to stay on course compared to many of their predecessors. |
| Keywords: | Economic growth;Low-income developing countries;Brazil;Korea, Republic of;Indonesia;Mozambique;Cambodia;Development;Cross country analysis;Economic models;growth, takeoff, development, low-income countries, convergence |
| Date: | 2013–05–30 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:13/132&r=dev |
| By: | Noy, Ilan; Karim, Azreen |
| Abstract: | The last few years have seen an explosion of economic research on the consequences of natural disasters. This new interest is attributable first and foremost to a growing awareness of the potentially catastrophic nature of these events, but also a result of the increasing awareness that natural disasters are social and economic events: their impact is shaped as much by the structure and characteristics of the countries they hit as by their physical characteristics. Here, we survey the literature that examines the direct and indirect impact of natural disaster events specifically on the poor and their impact on the distribution of income within affected communities and societies. We also discuss some of the lacunae in this literature and outline a future agenda of investigation. |
| Keywords: | Natural disasters, Poverty, Income distribution, |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:vuw:vuwecf:2974&r=dev |
| By: | Yasser Abdih; Leandro Medina |
| Abstract: | This study estimates the size of the informal economy, and the relative contribution of each underlying factor, for the Caucasus and Central Asia countries in 2008. Using a Multiple Indicator-Multiple Cause model, we find that a burdensome tax system, rigid labor market, low institutional quality, and excessive regulation in financial and products markets are determinant factors in explaining the size of the informal economy, which ranges from 26 percent of GDP in Kyrgyz Republic to around 35 percent of GDP in Armenia. Furthermore, the results show that higher levels of informality increase the levels of self employment and the percentage of currency held outside the banking system. |
| Keywords: | Shadow economy;Central Asia;Tax burdens;Labor markets;Economic models;Cross country analysis;Informal economy; latent variable; Caucasus and Central Asia. |
| Date: | 2013–05–31 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:13/137&r=dev |
| By: | Rahul Anand; David Coady; Adil Mohommad; Vimal V Thakoor; James P Walsh |
| Abstract: | Rising fuel subsidies have contributed to fiscal pressures in India. A key policy concern regarding subsidy reform is the adverse welfare impact on households, in particular poor households. This paper evaluates the fiscal and welfare implications of fuel subsidy reform in India. Fuel subsidies are found to be badly targeted, with the richest ten percent of households receiving seven times more in benefits than the poorest ten percent. Although subsidy reform would generate substantial fiscal savings, the associated increases in fuel and other prices would lower household real incomes of all income groups. Better targeting of fuel subsidies would fully protect lower income households while still generating substantial net fiscal savings. Lessons from subsidy reforms in other countries are identified and discussed. |
| Keywords: | Fiscal reforms;India;Energy sector;Oil;Subsidies;Welfare;Fuel pricing, subsidy reform, distributional impact, compensating transfers, India |
| Date: | 2013–05–29 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:13/128&r=dev |
| By: | Eugen Dimant (University of Paderborn); Tim Krieger (University of Freiburg); Daniel Meierriecks (University Freiburg) |
| Abstract: | We examine the influence of corruption on migration for 111 countries between 1985 and 2000. Robust evidence indicates that corruption is among the push factors of migration, especially fueling skilled migration. We argue that corruption tends to diminish the returns to education, which is particularly relevant to the better educated. |
| Keywords: | Corruption, Migration, Skilled Migration, Push Factors of Migration |
| JEL: | D73 F22 O15 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:pdn:wpaper:67&r=dev |
| By: | Robano, Virginia (George Washington University); Smith, Stephen C. (George Washington University) |
| Abstract: | Many poverty, safety net, training, and other social programs utilize multiple screening criteria to determine eligibility. We apply recent advances in multidimensional measurement analysis to develop a straightforward method for summarizing changes in groups of eligibility (screening) indicators, which have appropriate properties. We show how this impact can differ across participants with differing numbers of initial deprivations. We also examine impacts on other specially designed multidimensional poverty measures (and their components) that address key participant deficits. We apply our methods to a BRAC ultra-poverty program in Bangladesh, and find that our measures of multidimensional poverty have fallen significantly for participants. This improvement is most associated with better food security and with acquisition of basic assets (though this does not mean that the cause of poverty reduction was program activities focused directly on these deficits). In general, we find that the BRAC program had a greater impact on reducing multidimensional poverty for those with a larger initial number of deprivations. We also showed how evaluation evidence can be used to help improve the selection of eligibility characteristics of potential participants. |
| Keywords: | poverty, multidimensional poverty, poverty alleviation strategies, BRAC, microfinance institutions, ultra-poverty, ultra-poor, CFPR/TUP, Bangladesh, difference-in-difference, impact assessment, program evaluation, counterfactual targeting, assignment errors |
| JEL: | O15 I32 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7593&r=dev |
| By: | LEFEBVRE, Mathieu (University of Liège); PESTIEAU, Pierre (University of Liège; Université catholique de Louvain, CORE, B-1348 Louvain-la-Neuve, Belgium; PSE and CEPR); PONTHIERE, Grégory (Paris School of Economics and Ecole Normale Supérieure, Paris) |
| Abstract: | Income-differentiated mortality, by reducing the share of poor persons in the population, leads to what can be called the "Mortality Paradox": the worse the survival conditions of the poor are, the lower the measured poverty is. We show that the extent to which FGT measures (Foster Greer Thorbecke 1984) underestimate old-age poverty under income-differentiated mortality depends on whether the prematurely dead would have, in case of survival, suffered from a more severe poverty than the average surviving population. Taking adjusted FGT measures with ex- tended lifetime income profiles as a benchmark, we identify conditions under which the selection bias induced by income-differentiated mortality is higher for distribution-sensitive measures than for headcount measures. Finally, we show, on the basis of data on poverty in 11 European economies, that the size of the selection bias varies across different sub-classes of FGT measures and across countries. |
