nep-dev New Economics Papers
on Development
Issue of 2015‒01‒03
twelve papers chosen by
Jacob A. Jordaan
Universitiet Utrecht

  1. Saving for a (not so) Rainy Day: A Randomized Evaluation of Savings Groups in Mali By Beaman, Lori; Karlan, Dean S.; Thuysbaert, Bram
  2. Estimating the impact of microcredit on those who take it up: Evidence from a randomized experiment in Morocco By Crépon, Bruno; Devoto, Florencia; Duflo, Esther; Parienté, William
  3. Seasonal Credit Constraints and Agricultural Labor Supply: Evidence from Zambia By Fink, Günther; Jack, Kelsey; Masiye, Felix
  4. (Measured) Profit is Not Welfare: Evidence from an Experiment on Bundling Microcredit and Insurance By Banerjee, Abhijit; Duflo, Esther; Hornbeck, Richard
  5. Agricultural productivity, hired labor, wages and poverty : evidence from Bangladesh By Emran, Shahe; Shilpi, Forhad
  6. How does contract design affect the uptake of microcredit among the ultra-poor? : experimental evidence from the river islands of Northern Bangladesh By Takahashi, Kazushi; Shonchoy, Abu S.; Ito, Seiro; Kurosaki, Takashi
  7. Measures, spatial profile and determinants of dietary diversity: Evidence from India By Mousumi Das
  8. Vitamin A Deficiency and Training to Farmers: Evidence from a Field Experiment in Mozambique By Rute Caeiro; Pedro C. Vicente
  9. Tools, Fertilizer or Cash? Exchange Asymmetries in Productive Assets By Holden, Stein; Bezu, Sosina
  10. Self-Selection into Credit Markets: Evidence from Agriculture in Mali By Beaman, Lori; Karlan, Dean S.; Thuysbaert, Bram; Udry, Christopher
  11. Adaptation to climate variability and change in Uganda: Are there gender differences across households? By Guloba, Madina
  12. Antipoverty Transfers and Inclusive Growth in Brazil By Armando Barrientos; Dario Debowicz; Ingrid Woolard

  1. By: Beaman, Lori; Karlan, Dean S.; Thuysbaert, Bram
    Abstract: High transaction and contracting costs are often thought to create credit and savings market failures in developing countries. The microfinance movement grew largely out of business process innovations and subsidies that reduced these costs. We examine an alternative approach, one that infuses no external capital and introduces no change to formal contracts: an improved “technology” for managing informal, collaborative village-based savings groups. Such groups allow, in theory, for more efficient and lower-cost loans and informal savings, and in practice have been scaled up by international non-profit organizations to millions of members. Individuals save together and then lend the accumulated funds back out to themselves. In a randomized evaluation in Mali, we find improvements in food security, consumption smoothing, and buffer stock savings. Although we do find suggestive evidence of higher agricultural output, we do not find overall higher income or expenditure. We also do not find downstream impacts on health, education, social capital, and female decision-making power. Could this have happened before, without any external intervention? Yes. That is what makes the result striking, that indeed there were no resources provided nor legal institutional changes, yet the NGO-guided, improved informal processes led to important changes for households.
    Keywords: micro-savings; savings groups impact
    JEL: D12 D91 O12
    Date: 2014–10
  2. By: Crépon, Bruno; Devoto, Florencia; Duflo, Esther; Parienté, William
    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.
    Keywords: Microcredit; Microfinance
    JEL: D21 G21 O16
    Date: 2014–05
  3. By: Fink, Günther (Harvard School of Public Health); Jack, Kelsey (Tufts University); Masiye, Felix (University of Zambia)
    Abstract: Small-scale farming remains the primary source of income for a majority of the population in developing countries. While most farmers primarily work on their own fields, off-farm labor is common among small-scale farmers. A growing literature suggests that off-farm labor is not the result of optimal labor allocation, but is instead driven by households' inability to cover short-term consumption needs with savings or credit. We conduct a field experiment in rural Zambia to investigate the relationship between credit availability and rural labor supply. We find that providing households with access to credit during the growing season substantially alters the allocation of household labor, with households in villages randomly selected for a loan program selling on average 25 percent less off-farm labor. We also find that increased credit availability is associated with higher consumption and increases in local farming wages. Our results suggest that a substantial fraction of rural labor supply is driven by short-term constraints, and that access to credit markets may improve the efficiency of labor allocation overall.
    Keywords: agriculture, credit, seasonality, income smoothing
    JEL: J43 O13 O16
    Date: 2014–11
  4. By: Banerjee, Abhijit; Duflo, Esther; Hornbeck, Richard
    Abstract: We investigate the puzzle of microfinance: that loans generate large measured returns for businesses, yet loan take-up is low and the businesses often close. We analyze a randomized trial that bundled microfinance loans with a cheap health insurance policy. Requiring clients to purchase insurance substantially lowered loan renewal. The insurance was useless, due to administrative failures, but reduced loan renewal negatively impacted clients’ businesses. Clients' decision to incur substantial business losses, rather than pay modest insurance premiums, implies the substantial financial gains from microfinance loans are dissipated by unmeasured costs and provide little net value to microfinance clients.
