nep-dev New Economics Papers
on Development
Issue of 2014‒05‒24
fourteen papers chosen by
Jacob A. Jordaan
Utrecht University

  1. Beyond the income effect : impacts of conditional cash transfer programs on private investments in human capital By Cruz, Marcio; Ziegelhofer, Zacharias
  2. The effect of aid on growth : evidence from a quasi-experiment By Galiani, Sebastian; Knack, Stephen; Xu, Lixin Colin; Zou, Ben
  3. The Effect of Elections on Economic Growth: Results from a Natural Experiment in Indonesia By Moricz, Sara; Sjöholm, Fredrik
  4. Estimating the impact of microcredit on those who take it up: Evidence from a randomized experiment in Morocco By Bruno CREPON; Florencia DEVOTO; Esther DUFLO; William PARIENTE
  5. Growth, Inequality, and Poverty in Sub-Saharan Africa: Recent Progress in a Global Context By Augustin Kwasi Fosu
  6. Does the heterogeneity of project implementers affect the program participation of beneficiaries? : Evidence from rural Cambodia By Ayako Wakano; Hiroyuki Yamada; Daichi Shimamoto
  7. The Power of the Family: Kinship and Intra-Houselhold Decision-Making in Rural Burundi By Rama Lionel Ngenzebuke; Bram De Rock; Philip Verwimp
  8. The effects of remittances on poverty and inequality: Evidence from rural southern Morocco By Miftah, Amal; Bouoiyour, Jamal
  9. Poverty-Food Security Nexus: Evidences from a Survey of Urban Slum Dwellers in Kolkata By Chandana Maitra; Prof. D.S Prasada Rao
  10. Employment Creation, Poverty and the Structure of the Job Market in Nigeria By Francis Teal
  11. The Future in Mind: Aspirations and Forward-Looking Behaviour in Rural Ethiopia By Tanguy Bernard; Stefan Dercon; Kate Orkin; Alemayehu Seyoum Taffesse
  12. Are Democratizing Countries ‘Rewarded’ with Higher Levels of Foreign Aid? By Szent-Iványi, Balázs
  13. More Schooling and More Learning?: Effects of a Three-Year Conditional Cash Transfer Program in Nicaragua after 10 Years By Tania Barham; Karen Macours; John A. Maluccio
  14. The Unemployment Subsidy Program in Colombia: An Assessment By Jorge Andrés Tamayo; Jairo Núñez; Carlos Medina

  1. By: Cruz, Marcio; Ziegelhofer, Zacharias
    Abstract: In the past decade, conditional cash transfer (CCT) programs have become an important component of social policy in developing countries. While the impacts of these programs have been well researched with respect to their effectiveness to achieve intended outcomes, less is known about their impact on private expenditure decisions. This aspect has great policy relevance since changes in private household expenditures can either support or counteract the aim of the programs. This essay investigates the impact of a CCT program on private household expenditure decisions in nutrition, health and education which are seen as principal contributors to child human capital. First, household expenditure behavior under a CCT program is discussed based on Heckman's model on the technology of skill formation as a conceptual framework. The paper shows how intra-household preferences and perceptions on the substitutability or complementarity of investments can impact household resource allocation decisions. Subsequently, the theoretical implications are tested in the context of the Brazilian CCT program Bolsa Família, using the Brazilian household expenditure survey. Evidence is found that households increase their private expenditure in food and education disproportionally to the amount of cash transfer, that is, more than would be expected when considering the Engel curves of the expenditures under question.
    Keywords: Conditional Cash Transfers,Government Policies,Social Protections&Assistance,Children and Youth,Gender and Social Policy
    Date: 2014–05–01
  2. By: Galiani, Sebastian; Knack, Stephen; Xu, Lixin Colin; Zou, Ben
    Abstract: The literature on aid and growth has not found a convincing instrumental variable to identify the causal effects of aid. This paper exploits an instrumental variable based on the fact that since 1987, eligibility for aid from the International Development Association (IDA) has been based partly on whether or not a country is below a certain threshold of per capita income. The paper finds evidence that other donors tend to reinforce rather than compensate for reductions in IDA aid following threshold crossings. Overall, aid as a share of gross national income (GNI) drops about 59 percent on average after countries cross the threshold. Focusing on the 35 countries that have crossed the income threshold from below between 1987 and 2010, a positive, statistically significant, and economically sizable effect of aid on growth is found. A one percentage point increase in the aid to GNI ratio from the sample mean raises annual real per capita growth in gross domestic product by approximately 0.35 percentage points. The analysis shows that the main channel through which aid promotes growth is by increasing physical investment.
