nep-dev New Economics Papers
on Development
Issue of 2013‒09‒28
nine papers chosen by
Jacob A. Jordaan
Utrecht University

  1. Enlisting Employees in Improving Payroll-Tax Compliance: Evidence from Mexico By Frías, Judith A; Kumler, Todd; Verhoogen, Eric A
  2. Cycling to School: Increasing Secondary School Enrollment for Girls in India By Muralidharan, Karthik; Prakash, Nishith
  3. The Elusive Quest for Inclusive Growth: Growth, Poverty, and Inequality in Asia By Ravi Balakrishnan; Chad Steinberg; Murtaza H. Syed
  4. Inclusive Growth: Measurement and Determinants By Rahul Anand; Saurabh Mishra; Shanaka J. Peiris
  5. The Quality of the Recent High-Growth Episode in Sub-Saharan Africa By Marcelo Martinez; Montfort Mlachila
  6. Health Care Facility Choice and User Fee Abolition: Regression Discontinuity in a Multinomial Choice Setting By Steven F. Koch; Jeffrey S. Racine
  7. The Heterogeneous Impact of Conditional Cash Transfers By Sebastian Galiani; Patrick J. McEwan
  8. HIV Does Matter for Fertility: Human Capital, Mortality and Family Size By Günther Fink; Sebastian Linnemayr
  9. Impact of Sectoral Allocation of Foreign Aid on Gender Equity and Human Development By Lynda Pickbourn; Léonce Ndikumana