    Keywords: development; health insurance; microcredit; microenterprises; microfinance; revealed preference; welfare
    JEL: O12 O16 O19
    Date: 2014–09
  5. By: Emran, Shahe; Shilpi, Forhad
    Abstract: This paper provides evidence on the effects of agricultural productivity on wage rates, labor supply to market oriented activities, and labor allocation between own farming and wage labor in agriculture. To guide the empirical work, this paper develops a general equilibrium model that underscores the role of reallocation of family labor engaged in the production of non-marketed services at home (`home production'). The model predicts positive effects of a favorable agricultural productivity shock on wages and income, but the effect on hired labor is ambiguous; it depends on the strength of reallocation of labor from home to market production by labor surplus and deficit households. Taking rainfall variations as a measure of shock to agricultural productivity, and using subdistrict level panel data from Bangladesh, this paper finds significant positive effects of a favorable rainfall shock on agricultural wages, labor supply to market work, and per capita household expenditure. The share of hired labor in contrast declines substantially in response to a favorable productivity shock, which is consistent with a case where labor-deficit households respond more than the labor-surplus ones in reallocating labor from home production.
    Keywords: Labor Policies,Labor Markets,Economic Theory&Research,Markets and Market Access,Rural Poverty Reduction
    Date: 2014–10–01
  6. By: Takahashi, Kazushi; Shonchoy, Abu S.; Ito, Seiro; Kurosaki, Takashi
    Abstract: Despite the professed claims of microcredit alleviating poverty, little is known about what kind of credit contract is suitable for extremely poor households, also called the ultra-poor. To fill this knowledge gap, we initiated a field experiment in the river islands of northern Bangladesh, where a substantial portion of dwellers could be categorized as ultra-poor due to cyclic floods. We randomly offered four types of loans to such dwellers: regular small cash loans with one-year maturity, large cash loans with three-year maturity both with and without a one-year grace period, and in-kind livestock loans with three-year maturity and a one-year grace period. We compared uptake rates as well as the determinants of uptake and found that the uptake rate is the lowest for the regular contract, followed by the in-kind contract. Contrary to prior belief, we also found that the microcredit demand by the ultra-poor is not necessarily small, and in particular the ultra-poor are significantly more likely to join a microcredit program than the moderately poor if a grace period with longer maturity is attached to a large amount of credit, irrespective of whether the credit is provided in cash or in kind. This paper provides evidence that a typical microcredit contract with one-year maturity and without a grace period is not attractive to the ultra-poor. Microfinance institutions may need to design better credit contracts to address the poor's needs.
    Keywords: Bangladesh, Microfinance, Poverty, Microcredit, Uptake, Ultra-poor, Program design
    JEL: D12 G21 O12 O16
    Date: 2014–11
  7. By: Mousumi Das (Indira Gandhi Institute of Development Research)
    Abstract: Food security policies in developing countries generally focus on calorie intake, which is not sufficient to tackle the triple burden of malnutrition: undernourishment, micronutrient deficiencies and over-nutrition. Consumption of a diverse diet is important to lessen the burden and is constrained by different factors. This paper using nationally representative dataset from India, analyzes the determinants of dietary diversity, which is measured using the Entropy Index. Heterogeneous dietary diversity profile across adjoining regions highlights the persistence of uneven development in terms of consumption and health indicators. Quantile regression analysis is used to identify the impact of determinants at different parts of the intake distribution. We find that level of consumption expenditure, quality adjusted prices of food items, educational attainment and information dissemination are important factors that affect the household's consumption of a diverse diet. As one moves away from towns dietary diversity improves. Large size landholders need not necessarily consume a diverse diet as expected. Suitable policy interventions are identified.
