nep-dev New Economics Papers
on Development
Issue of 2013‒12‒29
twelve papers chosen by
Jacob A. Jordaan
Utrecht University

  1. Can subjective questions on economic welfare be trusted ? evidence for three developing countries By Ravallion, Martin; Himelein, Kristen; Beegle, Kathleen
  2. Microfinance and Poverty Alleviation By Augsburg, B.; Haas, R. de; Harmgart, H.; Meghir, C.
  3. Business Literacy and Development: Evidence from a Randomized Controlled Trial in Rural Mexico By Gabriela Calderon; Jesse M. Cunha; Giacomo De Giorgi
  4. Group Lending or Individual Lending? Evidence from a Randomized Field Experiment in Rural Mongolia By Attanasio, O.; Augsburg, B.; Haas, R. de; Fitzsimons, E.; Harmgart, H.
  5. Who Suffers the Penalty? A Panel Data Analysis of Earnings Gaps in Vietnam By Roubaud, François; Nordman, Christophe Jalil; Nguyen, Huu Chi
  6. Working Paper 185 - Remittances and the Voter Turnout in Sub-Saharan Africa: Evidence from Macro and Micro Level Data By Ebeke Christian; Yogo Urbain Thierry
  7. The intermediary role of microloan officers: Evidence from Ethiopia By Shchetinin, Oleg; Wollbrant, Conny
  8. The benefits of solar home systems :an analysis from Bangladesh By Samad, Hussain A.; Khandk, Shahidur R.; Asaduzzaman, M.; Yunus, Mohammad
  9. Affirmative Action, Education and Gender: Evidence from India By Cassan, Guilhem
  10. Promoting productive employment in Sub-Saharan Africa: A review of the literature By Szirmai, Adam; Gebreeyesus, Mulu; Guadagno, Francesca; Verspagen, Bart
  11. Migrant Remittances and Information Flows: Evidence from a Field Experiment By Batista, Catia; Narciso, Gaia
  12. Mitigating Long-run Health Effects of Drought: Evidence from South Africa By Taryn Dinkelman

  1. By: Ravallion, Martin; Himelein, Kristen; Beegle, Kathleen
    Abstract: While self-assessments of welfare have become popular for measuring poverty and estimating welfare effects, the methods can be deceptive given systematic heterogeneity in respondents'scales. Little is known about this problem. This study uses specially-designed surveys in three countries, Tajikistan, Guatemala, and Tanzania, to study scale heterogeneity. Respondents were asked to score stylized vignettes, as well as their own household. Diverse scales are in evidence, casting considerable doubt on the meaning of widely-used summary measures such as subjective poverty rates. Nonetheless, under the identifying assumptions of the study, only small biases are induced in the coefficients on widely-used regressors for subjective poverty and welfare.
    Keywords: Rural Poverty Reduction,Economic Theory&Research,Biodiversity,Poverty Lines,Regional Economic Development
    Date: 2013–12–01
  2. By: Augsburg, B.; Haas, R. de; Harmgart, H.; Meghir, C. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: We use an RCT to analyze the impact of microcredit on poverty reduction. The study population consists of loan applicants to a large microfinance institution in Bosnia and Herzegovina who would have been rejected through regular screening. Access to credit allowed borrowers to start and expand small-scale businesses. THe re is little evidence that this lead to net increases in household income. Households that already had a business and where the borrower had more education, ran down savings, presumably to complement the loan and achieve the minimum investment amount. In less-educated households, where assets were low consumption went down instead. For these households the labor supply of teenage children aged 16-19 increased, and their school attendance declined.
    Keywords: Microfinance;liquidity constraints;human capital;randomized controlled trial
    JEL: G21 D21 I32
    Date: 2013
  3. By: Gabriela Calderon; Jesse M. Cunha; Giacomo De Giorgi
    Abstract: A large share of the poor in developing countries run small enterprises, often earning low incomes. This paper explores whether the poor performance of businesses can be explained by a lack of basic business skills. We randomized the offer of a free, 48-hour business skills course to female entrepreneurs in rural Mexico. We find that those assigned to treatment earn higher profits, have larger revenues, serve a greater number of clients, are more likely to use formal accounting techniques, and more likely to be registered with the government. Indirect treatment effects on those entrepreneurs randomized out of the program, yet living in treatment villages, are economically meaningful, yet imprecisely measured. We present a simple model of experience and learning that helps interpret our results, and consistent with the theoretical predictions, we find that "low-quality" entrepreneurs are the most likely to quit their business post-treatment, and that the positive impacts of the treatment are increasing in entrepreneurial quality.