    Keywords: Achieving Shared Growth,Economic Theory&Research,Development Economics&Aid Effectiveness,Inequality,Country Strategy&Performance
    Date: 2014–05–01
  3. By: Moricz, Sara (Department of Economics, Lund University); Sjöholm, Fredrik (Department of Economics, Lund University)
    Abstract: Does democracy increase economic growth? Previous literature tends to find a positive effect but does also suffer from possible endogeneity problems: democratization is typically not random and might be affected by factors that also have an impact on economic growth. This paper narrows down the question to empirically estimating the causal effect of local elections on local economic growth in Indonesia by using a quasi-experimental research method. The first direct elections of district leaders in Indonesia were performed in a staggered manner, and decided such that the year of election is exogenous. Thus, growth in districts that have had their first elections of district heads can be compared with growth in districts that have not had a direct election, which more specifically is performed by using a difference-in-difference approach. Our estimations show no general effect of local elections on economic growth. The result is robust to various robustness tests and is supported by data that show small effects of elections on governance.
    Keywords: democracy; elections; growth; Indonesia; natural experiment
    JEL: H11 O10 O43
    Date: 2014–05–07
  4. By: Bruno CREPON (ENSAE and J-PAL); Florencia DEVOTO (Paris School of Economics); Esther DUFLO (MIT Department of Economics and J-PAL); William PARIENTE (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and J-PAL)
    Abstract: This paper reports the results from a randomized evaluation of a microcredit program introduced in rural areas of Morocco starting in 2006 by Al Amana, the country’s largest microfinance institution. Al Amana was the only MFI operating in the study areas during the evaluation period. Thirteen percent of the households in treatment villages took a loan, and none in control villages. Among households identified as more likely to borrow based on ex-ante characteristics, microcredit access led to a significant rise in investment in assets used for self-employment activities (mainly animal husbandry and agriculture), and an increase in profit. But this increase in profit was offset by a reduction in income from casual labor, so overall there was no gain in measured income or consumption. We find suggestive evidence that these results are mainly driven by effects on borrowers, rather than by externalities on households that do not borrow. This implies that among those who chose to borrow, microcredit had large, albeit very heterogeneous, impacts on assets and profits from self-employment activities, but small impact on consumption: we can reject an increase in consumption of more than 10% among borrowers, two years after initial rollout.
    Date: 2014–05–14
  5. By: Augustin Kwasi Fosu
    Abstract: The present study employs recent World Bank data to shed light, in a global context, on the transformation of income and inequality changes to poverty reduction for a large number of countries in sub-Saharan Africa (SSA). The study begins by shedding light on SSA’s progress on poverty. Next, it presents data on how various African countries have fared on poverty incidence relative to other countries, with special emphasis on the more recent period since the mid-1990s when SSA has generally experienced growth resurgence. The paper, then, decomposes performance on poverty in to income and inequality changes for a sample of SSA countries with the requisite data. The findings are that the recent progress on poverty has been considerable, in contrast to the earlier period. Compared with the progress in a global sample of countries, however, progress has been mixed; although African countries lag behind the BRIC group of countries generally, many of them have actually outperformed India. While income growth is, furthermore, found to be the main engine for poverty reduction in SSA generally, the role of inequality is crucial in certain countries. Moreover, viewed in a global context, the low levels of in come have retarded the effectiveness of income and inequality improvements in reducing poverty in many African countries.
    Date: 2014
  6. By: Ayako Wakano (Graduate School of Economics, Osaka University, JAPAN); Hiroyuki Yamada (Osaka School of International Public Policy, Osaka University, JAPAN); Daichi Shimamoto (School of Political Science and Economics, Waseda University, JAPAN)
    Abstract: Using the dataset collected for assessment of a post-harvest technology project in rural Cambodia, we focused on the heterogeneous social preferences of project implementers, often overlooked in the literature of Randomized Controlled Trials (RCT). Our study focuses on the gimplementer effecth on program participation for the treated farmers. We show the possibility that heterogeneous program participation of ordinary farmers across the treated villages could be induced due to heterogeneity in the characteristics of project staff. In particular, we show the altruism of project staff, measured by the dictator game, consistently increases participation and the number of participations in the training sessions of beneficiaries. This type of heterogeneity in project staffsf preferences across treatment sites might yield noises in mean effects estimated using RCT methods conducted at a certain cluster level, which undermines the external validity of the estimated results. While RCT methods are very powerful tools for many program and policy evaluations, we cannot emphasize too much the importance of the way how an actual project is implemented.
