nep-dev New Economics Papers
on Development
Issue of 2016‒12‒11
twelve papers chosen by
Jacob A. Jordaan
Universiteit Utrecht

  1. Can Cash Transfers Help Households Escape an Inter-Generational Poverty Trap? By Maria Caridad Araujo; Mariano Bosch; Norbert Schady
  2. Drivers of Inequality in South Africa By Janina Hundenborn; Ingrid Woolard; Murray Leibbrandt
  3. Free Primary Education, Schooling, and Fertility: Evidence from Ethiopia By Chicoine, Luke E.
  4. Small-Scale Farming and Food Security: The Enabling Role of Cash Transfers in South Africa's Former Homelands By von Fintel, Dieter; Pienaar, Louw
  5. Revisiting the Relationship between Financial Development and Child Labor in Developing Countries: Do Inequality and Institutions Matter? By Aïssata Coulibaly
  6. Access to Financial Services and Working Poverty in Developing Countries By Aïssata Coulibaly; Urbain Thierry Yogo
  7. Intended vs. unintended consequences of migration restriction policies: evidence from a natural experiment in Indonesia By Makovec, Mattia
  8. Exposing Corruption: Can Electoral Competition Discipline Politicians? By Afridi, Farzana; Dhillon, Amrita; Solan, Eilon
  9. Is the Allocation of Time Gender Sensitive to Food Price Changes? An Investigation of Hours of Work in Uganda By Campus, Daniela; Giannelli, Gianna Claudia
  10. The 'Informality Gap': Can Education Help Minorities Escape Informal Employment? Evidence from Peru By Delgado Montes, Juan Gabriel; Corrales, Javier; Singh, Prakarsh
  11. Does democracy reduce the HIV epidemic? Evidence from Kenya By Antoine Marsaudon; Josselin Thuilliez
  12. Popularity shocks and political selection : the effects of anti-corruption audits on candidates' quality By Framcisco Cavalcanti; Gianmarco Daniele; Sergio Galletta

  1. By: Maria Caridad Araujo; Mariano Bosch (Inter American Development Bank); Norbert Schady (Inter-American Development Bank)
    Abstract: Many poor households in developing countries are liquidity-constrained. As a result, they may under-invest in the human capital of their children. We provide new evidence on the long-term (10-year) effects of cash transfers using data from Ecuador. Our analysis is based on two separate sources of data and two identification strategies. First, we extend the results from an experiment that randomly assigned children under the age of 6 years to “early” or “late” treatment groups. Although the early treatment group received twice as much in total transfers, we find no difference between children in the two groups on performance on a large number of tests. Second, we use a regression discontinuity design exploiting the fact that a “poverty index” was used to determine eligibility for transfers. We focus on children who were just-eligible and just-ineligible for transfers when they were in late childhood, and compare their school attainment and work status 10 years later. Transfers increased secondary school completion, but the effects are small, between 1 and 2 percentage points from a counterfactual school completion rate of 75 percent. We conclude that any effect of cash transfers on the inter-generational transmission of poverty in Ecuador is likely to be modest.
    Keywords: poverty, human capital, liquidity constraints, educational attainment
    JEL: I30 J24 J13 I00
    Date: 2016–11
  2. By: Janina Hundenborn (SALDRU, University of Cape Town); Ingrid Woolard (SALDRU, University of Cape Town); Murray Leibbrandt (SALDRU, University of Cape Town)
    Abstract: The first democratic elections in 1994 brought about the promise for equal opportunity and an overall improvement of living standards for the majority of the South African population. The newly elected government promised to combat high levels of poverty as well as inequality inherited from the apartheid regime. However, 20 years after the democratization of South Africa, levels of inequality remain stubbornly high. Therefore, this paper analyzes the role of income from different sources in order to investigate which one(s) continue to drive those high levels of inequality. We use data from the 1993 Project for Statistics on Living Standards and Development (PSLSD) to present a detailed snapshot of the level and texture of inequality that was prevalent at the end of the apartheid regime. Furthermore, we use recent data from the National Income Dynamics Study (NIDS) from 2008 and 2014 to assess the role of different income sources in overall inequality and compare these contemporary snapshots to the results from 1993. We do so by applying two different decomposition methods to inequality measured by the Gini coefficient. The first is static, explaining the role of income sources in driving income inequality at each of the three points in time. The second is dynamic, explaining the role of changing income sources in changes in income inequality over time. We find that over the past 20 years, labour income has been the major contributor to overall inequality. The results indicate that a drop in inequality from labour market sources led to a decrease in overall income inequality. A more nuanced decomposition technique within the dynamic decomposition allows us to extract the effect of changes in household demographics on inequality from these results. This shows that when factors of household composition are accounted for, changes in all of the different income sources have led to a decrease in inequality between 2008 and 2014 in particular and over the entire post-apartheid period in general.