  1. By: Frías, Judith A; Kumler, Todd; Verhoogen, Eric A
    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: heterogeneous firms; Mexico; pension reform; state capacity; tax compliance
    JEL: H26 H55 O17
    Date: 2013–09
  2. By: Muralidharan, Karthik (University of California, San Diego); Prakash, Nishith (University of Connecticut)
    Abstract: We study the impact of an innovative program in the Indian state of Bihar that aimed to reduce the gender gap in secondary school enrollment by providing girls who continued to secondary school with a bicycle that would improve access to school. Using data from a large representative household survey, we employ a triple difference approach (using boys and the neighboring state of Jharkhand as comparison groups) and find that being in a cohort that was exposed to the Cycle program increased girls' age-appropriate enrollment in secondary school by 30% and also reduced the gender gap in age-appropriate secondary school enrollment by 40%. Parametric and non-parametric decompositions of the triple-difference estimate as a function of distance to the nearest secondary school show that the increases in enrollment mostly took place in villages where the nearest secondary school was further away, suggesting that the mechanism for program impact was the reduction in the time and safety cost of school attendance made possible by the bicycle. We find that the Cycle program was much more cost effective at increasing girls' enrolment than comparable conditional cash transfer programs in South Asia, suggesting that the coordinated provision of bicycles to girls may have generated externalities beyond the cash value of the program, including improved safety from girls cycling to school in groups, and changes in patriarchal social norms that proscribed female mobility outside the village, which inhibited female secondary school participation.
    Keywords: conditional transfers, school access, gender gaps, bicycle, girls' education, female empowerment, India, Bihar, MDG
    JEL: H42 I2 O15
    Date: 2013–08
  3. By: Ravi Balakrishnan; Chad Steinberg; Murtaza H. Syed
    Abstract: This paper assesses how pro-poor and inclusive Asia’s recent growth has been, and what factors have been driving these outcomes. It finds that while poverty has fallen across the region over the last two decades, inequality has increased, dampening the impact of growth on poverty reduction. As a result, relative to other emerging and developing regions and to Asia’s own past, the recent period of growth has been both less inclusive and less pro-poor. Our analysis suggests a number of policies that could help redress these trends and broaden the benefits of growth in Asia. These include fiscal policies to increase spending on health, education, and social safetynets; labor market reforms to boost the labor share of total income; and reforms to make financial systems more inclusive.
    Keywords: Economic growth;Asia;Fiscal policy;Government expenditures;Social safety nets;Labor market reforms;China;Asia, Inequality, Inclusive Growth, Poverty, Labor Market, Fiscal Policy, Financial Markets.
    Date: 2013–06–26
  4. By: Rahul Anand; Saurabh Mishra; Shanaka J. Peiris
    Abstract: We estimate a unified measure of inclusive growth for emerging markets by integrating their economic growth performance and income distribution outcomes, using data over three decades. Country distributions are calibrated by combining PPP GDP per capita and income distribution from survey data. We apply the microeconomic concept of a social mobility function at the macroeconomic level to measure inclusive growth that is closer to the absolute definition of pro-poor growth. This dynamic measure permits us to focus on inequality as well as distinguish between countries where per capita income growth was the same for the top and the bottom of the income pyramid, by accounting for the pace of growth. Our results indicate that macroeconomic stability, human capital, and structural changes are foundations for achieving inclusive growth. The role of globalization could also be positive with foreign direct investment and trade openess fostering greater inclusiveness, while financial deepening and technological change have no discernible effect.
    Keywords: Economic growth;Purchasing power parity;Income distribution;Poverty;Emerging markets;Low-income developing countries;Cross country analysis;economic growth, pro-poor growth, distribution, equity, inequality, inclusive growth
    Date: 2013–05–30
  5. By: Marcelo Martinez; Montfort Mlachila
    Abstract: The paper explores the quality of the recent high-growth episode in sub-Saharan Africa by examining the following two questions: (i) what has been the nature and pattern of SSA growth over the past 15 years and how does it compare with previous episodes? (ii) has this growth had an impact on socially desirable outcomes, for example, improvements in health, education and poverty indicators? To do this, the paper first examines various aspects of the fundamentals of growth in SSA—levels, volatility, sources, etc.—according to various country analytical groupings. Second, it explores the extent to which the growth has been accompanied by improvements in social indicators. The paper finds that the quality of growth in SSA over the past 15 years has unambiguously improved, although progress in social indicators has been uneven.
    Keywords: Economic growth;Sub-Saharan Africa;Production;Productivity;Education;Health care;Poverty reduction;Social indicators;Quality of growth, social indicators, sub-Saharan Africa
    Date: 2013–02–26
  6. By: Steven F. Koch; Jeffrey S. Racine
    Abstract: We apply parametric and nonparametric regression discontinuity methodology within a multinomial choice setting to examine the impact of public health care user fee abolition on health facility choice using data from South Africa. The nonparametric model is found to outperform the parametric model both in- and out-of-sample, while also delivering more plausible estimates of the impact of user fee abolition (i.e. the 'treatment effect'). In the parametric framework, treatment effects were relatively constant - around 7% - and that increase was drawn equally from both home care and private care groups. On the other hand, in the nonparametric framework treatment effects were largest for the least well-off (also around 7%) but fell for the most well-off. More plausibly, that increase was drawn primarily from the home care group, suggesting that the policy favoured those least well-off as more of these children received at least some minimum level of professional health care after the policy was implemented. Regarding the most well-off, despite having access to free public health care, children were still far more likely to receive health care at private facilities than at public facilities, which is also more plausible in South Africa's two-tier health sector.
    Date: 2013–09
  7. By: Sebastian Galiani (University of Maryland); Patrick J. McEwan (Wellesley College)
    Abstract: The Honduran PRAF experiment randomly assigned conditional cash transfers to 40 of 70 poor municipalities, within five strata defined by a poverty proxy. Using census data, we show that eligible children were 8 percentage points more likely to enroll in school and 3 percentage points less likely to work. The effects were much larger in the two poorest strata, and statistically insignificant in the other three (the latter finding is robust to the use of a separate regression-discontinuity design). Heterogeneity confirms the importance of judicious targeting to maximize the impact and cost-effectiveness of CCTs. There is no consistent evidence of effects on ineligible children or on adult labor supply.
    JEL: H00
    Date: 2013–09
  8. By: Günther Fink (Harvard School of Public Health); Sebastian Linnemayr (Harvard School of Public Health)
    Abstract: In this paper we provide new evidence regarding the long-term impact of HIV on fertility and economic development. We develop a theoretical framework where parents optimally allocate their resources between child-rearing and consumption, and incorporate both infant and adult mortality in their fertility decision. The model predicts an ambiguous overall effect of HIV on fertility, but suggests that the optimal fertility adjustment to HIV is larger for more educated parents than for parents with little or no formal education. We test this prediction using a novel data set combining historical individual level data from World Fertility Surveys (WFS) with recent data from the Demographic and Health Surveys (DHS) including nationally representative HIV-testing. The result that more educated women reduce fertility more than uneducated mothers in the presence of HIV appears to hold both in the longitudinal and the cross-sectional analysis. Our results imply that HIV is unlikely to have a significant effect on population size, but will negatively affect countries’ long term economic prospects through an adverse shift in the population’s human capital composition.
    Keywords: HIV, Fertility, Mortality, Family Size, Economic Development
    Date: 2013–09
  9. By: Lynda Pickbourn; Léonce Ndikumana
    Abstract: While developing countries have made some progress in human development since the turn of the century, many are still lagging behind in important goals such as education, health, nutrition and access to clean drinking water and improved sanitation. Moreover, gender equity remains a major challenge in most countries. In this paper for the United Nations University, Pickbourn and Ndikumana examine the role that foreign aid plays in generating these outcomes, using panel data from OECD-DAC on the sectoral allocation of development aid, in conjunction with country-level data on public expenditures, human development outcomes and other economic, social and political indicators. The paper attempts to assess whether the volume of aid and its sectoral allocation have an impact on human development outcomes and gender equity. We find that the impact of aid on many of the outcomes we study is largely dependent on initial levels of human development and per capita income. The results on the impact of aid vary by type of development outcome. While aid appears to be effective in reducing maternal mortality as well as the gender gap in youth literacy regardless of initial conditions, its effects are at best mixed for other indicators. The paper points to a number of policy issues that deserve further investigation.
    Keywords: foreign aid, human development, gender equity, education, health
    JEL: O1 O2 D0 E0
    Date: 2013

This nep-dev issue is ©2013 by Jacob A. Jordaan. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.