    JEL: C93 I25 O12 O14
    Date: 2013–12
  4. By: Attanasio, O.; Augsburg, B.; Haas, R. de; Fitzsimons, E.; Harmgart, H. (Tilburg University, Center for Economic Research)
    Abstract: Abstract: We present evidence from a randomized field experiment in rural Mongolia on the comparative poverty impact of group versus individual microcredit. We find a positive impact of group loans but not of individual loans on entrepreneurship and food consumption. Moreover, group borrowers are less likely to make informal transfers to families and friends while the opposite holds true for individual borrowers. This suggests that joint liability may deter borrowers from using loans for non-investment purposes with stronger impacts as a result. We find no difference in repayment rates between both types of microcredit.
    Keywords: Microcredit;poverty;randomized field experiment
    JEL: G21 D21 I32
    Date: 2013
  5. By: Roubaud, François; Nordman, Christophe Jalil; Nguyen, Huu Chi
    Abstract: In spite of its predominant economic weight in developing countries, little is known about the informal sector earnings structure compared to that of the formal sector. Taking advantage of the rich VHLSS dataset in Vietnam, in particular its three wave panel data (2002, 2004, 2006), we assess the magnitude of various formal–informal earnings gaps while addressing heterogeneity at three different levels: the worker, the job (wage employment vs. self-employment) and the earnings distribution. We estimate fixed effects and quantile regressions to control for unobserved individual characteristics. Our results suggest that the informal sector earnings gap highly depends on the workers’ job status and on their relative position in the earnings distribution. Penalties may in some cases turn into premiums. By comparing our results with studies in other developing countries, we draw conclusions highlighting Vietnam’s labour market specificity
    Keywords: Informal employment; earnings gap; transition matrix; panel data; Vietnam;
    JEL: J21 J23 J24 J31 O17
    Date: 2013–12
  6. By: Ebeke Christian; Yogo Urbain Thierry
    Abstract: Using both cross-country and individual level African data, this paper demonstrates that remittance inflows significantly lower the propensity to vote during national elections in Sub-Saharan Africa. This effect is robust to empirical specifications aimed at dealing with the endogeneity of remittance inflows at both country and household level data. This result adds to the literature highlighting the potential damaging effects of remittances on long term development.
    Date: 2013–12–19
  7. By: Shchetinin, Oleg (Department of Economics, School of Business, Economics and Law, Göteborg University); Wollbrant, Conny (Department of Economics, School of Business, Economics and Law, Göteborg University)
    Abstract: Microfinance institutions are key financial intermediaries between donors and borrowers in developing countries. Loan officers are crucial for establishing and maintaining the relationship between borrowers and microfinance institutions. This paper studies the impact of loan officers on the loan portfolio. We use a survey and choice experiment of 800 loan officers to estimate loan officers’ preferences over loan allocation. We investigate how these preferences are affected by the organizational structure of the microfinance institution, for example, incentive provision. We pay special attention to monitoring of borrowers and loan officer discretion. The most important determinants of loan allocation are related to the financial viability of microfinance institutions rather than the pro-social mission of microfinance. We derive recommendations for the governance of microfinance institutions.
    Keywords: Financial intermediation; Microfinance; Loan officers; Loan allocation; Choice experiment
    JEL: G21 L31 O16
    Date: 2013–12–17
  8. By: Samad, Hussain A.; Khandk, Shahidur R.; Asaduzzaman, M.; Yunus, Mohammad
    Abstract: The Government of Bangladesh, with help from the World Bank and other donors, has provided aid to a local agency called Infrastructure Development Company Limited and its partner organizations to devise a credit scheme for marketing solar home system units and making these an affordable alternative to grid electricity for poor people in remote areas. This paper uses household survey data to examine the financing scheme behind the dissemination of these solar home systems, in particular the role of the subsidy; the factors that determine the adoption of the systems in rural Bangladesh; and the welfare impacts of such adoption. The paper finds that while the subsidy has been declining over time, the demand for solar home systems has seen phenomenal growth, mostly because of technological developments that have made the systems increasingly more affordable. Households with better physical and educational endowments are more likely to adopt solar home systems than poor households. The price of the system matters in household decision making -- a 10 percent decline in the price of the system increases the overall demand for a solar panel by 2 percent. As for the benefits, adoption of a solar home system improves children’s evening study time, lowers kerosene consumption, and provides health benefits for household members, in particular for women. It is also found to increase women's decision-making ability in certain household affairs. Finally, it is found to increase household consumption expenditure, although at a small scale.