    Keywords: social preference, program evaluation, heterogeneity in treatment effects
    JEL: O22 C93 D03
    Date: 2014–05
  7. By: Rama Lionel Ngenzebuke; Bram De Rock; Philip Verwimp
    Abstract: We investigate and bring to light the role of kinship networks as a determinantof female’s bargaining power through her decision-making authorityin rural Burundi. We distinguish, on one hand, between immediate andextended family and between extended family members living within andoutside the village on the other hand. We bring to the fore a number of keyfindings. First, kinship network characteristics are strong determinants ofwithin household decision-making power. On one hand, female whose nextof kins are at least as rich as her husband’s counterparts enjoy a greater sayover children and asset-related decision-making. On the other hand, femalewith bigger and richer extended family also enjoy a greater say over childrenand asset-related decision-making. Second, the effect of kinship networkcharacteristics depends on the nature of family ties: the effect of thefemale’s immediate family is significantly and consistently greater than theeffect of her extended family. Third, kinship network characteristics matterfor female’s bargaining power even more importantly than individual andhousehold-level characteristics in rural Burundi. Last but not the least, wefind out that male’s education increases female’s say more than wife’s educationitself, particularly over asset-related decision-making.
    Keywords: female decision-making; children; assets; kindship; rural Burundi
    JEL: D19 D63 J12 J13 J16
    Date: 2014–05
  8. By: Miftah, Amal; Bouoiyour, Jamal
    Abstract: In this paper, we examine the effect of migrants’ remittances on poverty and inequality. The survey data were collected in Morocco, in the rural areas of the region Souss-Massa-Draa. By applying an original approach, we estimate the counterfactual income of remittance-recipient households corresponding to a hypothetical value of its average income calculated for a scenario without remittances; this is then compared with its current income. We find that the poverty rate and the vulnerability of non-poor households are significantly dropped due to remittances. Our findings also suggest that remittance inflows have increased income inequality compared to the no-migration counterfactual situation.
    Keywords: Remittances; Poverty; Income distribution; Morocco;
    JEL: D31 F24 I32 O15 O55
    Date: 2014–05
  9. By: Chandana Maitra (School of Population Health, The University of Queensland); Prof. D.S Prasada Rao (School of Economics, The University of Queensland)
    Abstract: In recent years, the process of economic growth in the Indian economy has been characterized by a peculiar divergence between the indicators of poverty and those of food security – the paradox of rising undernutrition and declining poverty over time. Given above, an important question that arises is, whether there is something inherent in poverty that drives food insecurity or whether the two phenomena are independent. The answer to this question has important policy implication because it tells us, in targeting the poor anti-poverty policies might lose sight of the food insecure households, nested in apparently non-poor households. Against this backdrop, the present paper attempts to explore the relationship between poverty and food security in terms of an experience based measure of food security, using an urban cross section sample. The experiential measure is based on a food security scale which was constructed by adapting the U.S. Household Food Security Survey Module (HFSSM) in a setting of 500 low income urban slum households in Kolkata, in 2010-11. Based on the scale, households were classified as highly food secure, marginally food secure and food insecure. The relationship between poverty and food security was then examined by applying a simultaneous ordered probit model, recognizing the possible endogeneity in the relationship. Results indicate that a poor household is likely to be more food insecure, given certain socioeconomic characteristics, with the policy implication that poverty alleviation measures would be effective in eliminating food insecurity. Apart from poverty, the other factors which significantly affect household food security status include household size and composition, gender and education level of the household head, indicating need for multi-pronged intervention in eliminating food insecurity.
    Date: 2014–04–03
  10. By: Francis Teal
    Abstract: Job creation is a central part of the policy of almost all African countries. The problems are particularly acute in Nigeria where over the period of the early 2000s there was a substantial decline in the number of private wage jobs. While policy discussion focuses on the extent of unemployment the unemployment rate, as measured in labour force surveys, is low in Nigeria. This is a common finding across a range of sub-Saharan African countries. To understand the nature of the employment problem it is argued in this paper that jobs need to be linked to the incomes those jobs generate. While wage jobs do, on average, produce more income than those in self-employment a critical issue is the extent of the distribution of incomes within occupational categories and the overlaps across these sectors. It is the very low incomes we observe in Nigeria at the bottom of the distribution, for both wage and the self-employed, that creates high exit rates from the labour market – the jobs simply pay too little. In this paper the evidence is reviewed as to how far the more rapid growth of recent years has translated into poverty reduction and how these poverty measures link to job creation. There is evidence that the headcount measure of poverty has fallen and has been associated with a rapid rise in rural employment over the period from 1999 to 2006. It is this sector which has seen the largest increases in income. This was not due to investment in human capital, the return for which has fallen over the period, but to a general increase in the returns to the labour and land owned by the poor.