| Keywords: | income-differentiated mortality, FGT poverty measures |
| JEL: | I32 |
| Date: | 2013–09–11 |
| URL: | http://d.repec.org/n?u=RePEc:cor:louvco:2013042&r=dev |
| By: | Banerjee, Abhijit; Duflo, Esther; Glennerster, Rachel; Kinnan, Cynthia |
| Abstract: | This paper reports on the first randomized evaluation of the impact of introducing the standard microcredit group-based lending product in a new market. In 2005, half of 104 slums in Hyderabad, India were randomly selected for opening of a branch of a particular microfinance institution (Spandana) while the remainder were not, although other MFIs were free to enter those slums. Fifteen to 18 months after Spandana began lending in treated areas, households were 8.8 percentage points more likely to have a microcredit loan. They were no more likely to start any new business, although they were more likely to start several at once, and they invested more in their existing businesses. There was no effect on average monthly expenditure per capita. Expenditure on durable goods increased in treated areas, while expenditures on “temptation goods” declined. Three to four years after the initial expansion (after many of the control slums had started getting credit from Spandana and other MFIs ), the probability of borrowing from an MFI in treatment and comparison slums was the same, but on average households in treatment slums had been borrowing for longer and in larger amounts. Consumption was still no different in treatment areas, and the average business was still no more profitable, although we find an increase in profits at the top end. We found no changes in any of the development outcomes that are often believed to be affected by microfinance, including health, education, and women’s empowerment. The results of this study are largely consistent with those of four other evaluations of similar programs in different contexts. |
| Keywords: | Microfinance |
| JEL: | D21 G21 O16 |
| Date: | 2013–04 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:9437&r=dev |
| By: | Mark Rosenzweig; Christopher R. Udry |
| Abstract: | We use newly-available Indian panel data to estimate how the returns to planting-stage investments vary by rainfall realizations. We show that the forecasts significantly affect farmer investment decisions and that these responses account for a substantial fraction of the inter-annual variability in planting-stage investments, that the skill of the forecasts varies across areas of India, and that farmers respond more strongly to the forecast where there is more forecast skill and not at all when there is no skill. We show, using an IV strategy in which the Indian government forecast of monsoon rainfall serves as the main instrument, that the return to agricultural investment depends substantially on the conditions under which it is estimated. Using the full rainfall distribution and our profit function estimates, we find that Indian farmers on average under-invest, by a factor of three, when we compare actual levels of investments to the optimal investment level that maximizes expected profits. Farmers who use skilled forecasts have increased average profit levels but also have more variable profits compared with farmers without access to forecasts. Even modest improvements in forecast skill would substantially increase average profits. |
| JEL: | D24 D81 O12 O13 Q12 Q54 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:19334&r=dev |
| By: | Giovanni Andrea Cornia (Università degli Studi di Firenze); Bruno Martorano |
| Abstract: | The paper discusses the income inequality changes which have taken place in a few representative developing regions during the last 30 years. While inequality rose in the majority of the countries of these regions in the 1980s and 1990s, the last decade was characterized by a bifurcation of inequality trends. This divergence offers the possibility to contrast the experience of virtuous regions (Latin America and parts of East and South-East Asia) and non-virtuous regions (the European economies in transition and China) so as to draw useful lessons. Since the global economic conditions affecting inequality in these countries were not too dissimilar and since no major variations in endogenous factors were evident across the regions analysed, the difference in inequality trends between virtuous and non-virtuous regions was most likely due to institutional factors and public policies. An econometric test confirms that the reduction of inequality is possible even under open economy conditions if a given set of appropriate macroeconomic, labour, fiscal and social policies is adopted by governments. |
| Keywords: | trends in income inequality, factor income distribution, democracy, policy reforms, international economic integration, international crisis, China, South East Asia, Latin America, transition economies of Europe. |
| JEL: | D31 E60 I38 J08 P51 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:frz:wpaper:wp2013_13.rdf&r=dev |
| By: | Kumler, Todd J. (Columbia University); Verhoogen, Eric (Columbia University); Frias, Judith A. (Mexican Institute of Social Security (IMSS)) |
| Abstract: | Non-compliance of firms with tax regulations is a major constraint on state capacity in developing countries. We focus on an arguably under-appreciated dimension of non-compliance: under-reporting of wages by formal firms to evade payroll taxes. We develop a simple partial-equilibrium model of endogenous compliance by heterogeneous firms to guide the empirical investigation. We then compare two independent sources of individual-level wage information from Mexico – firms' wage reports to the Mexican social security agency and workers' responses to a household labor-force survey – to investigate the extent of wage under-reporting and how it responded to an important change in the social security system. We document that under-reporting by formal firms is extensive, and that compliance is better in larger firms. Using a difference-in-differences strategy based on the 1997 Mexican pension reform, which effectively tied pension benefits more closely to reported wages for younger workers than for older workers, we show that the reform led to a relative decline in under-reporting for younger workers. Within metro area/sector/firm size cells, the decline in under-reporting was greater in cells initially employing a younger workforce on average. The empirical patterns are consistent with our theoretical model and suggest that giving employees incentives and information to improve the accuracy of employer reports can be an effective way to improve payroll-tax compliance. |
| Keywords: | tax compliance, state capacity, Mexico, heterogeneous firms, pension reform |
| JEL: | O17 H26 H55 |
| Date: | 2013–08 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7591&r=dev |