    Keywords: Dietary diversity, Quality-adjusted prices, Quantile regression, Food policy, India
    JEL: C21 D12 O10 Q18
    Date: 2014–11
  8. By: Rute Caeiro; Pedro C. Vicente
    Abstract: Vitamin A deficiency is a widespread public health problem in Sub-Saharan Africa. This paper analyzes the impact of a food-based intervention to fight vitamin A deficiency using orange-fleshed sweet potato (OFSP). We conducted a randomized evaluation of OFSP-related training to female farmers in Mozambique, in which the treatment group was taught basic concepts of nutrition, and OFSP-planting and cooking skills. We found encouraging evidence of changes in behavior and attitudes towards OFSP consumption and planting, and considerable increases in nutrition-related knowledge, as well as knowledge on cooking and planting OFSP. JEL codes: O12, O13, O33, I15
    Keywords: Vitamin A, Orange-fleshed Sweet Potato, Mozambique, Randomized Evaluation
    Date: 2013
  9. By: Holden, Stein (Centre for Land Tenure Studies, Norwegian University of Life Sciences); Bezu, Sosina (Centre for Land Tenure Studies, Norwegian University of Life Sciences)
    Abstract: We used a field experiment to investigate exchange asymmetries in productive assets among poor rural respondents in Ethiopia. Farmers were randomly allocated two types of productive assets or cash, with a choice to keep the productive asset (cash) or exchange it for cash (productive asset). To introduce productive asset variation, a durable asset (farm tool) and a short-term input (fertilizer) were randomly allocated and combined with a random amount of cash. Loss aversion was proxied with a separate experiment and was used to assess the importance of endowment effect theory to explain exchange asymmetries. A greater exchange asymmetry was found for the more popular tool than for fertilizer. Loss aversion could explain a small but significant part of the exchange asymmetry in tools, but experience did not reduce the exchange asymmetry. Compared to the female respondents, the male respondents exhibited greater exchange asymmetries and more non-linear price responses with declining elasticities as prices increased. Key words: exchange asymmetry, endowment effect, loss aversion, factor markets, productive assets, input demand elasticities, field experiment. JEL codes:
    Keywords: exchange asymmetry; endowment effect; loss aversion; factor markets; productive assets; input demand elasticities; field experiment.
    JEL: D03 D51 O13 Q12
    Date: 2014–12–03
  10. By: Beaman, Lori; Karlan, Dean S.; Thuysbaert, Bram; Udry, Christopher
    Abstract: We partnered with a micro-lender in Mali to randomize credit offers at the village level. Then, in no-loan control villages, we gave cash grants to randomly selected households. These grants led to higher agricultural investments and profits, thus showing that liquidity constraints bind with respect to agricultural investment. In loan-villages, we gave grants to a random subset of farmers who (endogenously) did not borrow. These farmers have lower – in fact zero – marginal returns to the grants. Thus we find important heterogeneity in returns to investment and strong evidence that farmers with higher marginal returns to investment self-select into lending programs.
    Keywords: agriculture; credit markets; returns to capital
    JEL: D21 D92 O12 O16 Q12 Q14
    Date: 2014–08
  11. By: Guloba, Madina
    Abstract: This paper hypothesizes that adaptation to climate change is influenced by the gender of the decision maker of the household. Using a two-wave household panel survey dataset, choice of adaptation strategies employed by female- and male-headed households a
    Keywords: adaptation, climate change, covariate shocks, gender, multinomial logit
    Date: 2014
  12. By: Armando Barrientos; Dario Debowicz; Ingrid Woolard
    Abstract: The paper examines the growth of antipoverty transfers in Brazil and their role in securing inclusive growth. Since the turn of the century, Brazil has managed to combine improvement in its growth performance, by the standards of recent decades, with substantial, and arguably unprecedented, reductions in poverty and inequality. There is considerable interest in the mix of economic and social policies responsible for inclusive growth in Brazil, including from countries in Africa. Since the mid-1990s, the emergence of large scale programmes providing direct income transfers to household facing extreme poverty and vulnerability have provided a focus for poverty reduction strategies in Brazil. They include non-contributory pensions, like Previdência Social Rural and the Benefício de Prestação Continuada, and human development conditional transfer programmes like Bolsa Escola and Bolsa Família. Antipoverty transfers are credited with a sharp reduction in extreme poverty and with having contributed to a reduction in inequality and social exclusion. Arguably, they have also strengthened political support for pro-poor policies. This paper provides a comprehensive assessment of the role of antipoverty transfers in securing inclusive growth. It examines their design, implementation, outcomes, and sustainability. It also sketches their potential relevance to African countries. There a growing literature covering recent developments in social assistance in Brazil. The paper contributes to the literature it in several respects. First, the huge interest in conditional cash transfers globally has concentrated attention on Bolsa Família, but the other components of social assistance are important too and are covered in the paper. Second, very little attention has been paid outside Brazil to the rich discussion and debate around the conceptual and normative frameworks supporting the development of social assistance, and social policy more broadly. The paper addresses this gap. Third, research into the effectiveness of social assistance in Brazil has produced a wealth of information on the aggregate impact of each of the component programmes. This paper assesses this literature while paying special attention to the distribution of the outcomes across municipalities in Brazil and the role socio-economic and capacity condition. Fourth, the paper will pay close attention to the sustainability of social assistance in Brazil, especially the budgetary and political sustainability issues. Fifth, the paper discusses the relevance of Brazil’s antipoverty transfers to African countries, including South-South international cooperation.
    Date: 2014

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