    Date: 2014
  11. By: Tanguy Bernard; Stefan Dercon; Kate Orkin; Alemayehu Seyoum Taffesse
    Abstract: Poor people often do not make investments, even when returns are high. One possible explanation is that they have low aspirations and form mental models which ignore some options for investment. This paper reports on findings of an innovative experiment to test this in rural Ethiopia. Firstly, individuals were randomly invited to watch documentaries about people from similar communities who had succeeded in agriculture or small business, without help from government or NGOs. A placebo group watched an Ethiopian entertainment programme and a control group were simply surveyed. Secondly, the number of invitees was varied by village to assess the importance of peer effects in the formation of aspirations. Six months after the screening of the documentaries, aspirations had improved among treated individuals but did not change in the placebo or control groups. Effects were larger for those with higher aspirations at baseline. We also find evidence of treatment effects on savings and credit behaviour, children’s school enrolment and investments in children’s schooling, suggesting that changes in aspirations can translate into changes in forward-looking behaviour. There are also positive treatment effects on a set of related measures from psychology and sociology, including a measure of locus of control, which theory predicts should behave in similar ways to aspirations. We also find that peer effects result in further impact on educational spending and induce more work and less leisure. That a one-hour documentary shown six months earlier induces such actual behavioural change offers challenging and promising areas for further research and the design of poverty-related interventions.
    Keywords: aspirations, expectations, future-oriented behaviour, media interventions
    JEL: D03 I31
    Date: 2014
  12. By: Szent-Iványi, Balázs
    Abstract: The paper examines how flows of foreign aid have reacted to events of democratization in developing countries. Using a panel dataset of 136 aid receiving countries between 1980 and 2009, aid allocation regressions reveal that donors in general have tended to react to visible, major democratic transitions by increasing aid to the partner country, but no significant increases can be identified in case of countries introducing smaller democratic reforms. The increases in aid flows are not sustained over time, implying that donors do not provide long term support to nascent democracies. Also, democratizations in Sub-Saharan Africa do not seem to have been rewarded with higher levels of aid.
    Keywords: foreign aid, aid allocation, democratization
    JEL: F35 F59
    Date: 2014–05
  13. By: Tania Barham; Karen Macours; John A. Maluccio
    Abstract: Conditional Cash Transfer (CCT) programs have become the anti-poverty program of choice in many developing countries. Numerous evaluations, often based on rigorous experimental designs, leave little doubt that such programs can increase enrollment and grades attained--in the short term. But evidence is notably lacking on whether these short-term gains translate into longer-term educational benefits needed to fully justify these programs. This paper uses the randomized phase-in of the RPS CCT program in Nicaragua to estimate the long-term effects on educational attainment and learning for boys, measured 10 years after the start of the program. We focus on a cohort of boys aged 9¿12 years at the start of the program in 2000 who, due to the program¿s eligibility criteria and prior school dropout patterns, were likely to have benefitted more in the group of localities that were randomly selected to receive the program first. We find that the short-term program effect of a half grade increase in schooling for boys was sustained after the end of the program and into early adulthood. In addition, results indicate significant and substantial gains in both math and language achievement scores, an approximately one-quarter standard deviation increase in learning outcomes for the now young men. Hence in Nicaragua, schooling and achievement gains coincided, implying important long term returns to CCT programs.
    Keywords: Social Policy & Protection, Education, Poverty
    Date: 2013–07
  14. By: Jorge Andrés Tamayo; Jairo Núñez; Carlos Medina
    Abstract: This paper assesses the effects of the Colombian Unemployment Subsidy (US), which includes benefits as well as training for some recipients. Using regression discontinuity and matching differences-in-differences estimators, the study finds that participation in the labor market, earnings of beneficiaries, and household income do not increase, and for some populations decrease during the 18 months after leaving the US program. Enrollment in formal health insurance falls. Effects on male heads of household include reductions in their earnings, decreases in their labor participation, and increases in their unemployment rates. The study also finds a small though statistically significant positive effect on beneficiaries¿ school attendance, but none on their children¿s weight or height at birth. The results are sensitive to the type of training that beneficiaries receive. Overall, the program serves more as a mechanism for smoothing consumption and providing social assistance than for increasing labor market efficiency.
    Keywords: Social Security, Fiscal Policy, Workforce & Employment, Unemployment, Social assistance, Labor markets
    Date: 2013–05

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