    Keywords: Energy Production and Transportation,Renewable Energy,Climate Change Mitigation and Green House Gases,Climate Change Economics,Economic Theory&Research
    Date: 2013–12–01
  9. By: Cassan, Guilhem
    Abstract: We use a unique natural experiment in order to assess the impact of positive discrimination in India on targeted groups’ educational attainment. We take advantage of the harmonization of the Scheduled Castes lists within the Indian states taking place in 1976 to measure the increase of the educational attainment of the new beneficiaries, taking the castes already on the list as a control group. We show that this policy had heterogenous effects across genders, with males benefiting from the SC status and females remaining essentially unaffected. We show that this translated into a differential increase in literacy and numeracy, and propose a novel method to measure the latter.
    Keywords: scheduled caste; quota; positive discrimination; gender
    JEL: I24 O15 H41
    Date: 2013–12
  10. By: Szirmai, Adam (UNU-MERIT / MGSoG); Gebreeyesus, Mulu (UNU-MERIT / MGSoG); Guadagno, Francesca (UNU-MERIT / MGSoG); Verspagen, Bart (UNU-MERIT / MGSoG)
    Abstract: This report provides an overview of current research on and knowledge about employment trends and policies in sub-Saharan Africa. Access to productive employment is seen as essential for poverty reduction and the inclusion of the poor in wider society. Productive employment is characterised by a. Sufficient income to permit workers and their dependents a level of consumption above the poverty line; b. Stability of this income over time (absence of vulnerability; c. Decent working conditions and working hours. The challenge of African economies lies not so much in open unemployment, as in the quality of employment as defined by earnings, vulnerability and working conditions. Much employment is located in the informal sector, where vulnerability is a serious problem. High youth employment in young populations is another serious challenge. Causes of employment problems include: lack of the right kinds of structural change, skill mismatches on the labour market, insufficient attention for SMEs with growth potential and insufficient innovation. The paper discusses a wide range of policies to promote productive employment including trade policies, sectoral policies, innovation policies, population policies and employment and labour market policies. The paper concludes with a discussion of emerging debates and contrasting views with regard to productive employment. It summarises the debates on agricultural led industrial development, resource based industrialisation, emergence of non-traditional exports, employment in labour intensive modern commercial agriculture, the role of manufacturing in growth and employment creation, the exploitation of unlimited supplies of labour, role of FDI and promoting pro-poor innovation in the informal sector.
    Keywords: productive employment, vulnerability, working conditions, unemployment, structural change, skill mismatches, employment policies
    JEL: J21 J24 J28 O2 O4
    Date: 2013–11–20
  11. By: Batista, Catia (Universidade Nova de Lisboa); Narciso, Gaia (Trinity College Dublin)
    Abstract: Do information flows matter for remittance behavior? We design and implement a randomized control trial to quantitatively assess the role of communication between migrants and their contacts abroad on the extent and value of remittance flows. In the experiment, a random sample of 1,500 migrants residing in Ireland was offered the possibility of contacting their networks outside the host country for free over a varying number of months. We find a sizable, positive impact of our intervention on the value of migrant remittances sent. Our results exclude that the remittance effect we identify is a simple substitution effect. Instead, our analysis points to this effect being a likely result of improved information via factors such as better migrant control over remittance use, enhanced trust in remittance channels due to experience sharing, or increased remittance recipients' social pressure on migrants.
    Keywords: information flows, international migration, migrant networks, remittances, randomized control trial
    JEL: F22 J61 O15
    Date: 2013–12
  12. By: Taryn Dinkelman
    Abstract: Drought is Africa’s primary natural disaster and a pervasive source of income risk for poor households. This paper documents the long-run health effects of early life exposure to drought and investigates an important source of heterogeneity in these effects. Combining birth cohort variation in South African Census data with cross-sectional and temporal drought variation, I estimate long-run health impacts of drought exposure among Africans confined to homelands during apartheid. Drought exposure in early childhood significantly raises later life male disability rates by 4% and reduces cohort size. Among a subset of homelands – the TBVC areas – disability effects are double and negative cohort effects are significantly larger. I show that differences in spatial mobility restrictions that influence the extent of migrant networks across TBVC and non-TBVC areas contribute to this heterogeneity. Placebo checks show no differential disability impacts of drought exposure across TBVC and non-TBVC areas after the repeal of migration restrictions. The results show that although drought has significant long-run effects on health human capital, migrant networks in poor economies provide one channel through which families mitigate these negative impacts of local environmental shock.
    JEL: I15 J61 N37 O15
    Date: 2013–12

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