    Keywords: income distribution; South Africa; inequality drivers; labour markets
    Date: 2016
  3. By: Chicoine, Luke E. (DePaul University)
    Abstract: This paper investigates the causal relationship between women's education and fertility by exploiting variation generated by the removal of school fees in Ethiopia. The increase in schooling caused by this reform is identified using both geographic variation in the intensity of the reform's impact and the temporal variation generated by the implementation of the reform. The model finds that the removal of school fees in Ethiopia led to an increase of over 1.5 years of schooling for women affected by the reform. A two-stage least squares approach is used to measure the impact of the exogenous increase in schooling on fertility. Each additional year of schooling led to a reduction in fertility, a delay in sexual activity, marriage, and the timing of at least their first, second, and third births. There is also evidence that the increase in schooling led to improved labor market outcomes, and a reduction in the desired number of children. Additionally, there is evidence of strategic use of hidden forms of contraception, only after family size becomes sufficiently large or after two sons have been born.
    Keywords: free primary education, Ethiopia, schooling, fertility
    JEL: O55 J13 I25 I26
    Date: 2016–11
  4. By: von Fintel, Dieter (Stellenbosch University); Pienaar, Louw (Western Cape Department of Agriculture)
    Abstract: Cash transfers successfully alleviate poverty in many developing countries. South Africa is a case in point, implementing one of the largest unconditional cash transfer programmes internationally, and with substantial benefits to household well-being along multiple dimensions. Yet, grants discourage formal labour market attachment, creating dependencies on the fiscus. This study uses a fuzzy regression discontinuity design to establish that state-funded Old Age Pensions encourage non-market economic activity (in the form of small-scale farming), and improve the self-reported food security of rural households that farm, vis-à-vis those that do not. However, only non-farming households increase market food expenditure and consume more diverse diets from market-sourced foods: diet quality improves with greater spending, while food sufficiency remains unaffected. Farmers, on the other hand, do not change food spending patterns, but self-rated food sufficiency improves due to greater levels and diversity in home production. The role of small-scale farming is of broader interest in rural development, given the context of the 1913 and 1936 Land Acts that constrained this form of livelihood in former apartheid homelands. This paper's contribution is two-fold: grants are an effective channel to actively promote rural development through small-scale farming, and they improve food security by non-market mechanisms.
    Keywords: cash transfers, small-scale farming, food security, South Africa, Apartheid homelands, regression discontinuity design
    JEL: Q12 Q18 Q15 D13 C26
    Date: 2016–11
  5. By: Aïssata Coulibaly (CERDI [CERDI] - CERDI - CNRS [CNRS])
    Abstract: This paper analyzes the relationship between financial development and child labor for a panel of developing countries over the period 1960 to 2004. We find that financial development measured by the ratio of private credit to GDP tends to increase child labor and this result is driven by countries with high level of inequality, above to the mean of the Gini coefficient. This could reflect that with access to credit, households tend to invest in their own farm or family business, raising the opportunity cost of schooling and inducing more working children. These findings are robust to the use of different estimation techniques like instrumental variables strategy and generalized method of moments. But this positive effect is likely to be non nonlinear, especially financial development and education spending are effective in reducing child labor only in countries with better control of corruption. This suggests that better institutions by improving the quality of education services and its return tend to alter the positive impact of financial development which occurs via the high opportunity cost of education.
    Keywords: Child Labor,Financial Development,Inequality,SWIID.
    Date: 2016–11–25
  6. By: Aïssata Coulibaly (CERDI [CERDI] - CERDI - CNRS [CNRS]); Urbain Thierry Yogo (CERDI [CERDI] - CERDI - CNRS [CNRS])
    Abstract: This paper investigates the effect of access to financial services on the prevalence of working poor. Using a panel of 63 developing countries over the period 2004-2013, we find that improving financial access (as measured by the number of bank branches per 100,000 adults) reduces the prevalence of working poor (workers living with less than US dollar 1.25 a day). This effect is even more relevant in countries affected by strong macroeconomic instability. Our findings are robust to endogeneity bias, the addition of various controls including remittances and mobile phone subscriptions, and to the shifting of the poverty line from US dollar 1.25 to US dollar 1.90. We also show that barriers to use banking services are correlated positively with working poverty. Moreover, our results confirm the validity of some transmissions channels such as growth (trickle-down effect) and the access of the non-poor workers to financial services, suggesting that improving financial access for the excluded non-poor can have a strong reducing-effect on working poverty.
    Keywords: Developing countries,Trickle-down effect.,Financial access,Working poverty
    Date: 2016–11–25
  7. By: Makovec, Mattia
    Abstract: We study the consequences of a series of migration policies that restricted the migration of Indonesian female domestic workers towards traditional destinations, namely Malaysia and Saudi Arabia. Our difference-in-differences specification exploits the differential impact across Indonesian villages of this unique natural experiment, intended to stop repeated cases of mistreatment of Indonesians working overseas. Our results suggest that the moratoria had negative effects on economic activity and households’ welfare, and worsened labor market conditions, especially for women, in the origin communities. Our results highlight the unintended effects that migration restrictions may have precisely on those they were intended to benefit.
