nep-dev New Economics Papers
on Development
Issue of 2014‒04‒29
six papers chosen by
Jacob A. Jordaan
Utrecht University

  1. Conditional Cash Transfers, Civil Conflict and Insurgent Influence: Experimental Evidence from the Philippines By Benjamin Crost; Joseph H. Felter; Patrick B. Johnston
  2. Remittances and Household Expenditure Behaviour in Senegal By Randazzo, Teresa; Piracha, Matloob
  3. Income Inequality, Trade and Financial Openness By G. C. Lim; Paul D. McNelis
  4. Income Inequality and Health: Evidence from Developed and Developing Countries By Herzer, Dierk; Nunnenkamo, Peter
  5. The economic spillovers from resource extraction: a partial resource blessing at the subnational level? By James CUST; Ridwan D. RUSLI
  6. A Refinement of the Relationship between Economic Growth and Income Inequality in Developing Countries By Fawaz, Fadi; Rahnamamoghadam, Masha; Valcarcel, Victor

  1. By: Benjamin Crost (University of Colorado Denver); Joseph H. Felter (Stanford University); Patrick B. Johnston (RAND Corporation)
    Abstract: Conditional cash transfer (CCT) programs are an increasingly popular tool for reducing poverty in conflict-affected areas. Despite their growing popularity, there is limited evidence on how CCT programs affect conflict and theoretical predictions are ambiguous. We estimate the effect of conditional cash transfers on civil conflict in the Philippines by exploiting an experiment that randomly assigned eligibility for a CCT program at the village level. We find that cash transfers caused a substantial decrease in conflict-related incidents in treatment villages relative to control villages. Using unique data on local insurgent influence, we also find that the program significantly reduced insurgent influence in treated villages.
    Date: 2014–04
  2. By: Randazzo, Teresa (University of Kent); Piracha, Matloob (University of Kent)
    Abstract: This paper analyses the impact of remittances on household expenditure behaviour in Senegal. We use propensity score matching and OLS methods to assess the average impact of remittances on several household budget shares. Our results show a productive use of international remittances in Senegal. However, the impact of remittances disappears when the marginal spending behaviour is considered, i.e., households do not show a different consumption pattern with respect to their remittance status. Therefore, in the decision on how to allocate expenditure, remittances are treated just as any other source of income.
    Keywords: remittances, household expenditure, Senegal
    JEL: F24 O12 O15
    Date: 2014–04
  3. By: G. C. Lim (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne); Paul D. McNelis (Department of Finance, Graduate School of Business Administration, Fordham University)
    Abstract: This paper examines the relationships between the Gini coefficient, trade-openness, foreign aid and foreign direct investment flows. Panel data estimates show that trade openness can be effective for changing income inequality, but its effectiveness depends on the stage of development. Simulation results show that the Gini and openness can be negatively or positively correlated — it depends on the capital intensity and on the degree of openness. Overall, the results suggest that trade and financial openness can be effective policies for reducing inequality in low income countries, if they significantly increase the marginal productivity of labour through capital intensive methods of production.
    Keywords: Gini coefficient, openness
    JEL: E10 F41
    Date: 2014–03
  4. By: Herzer, Dierk (Helmut Schmidt University, Hamburg); Nunnenkamo, Peter (Kieler Institut für Weltwirtschaft)
    Abstract: We assess the effect of income inequality on life expectancy by performing separate estimations for developed and developing countries. Our empirical analysis challenges the widely held view that inequality matters more for health in richer countries than for health in poorer countries. Employing panel cointegration and conventional panel regressions, we find that income inequality increases life expectancy in developed countries. By contrast, the effect on life expectancy is significantly negative in developing countries. While the quantitative effects are small, the striking contrast between the two country groups proves to be robust to modifications in measurement, specification and methodological choices.
    Keywords: health; inequality; panel cointegration
    JEL: C23 I14
    Date: 2014–04–17
  5. By: James CUST (University of Oxford & University of Luxembourg); Ridwan D. RUSLI (Division of Economics, School of Humanities and Social Sciences, Nanyang Technological University, Singapore, 637332.)
    Abstract: We examine the economic consequences of resource extraction and associated revenue windfalls, measured at the subnational level. Our analysis focuses on variations across Indonesian districts and municipalities to estimate the spillover effects on economic activity, measured in terms of local GDP. Two important channels are identified: direct spillover eects from extraction activity, and the fiscal spillovers from local government spending associated with revenue windfalls from extraction activity. We use Indonesia's fiscal sharing rules to quantify and disentangle these two channels by application of an instrumental variable. We show that the main economic gains accrue via transfers to, and spending by, local government. While direct project-level investments and production contribute to measures of overall GDP, these are found to be largely due driven by the value of oil extraction, with only limited evidence for a direct impact on non-oil GDP. In contrast to other works, it appears that regionally decentralized government spending can be growth-enhancing over the decade surveyed. We argue that resource endowments do contribute to increased economic activity at the subnational level in Indonesia, but may lower the overall growth eect of spending.
    Date: 2014–02
  6. By: Fawaz, Fadi; Rahnamamoghadam, Masha; Valcarcel, Victor
    Abstract: There is mixed evidence in the literature of a clear relationship between income inequality and economic growth. Most of that work has focused almost exclusively on developed economies. In what we believe to be a first effort, our emphasis is solely on developing economics, which we classify as high-income and low-income developing countries (HIDC and LIDC). We make such distinction on theoretical and empirical grounds. Empirically, the World Bank has classified developing economies in this manner since 1978. The data in our sample is also supportive of such classifications. We provide a theoretical scaffolding that uses asymmetric credit constraints as a premise for separating developing economies in such a way. We find strong evidence of a negative relationship between income inequality and economic growth in LIDC to be in stark contrast with a positive inequality-growth relationship for HIDC. Both correlations are statistically significant across multiple econometric specifications. These results are robust to degree of persistence in the variables of interest as well as a measure threshold of income that is estimated endogenously for our sample.
    Keywords: Income inequality, economic growth, Gini coefficient, credit constraints, collateral
    JEL: O1 O10 O40
    Date: 2014–04–08

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