    Date: 2016–11–24
  8. By: Afridi, Farzana (Indian Statistical Institute); Dhillon, Amrita (King's College London); Solan, Eilon (Tel Aviv University)
    Abstract: In developing countries with weak institutions, there is implicitly a large reliance on elections to instill norms of accountability and reduce corruption. In this paper we show that electoral discipline may be ineffective in reducing corruption when political competition is too high or too low. We first build a simple game theoretic model to capture the effect of electoral competition on corruption. We show that in equilibrium, corruption has a U-shaped relationship with electoral competition. If the election is safe for the incumbent (low competition) or if it is extremely fragile (high competition) then corruption is higher, and for intermediate levels of competition, corruption is lower. We also predict that when there are different types of corruption, then incumbents increase corruption in the components that voters care less about regardless of competition. We test the model's predictions using data gathered on audit findings of leakages from a large public program in Indian villages belonging to the state of Andhra Pradesh during 2006-10 and on elections to the village council headship in 2006. Our results largely confirm the theoretical results that competition has a non-linear effect on corruption, and that the impact of electoral competition varies by whether theft is from the public or private component of the service delivery. Overall, our results suggest that over-reliance on elections to discipline politicians is misplaced.
    Keywords: audit, electoral competition, corruption, social accountability
    JEL: D72 D82 H75 O43 C72
    Date: 2016–11
  9. By: Campus, Daniela (University of Florence); Giannelli, Gianna Claudia (University of Florence)
    Abstract: Dramatic spikes in food prices, like those observed over the last years, represent a real threat to food security in developing countries with severe consequences for many aspects of human life. Price instability can also affect the intra-household allocation of time, thus changing the labour supply of women, who traditionally play the role of 'shock absorbers'. This paper explores the nature of time poverty by examining how changes in the prices of the two major staples consumed, matooke and cassava, have affected the paid and unpaid labour time allocation in Ugandan households. We exploit the panel nature of the Uganda National Household Survey by adopting a Tobit-hybrid model. Our results show that gender differentials in the intra-household allocation of labour actually occur in correspondence with changes in food prices. We find that, overall, women work significantly more, since the additional hours women work in the labour market are not counterbalanced by a relevant reduction in their other labour activities. For men, we do not find any significant effect of price changes on hours of work.
    Keywords: food prices, labour supply, gender, Uganda
    JEL: J16 J22 J43 Q11
    Date: 2016–11
  10. By: Delgado Montes, Juan Gabriel (Amherst College); Corrales, Javier (Amherst College); Singh, Prakarsh (Amherst College)
    Abstract: Discrimination in formal labor markets can push discriminated groups into labor informality, where wages are lower and pensions scarce. In this paper, we explore whether education offsets discrimination by empowering discriminated groups to successfully compete for formal jobs. Specifically, we calculate the returns to education on formal employment for a discriminated group (indigenous Peruvians). We find that certain education levels –primary and tertiary–allow indigenous workers equal access to formal jobs. But, for indigenous workers with only secondary education, we find an "informality trap" where returns to secondary education are 6.7 percentage points lower, a difference larger than the net returns of primary education. We find that differences in education quality across districts, more than migration and industry-specific patterns, are the main drivers of this effect. These findings have policy implications suggesting improvements to quality are essential for secondary education to empower discriminated groups to successfully compete in labor markets.
    Keywords: exclusion, social security, informal labor markets, education, Latin America
    JEL: E26 J46 I26 H55 J71
    Date: 2016–11
  11. By: Antoine Marsaudon (PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC), PSE - Paris School of Economics); Josselin Thuilliez (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics)
    Abstract: Does democracy help Kenyan citizens to struggle against the HIV epidemic? Yet, very little attention has been devoted to establish whether political regimes react differently to the HIV infection. Using an electoral definition of democracy makes a contribution in understanding which aspects of political rules matter to manage the disease. Using a difference-in-difference design that draws upon pre-existing variations in HIV intensity and cohort's exposure to democracy, we find that a person living under democracy is less likely to have a HIV infection. Further, we present some evidence of ethnic favoritism and gender disparities during periods of non-democracy.
    Keywords: Institution,Democracy,HIV,Health,Kenya
    Date: 2016–11
  12. By: Framcisco Cavalcanti (Barcelona Economic Institute, University of Barcelona, Spain); Gianmarco Daniele (Barcelona Economic Institute, University of Barcelona, Spain); Sergio Galletta (IdEP, Economia, Universita' Svizzera italiana, Switzerland)
    Abstract: We show that the disclosure of information about a government's conduct affects the types of candidates who stand for election. Our empirical test focuses on Brazilian city council elections in 2004 and 2008. The identification strategy exploits the randomness of the timing of the release of audit reports on the (mis)use of federal funds by local governments. We observe that when the audit finds low levels of corruption (i.e., when it represents a positive popularity shock), the parties supporting the incumbent select less-educated candidates. On the contrary, parties pick, on average, more-educated candidates when the audit reveals a high level of corruption (i.e., when it represents a negative popularity shock). These effects are stronger in municipalities that have easier access to local media. Our evidence confirms that parties are strategic players: their decisions are affected by shocks that influence the electoral race.
    Keywords: Political selection, Corruption, Competence, Local election, Political parties, Candidates
    JEL: D70 D72 D73
    Date: 2016–10–25

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